Warren L. Baker, Jr. and Dorris J. Baker - Page 6




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               Petitioner’s compensation was based on a percentage of the             
          net premiums.  The compensation varied by the type of insurance,            
          such as automobile and homeowner’s.  Petitioner was also assigned           
          policies for which he received a smaller commission than those              
          policies he personally produced.  State Farm assigned existing              
          policies to petitioner because the policyholders moved to the               
          geographic location covered by his agency.  Similarly, when                 
          policyholders covered by petitioner moved to a different                    
          geographic location, the policies were assigned to another agent            
          in that geographic area.  Petitioner did not compensate other               
          agents for policies he assumed, and he did not receive payments             
          for policies assigned to other agents.                                      
               The commissions payable for assigned policies are provided             
          for in the schedule of payments attached to the agreement in                
          relevant part as follows:                                                   
               an amount equal to 66-2/3 percent of the graded                        
               commission scale in Section I, provided, however, no                   
               commission shall be payable to you on any premium                      
               collections on business credited to your account from                  
               the account of an agent whose agreement with * * *                     
               [State Farm] has been terminated, or as a result of an                 
               agreement between an agent and * * * [State Farm]                      
               pursuant to the applicable paragraph of Section IV of *                
               * * [an agreement], until a one-year period has elapsed                
               following the date of such termination, except as                      
               provided for in paragraph IV-B-2 of this Schedule of                   
               Payments.                                                              
               b.  Termination                                                        
               Section III of the agreement addresses termination.  Either            
          party could terminate the agreement by written notice.  The                 





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