Payment Plan Agreement: Definition & Sample

A payment plan agreement, also known as an installment agreement, is a written legal document that allows one party to make smaller payments over time to payoff a larger debt. This type of agreement can be used to help people with their taxes or car loans and it can benefit businesses who need more time to pay off debt.

A payment plan agreement's goal is to outline how much money will be paid, when it needs to be done by, and what happens if one party does not pay on time. This document can also help alleviate some stress for both parties because they know exactly what they are agreeing to before signing anything.

Common Sections in Payment Plan Agreements

Below is a list of common sections included in Payment Plan Agreements. These sections are linked to the below sample agreement for you to explore.

Payment Plan Agreement Sample

This Debt Repayment Agreement (this “ Agreement ”) is dated as of July 31, 2014 (the "Effective Date"), by and between Idea Sphere Inc., a Michigan corporation, with offices at 632 Broadway, Suite 201, New York, New York 10012 (the “ Company ”), and Little Harbor LLC, a Nevada limited liability company (the “ Creditor ”).

B. The Company and the Creditor have agreed that the Indebtedness shall be satisfied and paid in full by (i) the Company’s issuance to the Creditor of 7,000 shares (the “ Shares ”) of Series B Preferred Stock, no par value, of the Company (the “ Preferred Stock ”); plus (ii) monthly payments set forth on Schedule A through July 25, 2017 or until the trailing ninety (90) day volume weighted average of the closing sales prices of the common stock of Twinlab Consolidated Holdings, Inc. n/k/a as PUBCO ("TCC") on all domestic securities exchanges on which it may at that time be listed equals or exceeds $5.06 per share of such common stock, whichever occurs first.

C. The Company and the Creditor are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), and such rules and regulations promulgated by the United States Securities and Exchange Commission (the “ Commission ”) under the Securities Act, as may be applicable.

Now, Therefore, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Creditor hereby agree as follows:

1.1 Definitions . In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1 :

“ Affiliate ” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is controlled by or is under common control with such Person, as such terms are used in and construed under Rule 144. With respect to the Creditor, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as the Creditor will be deemed to be an Affiliate of the Creditor.

“ Business Day ” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business.

“ Control ” (including the terms “ controlling ”, “ controlled ” by or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Lien ” means any material lien, charge, claim, encumbrance, security interest, right of first refusal, preemptive right or other restrictions of any kind.

“ New York Courts ” means the state and federal courts sitting in the City of New York, Borough of Manhattan.

“ Person ” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

2.1 Closing . The Closing of the transactions contemplated by this Agreement shall take place at the offices of Company Counsel, 1515 Broadway, 43rd Floor, New York, New York on the Closing Date or at such other locations or remotely by facsimile transmission or other electronic means as the parties may mutually agree.

(a) On or prior to the Closing, the Company shall issue, deliver or cause to be delivered to the Creditor the following:

(ii) one or more stock certificates, free and clear of all restrictive and other legends except as provided in Section 4.1(b) hereof, evidencing the Shares to be issued to the Creditor (the “ Stock Certificates ”);

(b) On or prior to the Closing, the Creditor shall deliver or cause to be delivered to the Company the following:

(ii) the original promissory notes evidencing the Indebtedness, marked paid in full or such other evidence of payment in full as the Company shall reasonably request; and

(iii) a fully completed and duly executed Accredited Investor Questionnaire in the form attached hereto as Exhibit A .

(a) As payment in full of the Indebtedness, the Company shall (i) issue the Shares to the Creditor at the Closing, and (ii) pay to the Creditor the amounts set forth in Schedule A hereto, no later than the 25 th day of each month set forth on Schedule A hereto (except with respect to the first payment which shall be due within five (5) days of the Effective Date), provided that such payments shall terminate as of such time (if ever) as the trailing ninety (90) day volume weighted average of the closing sales prices of the common stock of TCC on all domestic securities exchanges on which it may at that time be listed equals or exceeds $5.06 per share of such common stock.

(b) The parties acknowledge and agree that due to the timing of the Effective Date and certain interest and principal payments due on indebtedness owed by Creditor for which the monthly amount set forth on Schedule A will be used to pay, TCC may pay such interest and principal payments and fees, if applicable, on behalf of Creditor and TCC shall receive a credit in the amount of such interest and principal payments and fees, if applicable, paid on behalf of Creditor against TCC's first payment on Schedule A which is due within five (5) days of the Effective Date.

