10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

Commission File No. 001-32230

Life Time Fitness, Inc.

(Exact name of Registrant as specified in its charter)

Minnesota
(State or other jurisdiction of
incorporation or organization)
2902 Corporate Place
Chanhassen, Minnesota
(Address of principal executive offices) 41-1689746
(I.R.S. Employer
Identification No.)
55317
(Zip Code)

Registrant’s telephone number, including area code: 952-947-0000

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares outstanding of the Registrant’s common stock as of July 21, 2008 was 39,604,782 common shares.

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2008 (unaudited) and December 31, 2007		3
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2008 and 2007 (unaudited)		4
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007 (unaudited)		5
	Notes to Unaudited Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		18
Item 4.	Controls and Procedures		18
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings		19
Item 1A.	Risk Factors		19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3.	Defaults Upon Senior Securities		19
Item 4.	Submission of Matters to a Vote of Security Holders		20
Item 5.	Other Information		20
Item 6.	Exhibits		21
SIGNATURES			23

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LIFE TIME FITNESS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	June 30,			December 31,
	2008			2007
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,674		$	5,354
Accounts receivable, net		3,800			4,475
Inventories		14,198			14,324
Prepaid expenses and other current assets		18,506			15,963
Deferred membership origination costs		18,289			16,205
Deferred income taxes		1,352			1,188
Income tax receivable		—			5,814
Total current assets		59,819			63,323
PROPERTY AND EQUIPMENT, net		1,494,787			1,259,271
RESTRICTED CASH		9,001			6,767
DEFERRED MEMBERSHIP ORIGINATION COSTS		15,658			14,367
OTHER ASSETS		54,639			42,805
TOTAL ASSETS	$	1,633,904		$	1,386,533
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	9,953		$	9,568
Accounts payable		14,377			12,872
Construction accounts payable		76,665			59,261
Accrued expenses		56,814			47,052
Deferred revenue		41,190			34,851
Total current liabilities		198,999			163,604
LONG-TERM DEBT, net of current portion		712,800			555,037
DEFERRED RENT LIABILITY		26,429			25,526
DEFERRED INCOME TAXES		46,538			38,607
DEFERRED REVENUE		17,777			17,529
OTHER LIABILITIES		16,076			13,673
Total liabilities		1,018,619			813,976
COMMITMENTS AND CONTINGENCIES (Note 6)
SHAREHOLDERS’ EQUITY:
Undesignated preferred stock, 10,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $.02 par value, 50,000,000 shares authorized; 39,604,782 and 39,137,947 shares issued and outstanding, respectively		792			783
Additional paid-in capital		379,705			373,910
Retained earnings		237,122			199,890
Accumulated other comprehensive loss		(2,334	)		(2,026	)
Total shareholders’ equity		615,285			572,557
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,633,904		$	1,386,533

See notes to unaudited consolidated financial statements.

3

LIFE TIME FITNESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
REVENUE:
Membership dues	$	126,121		$	106,667		$	245,769		$	207,195
Enrollment fees		6,640			6,378			13,173			12,064
In-center revenue		55,969			45,891			111,234			89,788
Total center revenue		188,730			158,936			370,176			309,047
Other revenue		3,677			3,201			6,682			6,191
Total revenue		192,407			162,137			376,858			315,238
OPERATING EXPENSES:
Center operations		113,259			94,035			220,839			183,527
Advertising and marketing		6,823			5,439			16,321			12,808
General and administrative		10,582			10,693			21,254			21,181
Other operating		4,675			3,792			8,770			7,116
Depreciation and amortization		17,190			14,678			33,780			28,365
Total operating expenses		152,529			128,637			300,964			252,997
Income from operations		39,878			33,500			75,894			62,241
OTHER INCOME (EXPENSE):
Interest expense, net of interest income of $17, $111, $88 and $155, respectively		(6,905	)		(6,369	)		(14,116	)		(11,897	)
Equity in earnings of affiliate		326			285			649			601
Total other income (expense)		(6,579	)		(6,084	)		(13,467	)		(11,296	)
INCOME BEFORE INCOME TAXES		33,299			27,416			62,427			50,945
PROVISION FOR INCOME TAXES		13,471			10,931			25,195			20,326
NET INCOME	$	19,828		$	16,485		$	37,232		$	30,619
BASIC EARNINGS PER COMMON SHARE	$	0.51		$	0.45		$	0.96		$	0.83
DILUTED EARNINGS PER COMMON SHARE	$	0.50		$	0.44		$	0.95		$	0.82
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC		38,963			36,864			38,923			36,747
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED		39,325			37,498			39,372			37,359

See notes to unaudited consolidated financial statements.

