Orin F. Farnsworth and Mary L. Farnsworth - Page 6




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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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