3.1 Representations and Warranties of the Company . The Company hereby represents and warrants to the Creditor as of the date hereof and the Closing Date:

(a) Authorization; Enforcement; Validity . The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company, and no further corporate action is required by the Company, its Board of Directors or its stockholders in connection therewith. This Agreement has been duly executed by the Company and is the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

(b) No Conflicts . The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not and will not (i) conflict with or violate any provisions of the Company’s certificate of incorporation or bylaws or otherwise result in a violation of the organizational documents of the Company, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any contract to which it is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject.

Filings, Consents and Approvals . The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement, other than (i) filings, if any, required by applicable state securities laws, (ii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, if the Company elects to issue the Shares pursuant to Regulation D, and (iii) those that have been made or obtained prior to the date of this Agreement.

(c) Issuance of the Shares . The Shares have been duly authorized and, when issued in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens suffered or permitted by the Company, other than restrictions on transfer provided for in this Agreement or imposed by applicable securities laws, and shall not be subject to preemptive or similar rights. Assuming the accuracy of the representations and warranties of the Creditor in this Agreement, the Shares will be issued in compliance with all applicable federal and state securities laws.

(d) Private Placement . Assuming the accuracy of the Creditor’s representations and warranties set forth in Section 3.2 of this Agreement and the accuracy of the information disclosed by the Creditor in the Accredited Investor Questionnaires delivered pursuant to Section 2.2(b)(iii), no registration under the Securities Act is required for the offer and issuance of the Shares by the Company to the Creditor under this Agreement.

(e) No Directed Selling Efforts or General Solicitation . Neither the Company nor any Person acting on its behalf has conducted any “general solicitation” or “general advertising” (as those terms are used in Regulation D) in connection with the offer or issuance of the Shares.

(f) Investment Company . The Company is not required to be registered as, and is not an Affiliate of, and immediately following the Closing will not be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

3.2 Representations and Warranties of the Creditor . The Creditor hereby represents and warrants to the Company, that as of the date hereof and as of the Closing Date:

(a) Authorization; Enforcement; Validity . The execution and delivery of this Agreement by the Creditor and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary limited liability company action on the part of the Creditor, and no further limited liability company action is required by the Creditor, or its members in connection therewith. This Agreement constitutes the valid and legally binding obligation of the Creditor, enforceable against the Creditor in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

(b) No Conflicts . The execution, delivery and performance by the Creditor of this Agreement and the consummation by the Creditor of the transactions contemplated hereby will not (i) conflict with or violate any provisions of the Creditor’s limited liability company agreement or otherwise result in a violation of the organizational documents of the Creditor, or (ii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Creditor.

(c) Investment Intent . The Creditor understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not with a view to, or for distributing or reselling such Shares or any part thereof in violation of the Securities Act or any applicable state securities laws, provided, however , that by making the representations herein, the Creditor does not agree to hold any of the Shares for any minimum period of time and reserves the right, subject to the provisions of this Agreement, at all times to sell or otherwise dispose of all or any part of such Shares pursuant to an effective registration statement under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws. The Creditor does not presently have any agreement, plan or understanding, directly or indirectly, with any Person to distribute or effect any distribution of any of the Shares (or any securities which are derivatives thereof) to or through any person or entity; the Creditor is not a registered broker-dealer under Section 15 of the Exchange Act or an entity engaged in a business that would require it to be so registered as a broker-dealer.

(d) Creditor Status . At the time the Creditor was offered the Shares, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act.

(e) General Solicitation . The Creditor is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general advertisement.

(f) Experience of the Creditor . The Creditor, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment. The Creditor is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

(g) Access to Information . The Creditor acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of the Creditor or its representatives or counsel shall modify, amend or affect the Creditor’s right to rely on the truth, accuracy and completeness of the Company’s representations and warranties contained herein. The Creditor has sought such accounting, legal and tax advice as it has considered necessary to make an informed decision with respect to its acquisition of the Shares.

(h) Brokers and Finders . No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company or any Creditor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Creditor.

(i) Independent Investment Decision . The Creditor has independently evaluated the merits of its decision to acquire the Shares, and the Creditor confirms that it has not relied on the advice of the Company in making such decision. The Creditor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Creditor in connection with the acquisition of the Shares constitutes legal, tax or investment advice.

(j) Reliance on Exemptions . The Creditor understands that the Shares are being offered and issued to it in reliance on specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth and accuracy of, and the Creditor’s compliance with, the representations, warranties, agreements, acknowledgements and understandings of the Creditor set forth herein in order to determine the availability of such exemptions and the eligibility of the Creditor to acquire the Shares.

(k) No Governmental Review . The Creditor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

(l) Trading Market . The Creditor acknowledges that the Shares are not registered with the Securities and Exchange Commission or listed on any national securities exchange or other listing medium.