4

LIFE TIME FITNESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Six Months Ended
	June 30,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	37,232		$	30,619
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		33,780			28,365
Deferred income taxes		8,874			2,474
Provision for doubtful accounts		27			46
Loss on disposal of property and equipment, net		1,335			164
Amortization of deferred financing costs		571			405
Share-based compensation		3,895			3,816
Excess tax benefit from stock option exercises		(5	)		(3,838	)
Equity in earnings of affiliate		(654	)		(601	)
Changes in operating assets and liabilities		20,555			4,692
Other		50			35
Net cash provided by operating activities		105,660			66,177
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (excluding non-cash purchases supplementally noted below)		(235,577	)		(200,446	)
Proceeds from sale of property and equipment		365			48
Proceeds from property insurance settlements		270			48
Increase in other assets		(12,140	)		(9,555	)
Increase in restricted cash		(2,234	)		(1,011	)
Net cash used in investing activities		(249,316	)		(210,916	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings		38,538			105,000
Repayments of long-term borrowings		(10,588	)		(6,147	)
Proceeds from revolving credit facility, net		116,200			40,000
Increase in deferred financing costs		(3,641	)		(1,896	)
Excess tax benefit from stock option exercises		5			3,838
Proceeds from stock option exercises		1,462			5,327
Net cash provided by financing activities		141,976			146,122
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(1,680	)		1,383
CASH AND CASH EQUIVALENTS — Beginning of period		5,354			6,880
CASH AND CASH EQUIVALENTS — End of period	$	3,674		$	8,263
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest, net of capitalized interest of $4,652 and $3,773, respectively	$	13,341		$	11,341
Cash payments for income taxes	$	3,855		$	16,924
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Purchase of property financed through capital lease obligation	$	12,121		$	—
Purchases of property and equipment in accounts payable	$	17,999		$	3,671
Non-cash share-based compensation capitalized to projects under development	$	443		$	338

See notes to unaudited consolidated financial statements.

5

LIFE TIME FITNESS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Table amounts in thousands, except share and per share data)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations and cash flows for the periods have been included.

These interim consolidated financial statements and the related notes should be read in conjunction with the annual consolidated financial statements and notes included in the latest Form 10-K, as filed with the Securities and Exchange Commission (“SEC”), which includes audited consolidated financial statements for the three fiscal years ended December 31, 2007.

2. Share-Based Compensation

We have four share-based compensation plans, the FCA, Ltd. 1996 Stock Option Plan (the “1996 Plan”), the Life Time Fitness, Inc. 1998 Stock Option Plan (the “1998 Plan”), the Amended and Restated Life Time Fitness, Inc. 2004 Long-Term Incentive Plan (the “2004 Plan”) and an Employee Stock Purchase Plan (the “ESPP”), collectively, the share-based compensation plans. In connection with approval for the 2004 Plan, our Board of Directors approved a resolution to cease making additional grants under the 1996 Plan and the 1998 Plan. The types of awards that may be granted under the 2004 Plan include incentive and non-qualified options to purchase shares of common stock, stock appreciation rights, restricted shares, restricted share units, performance awards and other types of share-based awards. As of June 30, 2008, we had granted a total of 5,587,165 options to purchase common stock under all of the share-based compensation plans, of which options to purchase 1,126,333 shares were outstanding, and a total of 794,503 restricted shares were granted, of which 617,323 restricted shares were outstanding and unvested. We use the term “restricted shares” to define nonvested shares granted to employees and non-employee directors, whereas Statement of Financial Accounting Standards No. 123, “Share-Based Payment” (“SFAS 123(R)”) reserves that term for fully vested and outstanding shares whose sale is contractually or governmentally prohibited for a specified period of time.

Total share-based compensation expense included in our consolidated statements of operations for the three and six months ended June 30, 2008 and 2007, was as follows:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2008		2007		2008		2007
Share-based compensation expense related to stock options	$	617	$	771	$	1,319	$	1,701
Share-based compensation expense related to restricted shares		1,458		1,195		2,508		2,054
Share-based compensation expense related to ESPP		38		32		68		61
Total share-based compensation expense	$	2,113	$	1,998	$	3,895	$	3,816

6

LIFE TIME FITNESS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Table amounts in thousands, except share and per share data)

The following table summarizes the stock option transactions for the six months ended June 30, 2008:

						Weighted
						Average
				Weighted-		Remaining
				Average		Contractual		Aggregate
	Stock			Exercise		Term (in		Intrinsic
	Options			Price		years)		Value
Outstanding at December 31, 2007		1,208,267		$	21.17
Granted		—			—
Exercised		(79,170	)	$	18.59
Canceled		(2,764	)	$	27.65
Outstanding at June 30, 2008		1,126,333		$	21.34		6.0	$	9,245
Vested or Expected to Vest at June 30, 2008		1,099,246		$	21.18		6.0	$	9,196
Exercisable at June 30, 2008		841,209		$	19.17		5.8	$	8,728

No options were granted during the six months ended June 30, 2008. The weighted average grant date fair value of stock options granted during the six months ended June 30, 2007 was $20.35. The aggregate intrinsic value of options (the amount by which the market price of the stock on the date of exercise exceeded the exercise price of the option) exercised during the six months ended June 30, 2008 and 2007 was $1.5 million and $12.1 million, respectively. As of June 30, 2008, there was $2.6 million of unrecognized compensation expense related to stock options that is expected to be recognized over a weighted average period of 0.9 years.

