Free Commission Agreement Template

COMMISSION AGREEMENT

Sales Commission And Compensation Agreement  ·  Governed By The Law Of The State Of Texas

This Commission Agreement (this "Agreement") is entered into as of April 1, 2026 by and between Pinnacle Sales Corp., of 500 Commerce Drive, Suite 200, Dallas, TX 75201, represented by John Mitchell, Vice President of Sales (tel. (214) 555-0340; email jmitchell@pinnaclesales.com) ("Company"), and Sarah Johnson, of 1824 Oak Lane, Plano, TX 75024 (tel. (469) 555-0187; email sarah.johnson@email.com) (the "Sales Representative" or "Representative").

Company and Sales Representative may be referred to individually as a "Party" and collectively as the "Parties." This Agreement is governed by the law of the State of Texas and is intended to be the written sales-commission contract required, where applicable, by that State's sales-representative and wage-payment statutes.

Company hereby engages the Sales Representative as an independent contractor to promote, market, and sell the Company's products and/or services (the "Products") in accordance with this Agreement.

The Sales Representative is an independent contractor and is not an employee, partner, agent, or joint venturer of the Company. The Representative is not entitled to employee benefits and is solely responsible for all federal, state, and local taxes on compensation received under this Agreement, including self-employment, Social Security, and Medicare contributions. Compensation shall be reported on IRS Form 1099-NEC under IRC §6041A where reporting thresholds are met. The Representative retains control over the manner and means of performing sales activities, including schedule, methods, and prospects, subject to the Company's product-representation and brand guidelines.

Commission entitlement under this Agreement is protected by the law of the State of Texas.

TREBLE DAMAGES — a willful failure to pay commissions exposes the principal to up to three times the unpaid commissions plus attorney fees. A contract under which a sales representative solicits wholesale orders in Texas must be in writing (or a computer-based medium) and state how the commission is computed and paid. A principal who fails to pay a commission as required is liable for 3× the unpaid commission due plus reasonable attorney fees (Tex. Bus. and Com. Code §54.004); treble damages are measured on the commission still unpaid at judgment. (Tex. Bus. and Com. Code ch. 54 (Compensation Agreements for Sales Representatives)).

Procuring cause. Like most jurisdictions, the State of Texas recognizes the procuring-cause doctrine as a default rule: the Representative earns a commission on any sale of which the Representative was the procuring cause — that is, the Representative "set in motion the series of events culminating in the sale" — even if the order is accepted or paid after this Agreement ends, unless this Agreement expressly displaces that default. The optional post-termination commission terms below fix the window in which post-termination orders remain commissionable.

The Company grants the Sales Representative the right to sell and promote the Products within the following geographic territory ("Territory"): Texas, Oklahoma, Arkansas, Louisiana.

Unless otherwise agreed in writing, the Company reserves the right to appoint additional representatives or to sell directly within the same Territory, and to modify the Territory upon thirty (30) days' written notice, provided that any modification shall not affect commissions earned on sales already completed or in progress within the original Territory.

In consideration for the sales services provided under this Agreement, the Company shall pay the Sales Representative a commission of 10% calculated on gross sales generated by the Representative (the "Base Commission Rate").

Commission Calculation: Commissions shall be calculated based on the total gross sales amount invoiced to customers, before deductions for returns, allowances, discounts, or credits.

Qualifying Sales: A sale is "qualifying" for commission purposes when (a) the sale was directly generated or facilitated by the Representative; (b) the customer's order has been accepted by the Company; and (c) full payment has been received from the customer. Commissions on partial payments shall be prorated.

Minimum Sales Quota: The Representative shall use commercially reasonable efforts to achieve a minimum sales quota of 75,000.00 USD per calendar quarter. Failure to meet the minimum quota for two (2) consecutive quarters may, at the Company's discretion, result in termination, reduction of Territory, or modification of commission terms upon thirty (30) days' written notice.

Payment Schedule: Commissions shall be calculated and paid on a monthly basis, with a commission statement provided with each payment detailing the transactions, amounts, and any adjustments.

Disputed Commissions: If the Representative disputes any commission calculation, the Representative must submit a written objection within thirty (30) days of the statement. The Company shall respond within fifteen (15) business days, and undisputed amounts shall be paid as scheduled.

Chargebacks and Adjustments: If a customer cancels an order, returns Products, or fails to pay, the Company may deduct the corresponding commission from future payments, itemized on the Representative's statement, subject to any limit imposed by the wage-payment or sales-representative law of the State of Texas.

