Under what condition related to payment default would the Maker be considered in default of the note with Aerus?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
An "Event of Default" shall exist hereunder if any one or more of the following events shall occur and be continuing:
- (a) Maker shall fail or refuse to pay within five (5) days after the date when due any principal of, or interest upon, this Note;
- (b) any statement, representation or warranty made by Maker to Payee shall prove to be untrue or inaccurate in any material respect when made;
- (c) default shall occur in the performance of any of the covenants or agreements of Maker contained herein or in any instrument securing this Note or any other document executed or delivered to Payee in connection herewith and such default shall continue uncured to the reasonable satisfaction of Payee for a period of fifteen (15) days after written notice thereof from Payee to Maker;
- (d) Maker or any guarantor of this Note (a "Guarantor") shall (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor or liquidator of the Maker or such Guarantor or of all or a substantial part of the assets of the Maker or such Guarantor, (ii) file a voluntary petition in bankruptcy, admit in writing that the Maker or such Guarantor is unable to pay the debts of the Maker or such Guarantor as they become due or generally not pay such debts
as they become due, (iii) make a general assignment for the benefit of creditors, (iv) file a petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy or insolvency laws, (v) file an answer admitting the material allegations of, or consent to, or default in answering, a petition filed against the Maker or such Guarantor in any bankruptcy, reorganization or insolvency proceeding, or (vi) take corporate action for the purpose of effecting any of the foregoing;
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, a franchisee (the Maker) can be considered in default of a note under several conditions related to payment. Specifically, Aerus outlines scenarios where failure to pay principal or interest on the debt when due constitutes a default. This includes failing to make payments on the scheduled date, upon acceleration of the debt, or at maturity.
Furthermore, Aerus specifies that if the Maker fails to pay any indebtedness for borrowed money when due, or if such indebtedness is declared due and payable prior to its express maturity due to any default, it can trigger a default status. This is particularly relevant if the failure continues beyond any applicable grace period. The FDD also indicates that being declared in default under any material contract, agreement, or instrument, including the Asset Purchase Agreement, Franchise Agreement, or any documents securing obligations to Aerus or its affiliates, can lead to a default if the condition persists for thirty days after notice.
In addition to direct payment failures, Aerus outlines other conditions that can trigger default, such as insolvency, where the Maker admits an inability to pay debts, applies for a trustee, or undergoes liquidation proceedings. Similarly, if any creditor of the Maker obtains possession of collateral through legal means like levy or repossession, it can also constitute an event of default. These conditions collectively highlight the importance of maintaining financial solvency and adhering to all contractual obligations to avoid defaulting on notes with Aerus.