The fair value of each stock option was estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted average assumptions used: ⁽¹⁾

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2008		2007		2008		2007
Risk-free interest rate (2)		—		—		—		4.7	%
Expected dividend yield		—		—		—		—
Expected life in years (3)		—		—		—		5
Volatility (3)		—		—		—		36.9	%

(1)	Forfeitures are estimated based on historical experience and projected employee turnover.
(2)	Based on the five-year Treasury constant maturity interest rate with the term that is consistent with the expected life of our stock options.
(3)	We estimate the expected life and volatility of stock options based on an average of the expected lives and volatilities reported by a peer group of publicly traded companies.

Net cash proceeds from the exercise of stock options were $1.5 million and $5.3 million for the six months ended June 30, 2008, and 2007, respectively. The actual income tax benefit realized from stock option exercises totals less than $0.1 million and $3.8 million, respectively, for those same periods.

7

LIFE TIME FITNESS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Table amounts in thousands, except share and per share data)

The following table summarizes the restricted shares activity for the six months ended June 30, 2008:

				Range of
				Market Price
	Restricted			Per Share on
	Shares			Grant Date
Outstanding at December 31, 2007		302,345		$	24.75-53.95
Granted		388,675			26.46-35.77
Canceled		(1,010	)		26.46-51.15
Vested		(72,687	)		24.75-53.95
Outstanding at June 30, 2008		617,323		$	26.46-53.95

During the six months ended June 30, 2008 and 2007, we issued 388,675 and 145,876 shares of restricted stock, respectively, with an aggregate fair value of $10.6 million and $7.2 million, respectively. The grant date fair market value of restricted shares that vested during the six months ended June 30, 2008 was $3.1 million. The total value of each restricted stock grant, based on the fair market value of the stock on the date of grant, is amortized to compensation expense on a straight-line basis over the related vesting period.

Our ESPP provides for the sale of our common stock to our employees at discounted purchase prices. The cost per share under this plan is 90% of the fair market value of our common stock on the last day of the purchase period, as defined. The current purchase period under the ESPP began July 1, 2008 and ends December 31, 2008. Compensation expense under the ESPP is estimated based on the discount of 10% at the end of the purchase period.

In June 2006, our Board of Directors authorized the repurchase of 500,000 shares of our common stock from time to time in the open market or otherwise for the primary purpose of offsetting the dilutive effect of shares pursuant to our ESPP. During the six months of 2008, we repurchased 35,743 shares for approximately $1.3 million. As of June 30, 2008, there were 443,122 remaining shares authorized to be repurchased for this purpose. The shares repurchased to date have been purchased in the open market and, upon repurchase, became authorized, but unissued shares of our common stock.

3. Earnings per Share

Basic earnings per common share (“EPS”) is computed by dividing net income applicable to common shareholders by the weighted average number of shares of common stock outstanding for each period. Diluted EPS is computed based on the weighted-average number of common shares and common equivalent shares. Common equivalent shares represent the effect of stock options and restricted stock awards during each period presented, which if exercised, would dilute EPS. Stock options excluded from the calculation of diluted EPS because the option exercise was greater than the average market price of the common share were 83,851 and 0 for the six months ended June 30, 2008 and 2007, respectively.

The basic and diluted earnings per share calculations are shown below:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2008		2007		2008		2007
Net income	$	19,828	$	16,485	$	37,232	$	30,619
Weighted average number of common shares outstanding — basic		38,963		36,864		38,923		36,747
Effect of dilutive stock options		264		522		274		507
Effect of dilutive restricted stock awards		98		112		175		105
Weighted average number of common shares outstanding — diluted		39,325		37,498		39,372		37,359
Basic earnings per common share	$	0.51	$	0.45	$	0.96	$	0.83
Diluted earnings per common share	$	0.50	$	0.44	$	0.95	$	0.82

8

LIFE TIME FITNESS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Table amounts in thousands, except share and per share data)

4. Operating Segments

Our operations are conducted mainly through our distinctive and large, multi-use sports and athletic, professional fitness, family recreation and resort and spa centers. We aggregate the activities of our centers and other ancillary businesses into one reportable segment as none of the centers or other ancillary businesses meet the quantitative thresholds for separate disclosure under SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” Each of the centers has similar expected economic characteristics, service and product offerings, customers and design. Each of the other ancillary businesses either directly or indirectly, through advertising or branding, compliment the operations of the centers. Our chief operating decision maker uses EBITDA as the primary measure of operating segment performance.