The Sales Representative agrees, during the term of this Agreement, to:

• Represent the Products honestly and accurately and refrain from false, misleading, or unauthorized representations regarding the Products, pricing, warranties, or Company policies.
• Comply with all applicable federal, state, and local laws governing the sale and marketing of the Products, including consumer-protection and anti-bribery laws.
• Maintain regular communication with the Company and submit sales reports in the format and frequency the Company specifies.
• Protect the confidentiality of all Company proprietary information, customer data, pricing, and trade secrets.
• Return all Company materials, samples, equipment, and proprietary information upon termination.

The Company agrees, during the term of this Agreement, to:

• Provide adequate product information, sales materials, pricing schedules, and training to promote and sell the Products.
• Process customer orders in a timely manner and fulfill them within standard delivery timelines.
• Notify the Representative promptly of material changes to product offerings, pricing, availability, or terms.
• Maintain accurate records of all sales attributable to the Representative and provide transparent commission statements.

In addition to the Base Commission Rate, the Company shall apply the following tiered commission structure based on cumulative sales volume within each calendar quarter:

• Tier 1: Up to 25,000.00 USD — 8% commission rate
• Tier 2: 25,000.00 USD to 75,000.00 USD — 12% commission rate
• Tier 3: Above 150,000.00 USD — 15% commission rate

Tiered rates shall apply to the incremental sales within each bracket. Tier thresholds reset at the beginning of each calendar quarter unless otherwise specified.

Upon execution of this Agreement, the Company shall pay the Sales Representative a one-time signing bonus of 5,000.00 USD, payable within fifteen (15) business days of the Effective Date. If the Representative voluntarily terminates this Agreement or is terminated for cause within the first six (6) months of the Effective Date, the Representative shall repay the signing bonus in full within thirty (30) days of the termination date.

In addition to the commission structure described above, the Sales Representative shall be eligible for an annual performance bonus based on the following criteria:

5% annual bonus on total sales exceeding $500,000. Additional 2% bonus for achieving 120% or more of annual quota.

Performance bonuses shall be calculated at the end of each calendar year and paid within thirty (30) days. The Company may modify the bonus criteria for subsequent years upon sixty (60) days' written notice.

The Company may recover ("clawback") commissions previously paid under the following circumstances:

• Customer Cancellation: If a customer cancels within sixty (60) days of the original sale date, the Company may recover the commission paid on that sale.
• Customer Non-Payment: If a customer fails to pay within ninety (90) days of the invoice date, the Company may recover the commission attributable to the unpaid portion.
• Product Returns: If Products are returned within the applicable return period, the commission on the returned items shall be deducted from future payments.
• Fraudulent Sales: If a sale was procured through fraud or misrepresentation, the full commission is immediately recoverable, without regard to the clawback period.

Clawback amounts shall be deducted from future commission payments; if insufficient, the Representative shall reimburse the Company within thirty (30) days of written demand. Any clawback shall be applied consistently with the wage-payment and sales-representative law of the State of Texas.

Term: This Agreement shall commence on April 1, 2026 and shall continue for one (1) year. It shall automatically renew for successive periods of equal duration unless either Party provides written notice of non-renewal at least thirty (30) days' prior to the end of the then-current term.

Termination Without Cause: Either Party may terminate at any time on thirty (30) days' written notice to the other Party.

Termination for Cause: Either Party may terminate immediately on written notice if the other Party (a) materially breaches and fails to cure within fifteen (15) days of notice; (b) becomes insolvent or files for bankruptcy; (c) engages in fraud, dishonesty, or illegal activity in connection with this Agreement; or (d) materially violates the Company's code of conduct.

Effect of Termination: Upon termination, the Representative shall cease sales activities on behalf of the Company, return all Company materials and customer data, and cooperate in an orderly transition. Termination does not extinguish commissions already earned, including commissions protected by the procuring-cause doctrine and the State's sales-representative statute.

This clause fixes — and thereby displaces the open-ended procuring-cause default with — a defined window for post-termination commissions. Following termination for any reason, the Sales Representative shall be entitled to commissions on qualifying sales that meet all of the following:

• The sale was initiated and substantially negotiated by the Representative prior to the termination date (i.e., the Representative was the procuring cause).
• The customer's order is received by the Company within thirty (30) days after the effective date of termination (the "Tail Period").
• The customer makes full payment within the Company's standard payment terms.