The Company and the Creditor acknowledge and agree that neither party to this Agreement has made or makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Article 3.

(a) Compliance with Laws . Notwithstanding any other provision of this Agreement, the Creditor covenants that the Shares may be disposed of only pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act, or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, and in compliance with any applicable state and federal securities laws. In connection with any transfer of the Shares other than (i) pursuant to an effective registration statement, (ii) to the Company, (iii) to an Affiliate of the Creditor, (iv) pursuant to Rule 144 ( provided that the Creditor provides the Company with reasonable assurances (in the form of seller and broker representation letters if required) that the securities may be sold pursuant to such rule) or Rule 144A, (v) pursuant to Rule 144 without the requirement that the Company be in compliance with the current public information requirements of Rule 144 and without other restriction following the applicable holding period or (vi) in connection with a bona fide pledge, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Creditor under this Agreement.

(b) Legends . Certificates evidencing the Shares shall bear any legend as required by the “Blue Sky” laws of any state and a restrictive legend in substantially the following form until such time as they are not required under Section 4.1(c) (and a stock transfer order may be placed against transfer of the certificates for the Shares):

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

In addition, if the Creditor is an Affiliate of the Company, certificates evidencing the Shares issued to the Creditor shall bear a customary “affiliates” legend.

(c) Removal of Legends . Subject to the Company’s right to request an opinion of counsel as set forth in Section 4.1(a) , the legend set forth in Section 4.1(b) above shall be removable and the Company shall issue or cause to be issued a certificate without such legend or any other legend (except for any “affiliates” legend as set forth in Section 4.1(b) ) to the holder of the Shares upon which it is stamped or issue if (i) such Shares are registered for resale under the Securities Act (provided that, if the Creditor is selling pursuant to the effective registration statement registering the Shares for resale, the Creditor agrees to only sell such Shares during such time that such registration statement is effective and not withdrawn or suspended, and only as permitted by such registration statement), (ii) such Shares are sold or transferred in compliance with Rule 144 (if the transferor is not an Affiliate of the Company), including without limitation in compliance with the current public information requirements of Rule 144 if applicable to the Company at the time of such sale or transfer, and the holder and its broker have delivered customary documents reasonably requested by the Company Counsel in connection with such sale or transfer, or (iii) such Shares are eligible for sale under Rule 144 without the requirement that the Company be in compliance with the current public information requirements of Rule 144 and without other restriction and Company Counsel has provided written confirmation of such eligibility. Any fees (with respect to the Company Counsel or otherwise) associated with the removal of such legend shall be borne by the Company. At such time as a legend is no longer required for certain securities, the Company will no later than three (3) Business Days following the delivery by the Creditor to the Company (with concurrent notice and delivery of copies to the Company) of a legended certificate representing such Shares (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer, and together with such other customary documents as the Company Counsel shall reasonably request), deliver or cause to be delivered to the transferee of the Creditor or the Creditor, as applicable, a certificate representing such Shares that is free from all restrictive and other legends. The Company may not make any notation on its records that enlarge the restrictions on transfer set forth in this Section 4.1 . Certificates for Shares subject to legend removal hereunder shall be transmitted by the Company to the Creditor.

(d) Acknowledgement . The Creditor hereunder acknowledges its primary responsibilities under the Securities Act and accordingly will not sell or otherwise transfer the Shares or any interest therein without complying with the requirements of the Securities Act.

4.2 Securities Laws Filings . The Company agrees to timely make such filings with regard to the transactions contemplated hereby as may be required by applicable securities laws.

(a) Indemnification of the Creditor . Subject to this Section 4.3 , the Company will indemnify and hold the Creditor and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Creditor (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling Person (each, a “ Creditor Party ”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the Creditor Party may suffer or incur, as a result of or relating to third party claims against the Creditor relating to any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement, provided that such a claim for indemnification relating to any breach of any of the representations or warranties made by the Company in this Agreement is made within one (1) year from the Closing. The Company will not be liable to any Creditor Party under this Agreement to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Creditor Party’s breach of any of the representations, warranties, covenants or agreements made by the Creditor Party in this Agreement.

(b) Conduct of Indemnification Proceedings . Promptly after receipt by any Person (the “ Indemnified Person ”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to Section 4.3(a) , such Indemnified Person shall promptly notify the Company in writing and the Company shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person and the assumption of the payment of all fees and expenses; provided, however , that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is actually and materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; (ii) the Company shall have failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnified Person in such proceeding; or (iii) in the reasonable judgment of counsel to such Indemnified Person and counsel to the Company, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned. Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, delayed or conditioned, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is a party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such Proceeding.