Is Aira Fitness's Franchisor Affiliate liable to the franchisee for any loss or damage caused by the Pod or its use?

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charges due hereunder together with the full purchase price set forth above. Upon exercise of option and payment by Franchisee of the purchase price and all charges, Franchisor's Affiliate will execute and deliver a bill of sale for the Pod to Franchisee. THIS SALE WILL BE WITHOUT ANY REPRESENTATION OR WARRANTY OF ANY KIND BY OWNER, WHETHER EXPRESS OR IMPLIED IN FACT OR LAW and, Franchisee will accept Pod "AS IS" and "WHERE IS".

No Warranties; Consequential Damages Excluded.

• (a) Disclaimer of Warranties. Franchisee acknowledges that: Franchisor's Affiliate is not the manufacturer of the Pod nor the manufacturer's agent or representative nor a dealer therein; the Pod is of a size, design, capacity, description and manufacture selected by the Franchisee; Franchisee is satisfied that the Pod is suitable and fit for its purposes; and FRANCHISOR'S AFFILIATE HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR REPRESENTATION WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS, CONDITION, MERCHANTABILITY, DESIGN OR OPERATION OF THE POD, ITS FITNESS FOR ANY PARTICULAR PURPOSE, THE QUALITY OR CAPACITY OF THE MATERIALS IN THE POD OR WORKMANSHIP IN THE POD, FRANCHISOR'S AFFILIATE'S TITLE TO THE POD, NOR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER; Franchisor's Affiliate shall not be liable to Franchisee for any loss, damage, or expense of any kind or nature caused, directly or indirectly, by the Pod or the use or maintenance thereof or the failure or operation thereof, or the repair, service or adjustment thereof, or by any delay or failure to provide any such maintenance, repairs, service or adjustment, or by any interruption of service or loss of use thereof or for any loss of business howsoever caused. Franchisor's Affiliate shall not be liable for any consequential damages as that term is used in U.C.C. Article 2A. No defect or unfitness of the Pod shall relieve Franchisee of the obligation to pay any installment of rent or any other obligation under this Lease. Franchisor's Affiliate shall have no obligation under this Lease in respect of the Pod and shall have no obligation to ship, deliver, assemble, install, erect, test, adjust or service the Pod. Franchisor's Affiliate agrees, so long as there shall not have occurred or be any Event of Default as defined in Paragraph 11 or event which with lapse of time or notice, or both, might become an Event of Default hereunder, that Franchisor's Affiliate will permit Franchisee, as Franchisee's sole and exclusive remedy hereunder, to enforce in Franchisee's own name and at Franchisee's sole expense any Supplier's or manufacturer's warranty or agreement in respect of the Pod to the extent that such warranty or agreement is assignable.
• (b) Exclusion of Consequential Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, FRANCHISOR'S AFFILIATE SHALL NOT, UNDER ANY CIRCUMSTANCES, BE LIABLE TO FRANCHISEE OR ANY THIRD PARTY, FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL OR EXEMPLARY DAMAGES ARISING OUT OF OR RELATED TO THE TRANSACTION CONTEMPLATED HEREUNDER, WHETHER IN AN ACTION BASED ON CONTRACT, TORT (INCLUDING

NEGLIGENCE OR STRICT LIABILITY) OR ANY OTHER LEGAL THEORY, INCLUDING, BUT NOT LIMITED TO, LOSS OF ANTICIPATED PROFITS, OR BENEFITS OF USE OR LOSS OF BUSINESS, REGARDLESS OF WHETHER SUCH LOSSES ARE CONSTRUED TO BE CONSEQUENTIAL, INCIDENTAL, SPECIAL OR EXEMPLARY DAMAGES, AND EVEN IF FRANCHISOR'S AFFILIATE IS APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.

IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT EACH AND EVERY PROVISION OF THIS AGREEMENT WHICH PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES OR EXCLUSION OF DAMAGES, IS INTENDED BY THE PARTIES TO BE SEVERABLE FROM ANY OTHER PROVISION AND IS A SEPARABLE AND INDEPENDENT ELEMENT OF RISK ALLOCATION AND IS INTENDED TO BE ENFORCED AS SUCH. THE PARTIES ALSO AGREE THAT, REGARDLESS OF THE FAILURE OF ANY SOLE OR EXCLUSIVE REMEDY APPLICABLE TO THE POD, FRANCHISEE WILL NOT BE ENTITLED TO ANY CONSEQUENTIAL DAMAGES OF WHATSOEVER KIND OR NATURE. THE PARTIES INTEND THE EXCLUSION OF CONSEQUENTIAL DAMAGES AS AN INDEPENDENT AGREEMENT APART FROM ANY SOLE AND EXCLUSIVE REMEDY APPLICABLE TO THE POD.

