What is the Aerus Debtor's obligation regarding taxes, assessments, and charges on the collateral?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
During the term of this Security Agreement, Debtor shall pay or cause to be paid when due all taxes, assessments and charges or levies imposed upon it or on any of the Collateral or any part thereof, except where such tax, assessment, charge or levy is contested in good faith by appropriate proceedings with adequate reserves therefor having been set aside on its books and, if requested, tendered to Secured Party as additional cash collateral.
Debtor shall pay or cause to be paid all such contested taxes, assessments, charges or levies forthwith whenever foreclosure on any lien that attaches (or security therefor) appears imminent.
Debtor on demand shall promptly furnish Secured Party with receipts showing any such payment and Debtor shall not permit the Collateral, or any part thereof, to be levied upon or sold for any tax, charge or assessment whatsoever, nor permit to be done to, in, upon or about the Collateral, anything that may impair the value thereof, or the security interest therein created hereby.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the Debtor, during the term of the Security Agreement, is responsible for paying all taxes, assessments, and charges or levies imposed on them or any part of the collateral when they are due.
However, there is an exception: if the Debtor contests any tax, assessment, charge, or levy in good faith through appropriate proceedings and sets aside adequate reserves on their books for it, they are not immediately required to pay. If requested by Aerus Franchising (the Secured Party), the Debtor must tender additional cash collateral.
The Debtor is obligated to pay all contested taxes, assessments, charges, or levies immediately if foreclosure on any lien that attaches (or security for it) appears imminent. Furthermore, the Debtor must promptly provide Aerus Franchising with receipts showing any such payment upon demand. The Debtor is prohibited from allowing the collateral, or any part of it, to be levied upon or sold for any tax, charge, or assessment, and from taking any action that may impair the value of the collateral or the security interest created by the agreement.