The following table presents revenue for the three and six months ended June 30, 2008 and 2007:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,
	2008		2007		2008		2007
Membership dues	$	126,121	$	106,667	$	245,769	$	207,195
Enrollment fees		6,640		6,378		13,173		12,064
Personal training		26,568		20,890		55,149		42,776
Other in-center		29,401		25,001		56,085		47,012
Other		3,677		3,201		6,682		6,191
Total revenue	$	192,407	$	162,137	$	376,858	$	315,238

5. Supplementary Cash Flow Information

Decreases (increases) in operating assets and increases (decreases) in operating liabilities are as follows:

	For the Six Months
	Ended June 30,
	2008			2007
Accounts receivable	$	648		$	(963	)
Income tax receivable		5,819			3,935
Inventories		126			(3,876	)
Prepaid expenses and other current assets		(1,981	)		(3,050	)
Deferred membership origination costs		(3,375	)		(4,792	)
Accounts payable		861			4,499
Accrued expenses		10,684			312
Deferred revenue		6,598			8,465
Deferred rent		903			(110	)
Other liabilities		272			272
Changes in operating assets and liabilities	$	20,555		$	4,692

6. Commitments and Contingencies

Litigation — We are engaged in legal proceedings incidental to the normal course of business. Due to their nature, such legal proceedings involve inherent uncertainties, including but not limited to, court rulings, negotiations between affected parties and governmental intervention. We have established reserves for matters that are probable and estimable in amounts we believe are adequate to cover reasonable adverse judgments not covered by insurance. Based upon the information available to us and discussions with legal counsel, it is our opinion that the outcome of the various legal actions and claims that are incidental to our business will not have a material adverse impact on the consolidated financial position, results of operations or cash flows; however, such matters are subject to many uncertainties, and the outcome of individual matters are not predictable with assurance.

9

LIFE TIME FITNESS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Table amounts in thousands, except share and per share data)

7. New Accounting Pronouncements

In September 2006, the FASB issued Statement SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). This accounting standard defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements with certain exceptions. SFAS 157 was effective for us January 1, 2008. The adoption of SFAS 157 did not have a material effect on our financial position or results of operations.

In December 2007, the FASB issued a revision of SFAS No. 141, “Business Combinations” (“SFAS 141(R)”). This accounting standard requires an acquirer to recognize and measure the assets acquired, liabilities assumed and any noncontrolling interests in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exception. In addition, SFAS 141(R) requires that acquisition-related costs will be generally expensed as incurred. SFAS 141(R) also expands the disclosure requirements for business combinations. SFAS 141(R) will be effective for us on January 1, 2009. We are currently evaluating the effects of the adoption of SFAS 141(R).

In March 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities — an amendment of SFAS No. 133” (“SFAS 161”). SFAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities including how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS 161 will be effective for us on January 1, 2009. We are currently evaluating the effects of the adoption of SFAS 161.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles (GAAP)” (“SFAS 162”), which establishes the GAAP hierarchy, identifying the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements. SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. We are currently evaluating the impact of the adoption of SFAS 162.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion may contain forward-looking statements regarding us and our business, prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause our actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2007. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may subsequently arise. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that advise interested parties of the risks and factors that may affect our business.

The interim consolidated financial statements filed on this Form 10-Q and the discussions contained herein should be read in conjunction with the annual consolidated financial statements and notes included in the latest Form 10-K, as filed with the SEC, which includes audited consolidated financial statements for the three fiscal years ended December 31, 2007.

10

Overview

We operate distinctive and large, multi-use sports and athletic, professional fitness, family recreation and resort and spa centers under the LIFE TIME FITNESS® brand. We design, develop and operate our own centers and we focus on providing our members and customers with products and services at a high quality and compelling value in the areas of education, exercise and nutrition.

We compare the results of our centers based on how long the centers have been open at the most recent measurement period. We include a center for comparable center revenue purposes beginning on the first day of the thirteenth full calendar month of the center’s operation, prior to which time we refer to the center as a new center. We include an acquired center for comparable center revenue purposes beginning on the first day of the thirteenth full calendar month after we assumed the center’s operations. As we grow our presence in existing markets by opening new centers, we expect to attract some memberships away from our other existing centers already in those markets, reducing revenue and initially lowering the memberships of those existing centers. In addition, as a result of new center openings in existing markets, and because older centers will represent an increasing proportion of our center base over time, our comparable center revenue may be lower in future periods than in the past. Of the eleven new centers we plan to open in 2008, we expect that eight will be in existing markets. We do not expect that operating costs of our planned new centers will be significantly higher than centers opened in the past, and we also do not expect that the planned increase in the number of centers will have a material adverse effect on the overall financial condition or results of operations of existing centers. Another result of opening new centers, as well as the assumption of operations of seven leased facilities in 2006 and the assumption of operations of one leased facility in 2007, is that our center operating margins may be lower than they have been historically while the centers build membership base. We expect both the addition of pre-opening expenses and the lower revenue volumes characteristic of newly-opened centers, as well as the facility costs for the eight leased centers and the lease costs for facilities which we financed through a sale leaseback transaction, to affect our center operating margins at these centers and on a consolidated basis. Our categories of new centers and existing centers do not include the center owned by Bloomingdale LIFE TIME Fitness, L.L.C. because it is accounted for as an investment in an unconsolidated affiliate and is not consolidated in our financial statements.