No Agency. Franchisee acknowledges and agrees that neither the manufacturer, the Supplier, nor any salesman, representative or other agent of the manufacturer or Supplier, is an agent of Franchisor's Affiliate. No salesman, representative or agent of the manufacturer or Supplier is authorized to waive or alter any term or condition of this Lease and no representation as to the Pod or any other matter by the manufacturer or Supplier shall in any way affect Franchisee's duty to pay rent and perform its other obligations as set forth in this Lease.

Loss or Damage to Pod; Insurance.

(a) Risk of Loss. From the date the Supplier ships the Pod to Franchisee or the date Franchisor's Affiliate confirms Franchisee's purchase order or contract to Supplier, whichever occurs first, Franchisee hereby assumes and shall bear the entire risk of loss for theft, damage, destruction or other injury to the Pod from any and every cause whatsoever. NO SUCH LOSS OR DAMAGE SHALL IMPAIR ANY OBLIGATION OF FRANCHISEE UNDER THIS LEASE WHICH SHALL CONTINUE IN FULL FORCE AND EFFECT. In the event of damage or loss to the Pod (or any part thereof) and irrespective of payment from any insurances coverage maintained by Franchisee, but applying full credit therefor, Franchisee shall at the option of Franchisor's Affiliate, (a) place the Pod in good repair, condition and working order; or (b) replace the Pod (or any part thereof) with like equipment in good repair, condition and working order and transfer clear title to such replacement equipment to Franchisor's Affiliate, whereupon such replacement equipment shall be deemed the Pod for all purposes; or (c) pay to Franchisor's Affiliate, not as a penalty, but herein liquidated for all purposes, an amount equal to the sum of (A) any accrued and unpaid rent as of the

date the loss, theft, damage or destruction occurred ("Date of Loss") plus interest at the rate of eighteen percent (18%) per annum or the highest rate allowed by law; (B) the present value of all future rentals reserved in the Lease and contracted to be paid over the unexpired term of the Lease discounted at a rate equal to the discount rate of the Federal Reserve Bank of Chicago as of the Date of Loss; (C) the present value of the agreed upon or estimated residual value of the Pod as of the expiration of this Lease or any renewal thereof discounted at a rate equal to the discount rate of the Federal Reserve Bank of Chicago as of the Date of Loss; and (D) any other amount otherwise then due and owing under the Lease or which otherwise will become due and owing irrespective of the fact that the Pod has been damaged, destroyed, lost or stolen including any additional taxes or other charges that may otherwise arise by reason of the damage, destruction, loss or theft of the Pod. Upon Franchisor's Affiliate's receipt of such payment, Franchisee shall be entitled to the proceeds of any recovery in respect of any such item of Pod from insurance or otherwise to the extent that any excess shall be retained by Franchisor's Affiliate.

(b) Insurance. Franchisee shall obtain and maintain for the entire term of this Lease, at its own expense (as primary insurance for Franchisor's Affiliate and Franchisee), property damage and liability insurance and insurance against loss or damage to the Pod including, without limitation, loss by fire (including so-called extended coverage), theft, collision and such other risks of loss as are customarily insured against on the type of Pod leased hereunder and by businesses in which Franchisee is engaged, in such amounts, in such form and with such insurers as shall be reasonably satisfactory to Franchisor's Affiliate provided, however, that the amount of insurance against loss or damage to the Pod shall be the replacement value of the Pod. Each insurance policy will name Franchisee as an insured and Franchisor's Affiliate as an additional insured and loss payee thereof as Franchisor's Affiliate's interests may appear, shall contain crossliability endorsements and shall contain a clause requiring the insurer to give Franchisor's Affiliate at least 30 days prior written notice of any material alteration in the terms of such policy or of the cancellation thereof. Franchisee shall furnish to Franchisor's Affiliate a certificate of insurance or other evidence satisfactory to Franchisor's Affiliate that such insurance coverage is in effect, provided, however, that Franchisor's Affiliate shall be under no duty either to ascertain the existence of or to examine such insurance policy or to advise Franchisee in the event such insurance coverage shall not comply with the requirements hereof. Franchisee further agrees to give Franchisor's Affiliate prompt notice of any damage to, or loss of, the Pod, or any part thereof; all insurance covering loss or damage to the Pod shall contain a breach of warranty clause satisfactory to Franchisor's Affiliate. In the event Franchisee fails to obtain insurance in accordance with this provision, the Franchisor's Affiliate may, at its option, obtain the insurance or declare Franchisee's failure an event of default. In the event that Franchisor's Affiliate obtains insurance, it shall be entitled to prompt reimbursement from the Franchisee of the costs, including reasonable administrative costs, of doing so.

• Franchisee Representations. If Franchisee is a corporation, a partnership, or a limited liability company, Franchisee represents and warrants that:
  • (a) Corporate Franchisee. If Franchisee is a corporation, it is duly organized and validly existing in good standing under the laws of the jurisdiction of its incorporation, duly qualified to do business in each jurisdiction where any Pod is, or is to be, located, and has full corporate power and authority to hold property under lease and to enter into and perform its obligations under this Lease;

Source: Item 23 — **RECEIPTS (FDD pages 59–254)