After the Tail Period expires, no further commissions shall be owed except as the State's sales-representative statute may independently require. Post-termination commissions shall be paid on the regular schedule.

During the term of this Agreement, the Sales Representative agrees not to directly or indirectly engage in the sale, promotion, or marketing of products or services substantially similar to or competitive with the Company's Products within the designated Territory, whether on the Representative's own behalf or as an employee, consultant, agent, or owner of another entity.

State-specific enforceability. Enforceability of non-competition covenants varies sharply by state. For the State of Texas: COMMON-LAW REASONABLENESS — enforceable if reasonable in duration, geographic scope, and protected interest (Tex. Bus. and Com. Code §§15.50–15.52 (Texas Covenants Not to Compete Act)). Enforceable if (i) ancillary to an otherwise enforceable agreement, (ii) supported by consideration that gives rise to the employer's legitimate business interest (e.g., access to confidential information), and (iii) reasonable in time, geographic area, and scope of activity restricted. Courts must reform overbroad covenants to make them reasonable (§15.51(c) — mandatory blue-pencil with no fee shifting for reformation).

Federal status. The FTC Non-Compete Clause Rule (16 C.F.R. Part 910) was vacated nationwide by Ryan, LLC v. FTC, 746 F. Supp. 3d 369 (N.D. Tex. 2024); the FTC voted 3-1 to abandon its 5th Cir. appeal on September 5, 2025 and acceded to vacatur. The Rule is NOT in effect anywhere in the United States.

If a court of competent jurisdiction finds this provision unreasonable in any respect, and the governing state permits reformation, the court is authorized to blue-pencil it to the minimum extent necessary to make it enforceable.

For a period of twelve (12) months following termination of this Agreement, the Sales Representative agrees not to, directly or indirectly:

• Solicit or attempt to do business with any customer or prospective customer of the Company with whom the Representative had contact, or about whom the Representative obtained confidential information, during the term.
• Recruit, solicit, or induce any employee, contractor, or sales representative of the Company to end their relationship with the Company.
• Interfere with the Company's business relationships with its customers, suppliers, or partners.

This restriction is intended to protect the Company's customer relationships and goodwill and applies only to the extent permitted by the law of the State of Texas.

Any dispute, controversy, or claim arising out of or relating to this Agreement, including disputes regarding commission calculations, shall be resolved as follows:

Binding Arbitration: Any dispute that cannot be resolved by good-faith negotiation within thirty (30) days shall be submitted to binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, seated in the State of Texas. The award is final and binding, and judgment may be entered in any court of competent jurisdiction. This clause does not waive any non-waivable statutory remedy the Representative holds under the sales-representative law of the State of Texas.

The Sales Representative acknowledges access to confidential and proprietary information of the Company, including customer lists, pricing strategies, sales data, marketing plans, trade secrets, and supplier relationships ("Confidential Information"). Trade-secret obligations are enforceable under the federal Defend Trade Secrets Act, 18 U.S.C. §1836 et seq., and the trade-secret law of the State of Texas.

The Representative agrees to (a) hold all Confidential Information in strict confidence and not disclose it without the Company's prior written consent; (b) use it solely to perform this Agreement; and (c) return or destroy all such materials upon termination.

DTSA Whistleblower Notice (18 U.S.C. §1833(b)): An individual shall not be held criminally or civilly liable under any federal or state trade-secret law for disclosing a trade secret that (i) is made in confidence to a government official or attorney solely to report or investigate a suspected violation of law, or (ii) is made in a complaint or other document filed under seal in a lawsuit or other proceeding.

This confidentiality obligation shall survive termination for a period of two (2) years.

This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its conflict-of-laws principles. Any action arising under this Agreement shall be brought exclusively in the courts located in the State of Texas, and the Parties consent to personal jurisdiction and venue therein. No choice-of-law or forum clause shall be construed to waive a non-waivable protection the Representative holds under the sales-representative or wage-payment law of the State of Texas.

This Agreement is the entire agreement between the Parties regarding its subject matter and supersedes all prior and contemporaneous agreements, whether oral or written. No amendment or waiver is valid unless in writing and signed by both Parties. If any provision is held invalid or unenforceable, it shall be modified to the minimum extent necessary to make it enforceable, and the remaining provisions shall continue in full force and effect. This Agreement may be executed in counterparts, including by electronic delivery, each of which is an original.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated.