1. DEALING WITH THE LEASE: State of the Union! Today’s Top Ten Lease Issues and Franchise Triangle LEXPERT Conference Toronto, Ontario November 26, 2014

2. Insurance Building and Contents Insurance: Landlord seeks to insure against possibility of damage to its buildings, fixtures, equipment and leasehold improvements Tenant seeks to insure its belongings in the premises – inventory, trade and office furniture, fixtures and leasehold improvements installed at tenant’s cost, or for which tenant will be responsible to replace in the event of damage.

3. Insurance Business Interruption Insurance: Landlord owns building and tenant occupies building essentially for same reason – income generation For Landlord, income = rental receivable from tenants. For Tenant, income = sales, fees, other sources Both parties have the same interest in the continuation of its income from the premises.

4. Insurance Liability Insurance: –Must be arranged with great care, for both landlords and tenants. –In terms of potential loss, most important coverage.

5. Insurance Coverage extensions both landlord and tenant should look for: –punitive damages –pollution liability –blanket contractual liability insurance –personal injury coverage –occurrence basis property damage –non-owned automobile liability coverage –tenant’s legal liability coverage –umbrella liability insurance

6. Insurance Boiler & Machinery Insurance –aimed at the cost of repair/replacement of objects which form parts of the heating, air conditioning, mechanical or electrical system which is owned by landlord/occupied by tenant

7. Waiver of Subrogation Insurer has statutory, common law and contractual right to acquire the right of the insured to bring an action against any person or entity that is found to be legally liable for loss or damage UNLESS that right has been given up, either directly through a waiver of subrogation or prevented through a release between the insured and the party liable for the loss or damage.

8. Waiver of Subrogation Subrogation is the process where insurer A pursues reimbursement from insurer B for claims it paid that were caused by the actions of insurer B’s policy holder. WAIVER of subrogation prevents insurer A from pursuing reimbursement from insurer B for such claims.

9. Mutual Release / Exculpatory Clauses Exculpatory clauses: –serve to alter the contractual, common law and statutory liability of the landlord and the tenant to each other and to specified 3 rd parties –absolve a contracting party from liability to another party for any injury, loss or damage where such liability otherwise exists –used to limit a party’s liability for which it otherwise might be liable

10. Mutual Release / Exculpatory Clauses Releases are a subgroup of exculpatory provisions which operate by assuming that liability exists and then by expressly releasing a contracting party from such liability.

11. Mutual Release / Exculpatory Clauses Mutual Release –The parties release each other for all claims against the other with respect to all loss of, or damage to, personal and/or real property and loss of use of that property that is required to be insured against by each party under the Lease or is otherwise insured against by them.

12. Mutual Indemnity Indemnity provisions shift the risk of loss or damage from one contracting party to another. Indemnifying party assumes liability for damage/losses which extend beyond that party’s common law liability in contract or in tort.

13. Mutual Indemnity Indemnities may: –cover losses arising as a result of 3 rd party negligence –include damages or losses for wilful acts –encompass losses or damages that are not reasonably foreseeable