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On November 1, 1966, Mr. Farnsworth and Farmers signed an
addendum to the DMAA, amending his concurrently signed DMAA.
The November 1, 1966, addendum to the DMAA reduced Mr.
Farnsworth’s overwrite commissions to the portion of the
overwrite in excess of $935 per month. The monthly reduction in
the overwrite payable to Mr. Farnsworth is commonly referred to
as the “retention amount”. Under the terms of the addendum, the
retention amount was to be withheld for the first 120 months of
the contract (10 years). Commencing with the 121st month, the
retention would be reduced or eliminated if Farmers, in its
discretion, determined that Mr. Farnsworth’s performance
warranted the reduction.
A second addendum to the DMAA, entered into by Farmers and
Mr. Farnsworth on February 6, 1968, reduced the “retention
amount” from $935 per month to $605 per month, but extended the
term of the retentions to the 178th month of the contract
(approximately 15 years from inception of the contract).
Commencing with the 178th month, the retention would be reduced
or eliminated if Farmers, in its discretion, determined that Mr.
Farnsworth’s performance warranted the reduction.3
3The stipulation of facts between petitioner and respondent
mischaracterized the retention amounts as commencing, rather than
terminating or being reduced, on the 121st and 178th month of the
DMAA, respectively. The addenda make clear, however, that the
retention amounts were to be withheld commencing immediately, and
were to continue until the 121st and 178th month, respectively,
(continued...)
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