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Promissory Note as Addendum to Draw Against Commission Agreement

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Promissory Note as Addendum to Draw Against Commission Agreement Powered By Docstoc
					This is a unique loan agreement between an employee and an employer whereby the
employee makes monthly installment payments using commission they have earned to
pay back the employer for a loan. This promissory note does not include an interest
rate and uses monthly installment payments as the method of repayment. This
document should be used by small businesses or other entities that enter into loan
agreements with their employees and want to deduct the loan payments from the
employees' commission.
                                PROMISSORY NOTE

$_______ [Instruction: Insert Draw Amount]

         FOR VALUE RECEIVED, the undersigned, ("Employee") promises to pay to the
order of ___________ [Instruction: Insert Employer Name] ("Employer"), in “Monthly
Installments” as defined herein, the sum of ___________ Dollars ($____) [Instruction:
Insert Draw Amount], together with compound interest, from the date hereof until paid
in full, at the rate of ___________ (___%) per annum [Instruction: Insert Percent]. All
computations of interest will be made by Employer on the basis of a three hundred sixty
five (365) days year, for the actual number of days elapsed in the relevant period
(including the first day but excluding the last). In no event shall interest to be paid
hereon exceed the maximum rate permitted by applicable law and, if, for any
circumstances whatsoever fulfillment of any of the provisions of this Note shall require
exceeding such maximum rate, the obligation to be fulfilled shall be reduced to the limit
thereof; any sums received by Employer in excess of such maximum rate shall be applied
to the unpaid principal balance of this Note.

1. Payment and Prepayment.

    A. Until the Loan or Note is paid in full, for whatever reason, the unpaid principal
and accrued interest shall be payable in monthly installments, of ___________ Dollars
($____) [Instruction: Insert Amount] (“Monthly Installments”) payable on the first of
each month (“Installment Due Date”), and continuing until the entire balance, including
the principal and all interest accrued, is paid in full.

    B. Principal and interest on this Note shall be payable in lawful money of the United
States of America. All payments, when paid, shall be applied first to the payment of
accrued interest and then the balance thereof to principal.

   C. Employee reserves the right to prepay this Note, in whole or in part, with no
prepayment penalty.

2. Employee’s Employment with Employer.

    A. Notwithstanding anything to the contrary contained herein, throughout the
duration of Employee’s employment with Employer, in consideration of Employee’s
valuable service, Employer shall waive Employer’s right: (i) to accrue interest hereunder
and (ii) to receive Monthly Installment payments on the Note. Instead, during said
duration, as indicated in the employment agreement by and between Employer and
Employee dated as of ___________ [Instruction: Insert Date] (the “Employment
Agreement”), Employer shall deduct the principal amount due hereunder from first
monies due and payable to Employee as “Commissions” as such term is defined in the
Employment Agreement.
    B. Upon the date of termination of the “Term”, as such term is defined in the
Employment Agreement: (i) accrual of interest shall commence on any outstanding
amount due pursuant to the terms and conditions of this Note and (ii) Monthly
Installments shall become payable commencing on the subsequent Installment Due Date.

3. Remedies. If Employee material breaches any of its obligations under this Note or
any document or instrument securing this Note, all of the unpaid principal balance hereof,
together with all accrued but unpaid interest, shall be due and payable, at the option of the
Employer. Failure to exercise this option shall not constitute a waiver of the right to
exercise the same in the event of any subsequent default. Employee shall pay all
reasonable costs of collection, including without limitation, court costs, reasonable
attorney’s fees and expenses, and all other expenses of collection permitted by law.
Employee expressly waives presentment, protest and demand, notice of protest, demand
and dishonor and nonpayment of this Note as well as all other notices of any kind.

4. Miscellaneous.

    A. All notices, requests, demands and other communications hereunder shall be in
writing delivered by registered or certified mail, return receipt requested, postage prepaid,
at the addresses’ first indicated above, or at such other address as the parties may
designate by valid notice.

   B. Employee will not assign or transfer any of its benefits or obligations arising
under this Note, without Employer’s prior written consent.

   C. In the event any one or more of the provisions of this Note shall, for any reason,
be held to be invalid, illegal or unenforceable, the same shall not affect any other
provision of this Note and the remaining provisions of the Note shall remain in full force
and effect.

    D. No waiver or modification of any of the terms or provisions of this Note shall be
valid or binding unless set forth in a writing signed by a duly authorized officer of
Employer, and then only to the extent therein specifically set forth. If more than one
person executes this Note, their obligations hereunder shall be joint and several.

    E. This Note and all acts and transactions pursuant hereto and the rights and
obligations of the parties hereto shall be governed in accordance with the laws of the
State of _____________, [Instruction: Insert State], applicable to agreements to be
wholly performed therein, with jurisdiction exclusive to the Federal and State courts
located in the County of _____________ [Instruction: Insert County], State of
______________ [Instruction: Insert State].
IN WITNESS WHEREOF, Employee has executed this Note as of the day and year first
written above.

EMPLOYEE:


________________________________ [Instruction: sign]
By: ___________________________ [Instruction: Insert Name of Signatory]
Title: ___________________________ [Instruction: Insert Title of Signatory]
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Description: This is a unique loan agreement between an employee and an employer whereby the employee makes monthly installment payments using commission they have earned to pay back the employer for a loan. This promissory note does not include an interest rate and uses monthly installment payments as the method of repayment. This document should be used by small businesses or other entities that enter into loan agreements with their employees and want to deduct the loan payments from the employees' commission.