We measure performance using such key operating statistics as average revenue per membership, including membership dues and enrollment fees, average in-center revenue per membership and center operating expenses, with an emphasis on payroll and occupancy costs, as a percentage of sales and comparable center revenue growth. We use center revenue and EBITDA margins to evaluate overall performance and profitability on an individual center basis. In addition, we focus on several membership statistics on a center-level and system-wide basis. These metrics include growth of center membership levels and growth of system-wide memberships, percentage center membership to target capacity, center membership usage, center membership mix among individual, couple and family memberships and center attrition rates.

We have three primary sources of revenue. First, our largest source of revenue is membership dues (65.2% of total revenue for the six months ended June 30, 2008) and enrollment fees (3.5% of total revenue for the six months ended June 30, 2008) paid by our members. We recognize revenue from monthly membership dues in the month to which they pertain. We recognize revenue from enrollment fees over the expected average life of the membership, which we estimate to be 33 months for the second quarter of 2008 and 36 months for the first quarter of 2008 and prior periods. Second, we generate revenue within a center, which we refer to as in-center revenue, or in-center businesses (29.5% of total revenue for the six months ended June 30, 2008), including fees for personal training, dieticians, group fitness training and other member activities, sales of products at our LifeCafe, sales of products and services offered at our LifeSpa, tennis programs and renting space in certain of our centers. And third, we have expanded the LIFE TIME FITNESS brand into other wellness-related offerings that generate revenue, which we refer to as other revenue, or corporate businesses (1.8% of total revenue for the six months ended June 30, 2008), including our media, wellness and athletic events businesses. Our primary media offering is our magazine, Experience Life. Other revenue also includes two restaurants in the Minneapolis market and rental income on our Highland Park, Minnesota office building.

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Center operations expenses consist primarily of salary, commissions, payroll taxes, benefits, real estate taxes and other occupancy costs, utilities, repairs and maintenance, supplies, administrative support and communications to operate our centers. Advertising and marketing expenses consist of our marketing department costs and media and advertising costs to support center membership levels, in-center businesses and our corporate businesses. General and administrative expenses include costs relating to our centralized support functions, such as accounting, information systems, procurement, real estate and development and member relations. Our other operating expenses include the costs associated with our media, athletic events and nutritional product businesses, two restaurants and other corporate expenses, as well as gains or losses on our dispositions of assets. Our total operating expenses may vary from period to period depending on the number of new centers opened during that period, the number of centers engaged in presale activities and the performance of the in-center businesses.

Our primary capital expenditures relate to the construction of new centers and updating and maintaining our existing centers. The land acquisition, construction and equipment costs for a current model center since inception in 2000, has ranged from approximately $18 to $39 million, and can vary considerably based on variability in land cost and the cost of construction labor, as well as whether or not a tennis area is included or whether or not we expand the gymnasium or add other facilities. The average cost for the current model centers opened in 2007 was approximately $31 million. We expect the average cost of new centers constructed in 2008 to be approximately $35 million, reflecting location costs and the new 3-story centers set to open. We perform maintenance and make improvements on our centers and equipment throughout each year. We conduct a more thorough remodeling project at each center approximately every four to six years.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S., or GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Ultimate results could differ from those estimates. In recording transactions and balances resulting from business operations, we use estimates based on the best information available. We use estimates for such items as depreciable lives, volatility factors, expected lives and rate of return in determining fair value of option grants, tax provisions and provisions for uncollectible receivables. We also use estimates for calculating the amortization period for deferred enrollment fee revenue and associated direct costs, which are based on the historical average expected life of center memberships. We revise the recorded estimates when better information is available, facts change or we can determine actual amounts. These revisions can affect operating results.

Our critical accounting policies and use of estimates are discussed in and should be read in conjunction with the annual consolidated financial statements and notes included in the latest Form 10-K, as filed with the SEC, which includes audited consolidated financial statements for our three fiscal years ended December 31, 2007.

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Results of Operations

The following table sets forth our statement of operations data as a percentage of total revenue and also sets forth other financial and operating data:

