What is the Maker's obligation upon receipt of the Principal from Sonesta Simply Suites?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
ing Date through such Disbursement, there has been no material adverse change to the Hotel (including, but not limited to a decrease in Guest Rooms); Maker is in compliance with the terms and conditions of the Agreement, this Note, and any other agreement between Maker and Holder or its affiliates; and all required parties have executed a guaranty in a form acceptable to Holder.
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- Repayment Terms; Forgiveness of Debt. Maker will become subject to the obligation to repay or discharge this Note upon receipt of the Principal. [After the Principal is funded][After the final Disbursement], [____ percent (__%)] of the original principal amount will be forgiven without payment on each anniversary of the Opening Date, provided that no Acceleration Event (defined below) has occurred and Maker is in full compliance with the Agreement and any other agreement between Maker and Holder or its affiliates. The Maker's obligation to repay the Principal will cease and this Note will be canceled and discharged if and when the Principal is completely forgiven.
Source: Item 23 — RECEIPTS (FDD pages 80–246)
What This Means (2025 FDD)
According to Sonesta Simply Suites' 2025 Franchise Disclosure Document, upon receiving the Principal, the Maker becomes obligated to repay or discharge the Note. A percentage of the original principal amount will be forgiven on each anniversary of the Opening Date, provided that no Acceleration Event has occurred and the Maker is in full compliance with the Agreement and any other agreement between Maker and Holder or its affiliates. The specific percentage to be forgiven is not specified in the excerpt.
The Maker's obligation to repay the Principal will cease once the Principal is completely forgiven, at which point the Note will be canceled and discharged. The Maker is solely responsible for any tax consequences resulting from debt forgiveness. Sonesta Simply Suites may file Form 1099-C, Cancellation of Debt, with the Internal Revenue Service, and provide a copy to the Maker.
An 'Acceleration Event' includes situations such as a false representation, termination of the Agreement, any breach of the Agreement or Note, transfer of interest in the Agreement without assumption of obligations, loss of ownership or possession of the premises, transfer of ownership interest of the Maker, or commencement of proceedings for the appointment of a receiver. Should an Acceleration Event occur, the unamortized Principal becomes immediately due and payable without further notice, and the Maker will have no obligation to receive any additional Disbursement.