	For the Three						For the Six
	Months Ended						Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Revenue
Center revenue
Membership dues		65.5	%		65.8	%		65.2	%		65.7	%
Enrollment fees		3.5			3.9			3.5			3.8
In-center revenue		29.1			28.3			29.5			28.5
Total center revenue		98.1			98.0			98.2			98.0
Other revenue		1.9			2.0			1.8			2.0
Total revenue		100.0			100.0			100.0			100.0
Operating expenses
Center operations		58.9			58.0			58.6			58.2
Advertising and marketing		3.5			3.4			4.3			4.1
General and administrative		5.5			6.6			5.7			6.7
Other operating		2.4			2.3			2.3			2.3
Depreciation and amortization		9.0			9.0			9.0			9.0
Total operating expenses		79.3			79.3			79.9			80.3
Income from operations		20.7			20.7			20.1			19.7
Other income (expense)
Interest expense, net		(3.6	)		(4.0	)		(3.7	)		(3.8	)
Equity in earnings of affiliate		0.2			0.2			0.2			0.2
Total other income (expense)		(3.4	)		(3.8	)		(3.5	)		(3.6	)
Income before income taxes		17.3			16.9			16.6			16.1
Provision for income taxes		7.0			6.7			6.7			6.4
Net income		10.3	%		10.2	%		9.9	%		9.7	%
Other financial and operating data
Average center revenue per membership	$	361		$	338		$	724		$	672
Average in-center revenue per membership	$	107		$	98		$	218		$	195
Centers open at end of period		74			64			74			64
Number of memberships at end of period		547,497			489,489			547,497			489,489
Total center square footage at end of period (1)		7,298,299			6,251,727			7,298,299			6,251,727

(1) The square footage presented in this table reflects fitness square footage which is the best metric for the efficiencies of a facility. We exclude outdoor pool, outdoor play areas, indoor/outdoor tennis elements and satellite facility square footage.

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Three Months Ended June 30, 2008, Compared to Three Months Ended June 30, 2007

Total revenue. Total revenue increased $30.3 million, or 18.7%, to $192.4 million for the three months ended June 30, 2008, from $162.1 million for the three months ended June 30, 2007.

Total center revenue grew $29.8 million, or 18.7%, to $188.7 million for the three months ended June 30, 2008, from $158.9 million for the three months ended June 30, 2007. Comparable center revenue increased 3.3% for the three months ended June 30, 2008 compared to the three months ended June 30, 2007. Of the $29.8 million increase in total center revenue,

• 65.3% was from membership dues, which increased $19.5 million, or 18.2%, due to increased memberships at new centers, junior membership programs and increased sales of value-added memberships. Our number of memberships increased 11.9% to 547,497 at June 30, 2008 from 489,489 at June 30, 2007. The membership growth of 11.9% was down from membership growth of 24.5% from June 30, 2007 over June 30, 2006, primarily due to our anniversary of the acquisition of seven leased centers in July 2006, our strategy to reduce memberships in centers where memberships exceed our target capacity and the effects of a slower economy in the fourth quarter of 2007 and the first half of 2008.

• 33.8% was from in-center revenue, which increased $10.1 million primarily as a result of our members’ increased use of our personal training, member activities, LifeCafe and LifeSpa products and services. As a result of this in-center revenue growth and our focus on broadening our offerings to our members, average in-center revenue per membership increased from $98 for the three months ended June 30, 2007 to $107 for the three months ended June 30, 2008.

• 0.9% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line basis over 33 months for the second quarter of 2008 and 36 months for the first quarter of 2008 and prior periods. Enrollment fees increased $0.2 million for the three months ended June 30, 2008 to $6.6 million.

Other revenue increased $0.5 million, or 14.9%, to $3.7 million for the three months ended June 30, 2008, which was primarily due to increased advertising revenue from our media business.

Center operations expenses. Center operations expenses totaled $113.3 million, or 60.0% of total center revenue (or 58.9% of total revenue), for the three months ended June 30, 2008 compared to $94.0 million, or 59.2% of total center revenue (or 58.0% of total revenue), for the three months ended June 30, 2007. This $19.3 million increase primarily consisted of $10.9 million in additional payroll-related costs to support increased memberships at new centers, an increase of $4.7 million in facility-related costs, including utilities and real estate taxes and an increase in expenses to support in-center products and services, and increases in new membership acquisition costs.

Advertising and marketing expenses. Advertising and marketing expenses were $6.8 million, or 3.5% of total revenue, for the three months ended June 30, 2008, compared to $5.4 million, or 3.4% of total revenue, for the three months ended June 30, 2007. These expenses increased primarily due to broader advertising for existing and new centers and those centers engaging in presale activities.

General and administrative expenses. General and administrative expenses were $10.6 million, or 5.5% of total revenue, for the three months ended June 30, 2008, compared to $10.7 million, or 6.6% of total revenue, for the three months ended June 30, 2007. This $0.1 million decrease was primarily due to increased efficiencies and productivity improvements, as well as the elimination of lease costs for our former corporate office.

Other operating expenses. Other operating expenses were $4.7 million for the three months ended June 30, 2008, compared to $3.8 million for the three months ended June 30, 2007. This increase is primarily a result of losses on the disposition of property and equipment.

Depreciation and amortization. Depreciation and amortization was $17.2 million for the three months ended June 30, 2008, compared to $14.7 million for the three months ended June 30, 2007. This $2.5 million increase was due primarily to depreciation on our new centers and new headquarters opened in 2007 and the first half of 2008.

Interest expense, net. Interest expense, net of interest income, was $6.9 million for the three months ended June 30, 2008, compared to $6.4 million for the three months ended June 30, 2007. This $0.5 million increase was primarily the result of increased average debt balances on floating rate debt.

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Provision for income taxes. The provision for income taxes was $13.5 million for the three months ended June 30, 2008, compared to $10.9 million for the three months ended June 30, 2007. This $2.6 million increase was due to an increase in income before income taxes of $5.9 million.

Net income. As a result of the factors described above, net income was $19.8 million, or 10.3% of total revenue, for the three months ended June 30, 2008, compared to $16.5 million, or 10.2% of total revenue, for the three months ended June 30, 2007.

Six Months Ended June 30, 2008, Compared to Six Months Ended June 30, 2007

Total revenue. Total revenue increased $61.7 million, or 19.5%, to $376.9 million for the six months ended June 30, 2008, from $315.2 million for the six months ended June 30, 2007.

Total center revenue grew $61.2 million, or 19.8%, to $370.2 million for the six months ended June 30, 2008, from $309.0 million for the six months ended June 30, 2007. Comparable center revenue increased 3.8% for the six months ended June 30, 2008 compared to the six months ended June 30, 2007. Of the $61.2 million increase in total center revenue,

• 63.1% was from membership dues, which increased $38.6 million, or 18.6%, due to increased memberships at new centers, junior membership programs and increased sales of value-added memberships. Our number of memberships increased 11.9% to 547,497 at June 30, 2008 from 489,489 at June 30, 2007. The membership growth of 11.9% was down from membership growth of 24.5% from June 30, 2007 over June 30, 2006, primarily due to our anniversary of the acquisition of seven leased centers in July 2006, our strategy to reduce memberships in centers where memberships exceed our target capacity and the effects of a slower economy in the fourth quarter of 2007 and the first half of 2008.

• 35.1% was from in-center revenue, which increased $21.4 million primarily as a result of our members’ increased use of our personal training, member activities, LifeCafe and LifeSpa products and services. As a result of this in-center revenue growth and our focus on broadening our offerings to our members, average in-center revenue per membership increased from $195 for the six months ended June 30, 2007 to $218 for the six months ended June 30, 2008.

• 1.8% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line basis over 33 months for the second quarter of 2008 and 36 months for the first quarter of 2008 and prior periods. Enrollment fees increased $1.1 million for the six months ended June 30, 2008 to $13.2 million.

Other revenue increased $0.5 million, or 7.9%, to $6.7 million for the six months ended June 30, 2008, which was primarily due to increased advertising revenue from our media business.

Center operations expenses. Center operations expenses totaled $220.8 million, or 59.7% of total center revenue (or 58.6% of total revenue), for the six months ended June 30, 2008 compared to $183.5 million, or 59.4% of total center revenue (or 58.2% of total revenue), for the six months ended June 30, 2007. This $37.3 million increase primarily consisted of $20.5 million in additional payroll-related costs to support increased memberships at new centers, an increase of $8.8 million in facility-related costs, including utilities and real estate taxes and an increase in expenses to support in-center products and services. As a percent of total center revenue, center operations expense increased slightly due to increased new membership acquisition costs.

Advertising and marketing expenses. Advertising and marketing expenses were $16.3 million, or 4.3% of total revenue, for the six months ended June 30, 2008, compared to $12.8 million, or 4.1% of total revenue, for the six months ended June 30, 2007. These expenses increased primarily due to broader advertising for existing and new centers and those centers engaging in presale activities.

General and administrative expenses. General and administrative expenses were $21.3 million, or 5.7% of total revenue, for the six months ended June 30, 2008, compared to $21.2 million, or 6.7% of total revenue, for the six months ended June 30, 2007. As a percent of total center revenue, general and administrative expenses decreased primarily due to increased efficiencies and productivity improvements, as well as the elimination of lease costs for our former corporate office.

Other operating expenses. Other operating expenses were $8.8 million for the six months ended June 30, 2008, compared to $7.1 million for the six months ended June 30, 2007. This increase is primarily a result of losses on the disposition of property and equipment.

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Depreciation and amortization. Depreciation and amortization was $33.8 million for the six months ended June 30, 2008, compared to $28.4 million for the six months ended June 30, 2007. This $5.4 million increase was due primarily to depreciation on our new centers and new headquarters opened in 2007 and the first half of 2008.

Interest expense, net. Interest expense, net of interest income, was $14.1 million for the six months ended June 30, 2008, compared to $11.9 million for the six months ended June 30, 2007. This $2.2 million increase was primarily the result of increased average debt balances on floating rate debt.

Provision for income taxes. The provision for income taxes was $25.2 million for the six months ended June 30, 2008, compared to $20.3 million for the six months ended June 30, 2007. This $4.9 million increase was due to an increase in income before income taxes of $11.5 million.

Net income. As a result of the factors described above, net income was $37.2 million, or 9.9% of total revenue, for the six months ended June 30, 2008, compared to $30.6 million, or 9.7% of total revenue, for the six months ended June 30, 2007.

Liquidity and Capital Resources

Liquidity

Historically, we have satisfied our liquidity needs through various debt arrangements, sales of equity and cash provided by operations. Principal liquidity needs have included the development of new centers, debt service requirements and expenditures necessary to maintain and update our existing centers and their related fitness equipment. We believe that we can satisfy our current and longer-term debt service obligations and capital expenditure requirements with cash flow from operations, by the extension of the terms of or refinancing our existing debt facilities, through sale leaseback transactions and by continuing to raise long-term debt or equity capital, although there can be no assurance that such actions can or will be completed. Our business model operates with negative working capital because we carry minimal accounts receivable due to our ability to have monthly membership dues paid by electronic draft, we defer enrollment fee revenue and we fund the construction of our new centers under standard arrangements with our vendors that are paid with proceeds from long-term debt.

Operating Activities

As of June 30, 2008, we had total cash and cash equivalents of $3.7 million and $9.0 million of restricted cash that serves as collateral for certain of our debt arrangements. We also had $31.4 million available under the existing terms of our revolving credit facility as of June 30, 2008.

Net cash provided by operating activities was $105.7 million for the six months ended June 30, 2008 compared to $66.2 million for the six months ended June 30, 2007, driven primarily by a $6.6 million, or 21.6%, improvement in net income, an increase in depreciation expense of $5.4 million, an increase in deferred income taxes of $6.4 million and cash provided by changes in operating assets and liabilities.

Investing Activities

Investing activities consist primarily of purchasing real property, constructing new centers and purchasing new fitness equipment. In addition, we invest in capital expenditures to maintain and update our existing centers. We finance the purchase of our property and equipment by cash payments or by financing through notes payable or capital lease obligations. For current model centers, our investment, through June 30, 2008, has ranged from approximately $18 to $39 million, which includes the land, the building and approximately $3 million of exercise equipment, furniture and fixtures. We expect the average cost of new centers constructed in 2008 to be approximately $35 million, reflecting location costs and the new 3-story centers set to open.

Net cash used in investing activities was $249.3 million for the six months ended June 30, 2008, compared to $210.9 million for the six months ended June 30, 2007. The increase of $38.4 million was primarily due to capital expenditures for the construction of new centers and updates to our existing centers.

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Our capital expenditures were as follows (in thousands):

	For the Six Months
	Ended June 30,
	2008		2007
Cash purchases of property and equipment	$	235,577	$	200,446
Non-cash purchase of property financed through capital lease obligation		12,121		—
Non-cash purchases of property and equipment in accounts payable		17,999		3,671
Non-cash share-based compensation capitalized to projects under development		443		338
Total capital expenditures	$	266,140	$	204,455

The following schedule reflects capital expenditures by type of expenditure (in thousands):

	For the Six Months
	Ended June 30,
	2008		2007
New center land, building and construction on clubs opened or to be opened through the current year	$	136,081	$	111,969
New center land, building and construction on clubs to be opened in the next calendar year		60,372		65,175
Acquisitions, updating existing centers and corporate infrastructure		69,687		27,311
Total capital expenditures	$	266,140	$	204,455

At July 15, 2008, we had purchased or leased the real property for the 11 new centers that we plan to open in 2008, four of which had already opened. In addition, we had purchased the real property for seven and entered into a ground lease for one of the 11 current model centers we plan to open in 2009, and we had entered into agreements to purchase or lease real property for the development of three current model centers that we plan to open in 2009. Construction in progress, including land purchased for future development totaled $257.1 million at June 30, 2008 and $152.4 million at June 30, 2007.

We expect our net cash outlays for capital expenditures to be approximately $440 to $460 million for the year ending December 31, 2008, including approximately $205 to $225 million in the remaining six months of 2008. Of this approximately $205 to $225 million, we expect to incur approximately $190 to $210 million for new center construction and approximately $15 million for the updating of existing centers, net of leasehold improvement credit, and corporate infrastructure. We plan to fund these capital expenditures with cash from operations, our revolving credit facility and additional long-term financing including sale leaseback transactions.

Financing Activities

Net cash provided by financing activities was $142.0 million for the six months ended June 30, 2008, compared to $146.1 million for the six months ended June 30, 2007. The decrease of $4.1 million was primarily due to the $105.0 million financing received in January 2007.

On April 15, 2005, we entered into a Credit Agreement, with U.S. Bank National Association, as administrative agent and lead arranger, J.P. Morgan Securities, Inc., as syndication agent, and the banks party thereto from time to time (the “U.S. Bank Facility”). On May 31, 2007, we entered into a Second Amended and Restated Credit Agreement effective May 31, 2007 to amend and restate our U.S. Bank Facility. The material changes to the U.S. Bank Facility increase the amount of the facility from $300.0 million to $400.0 million, which may be increased by an additional $25.0 million upon the exercise of an accordion feature by us and one or more bank lenders, and extend the term of the facility by a little over one year to May 31, 2012. Interest on the amounts borrowed under the U.S. Bank Facility continues to be based on (i) a base rate, which is the greater of (a) U.S. Bank’s prime rate and (b) the federal funds rate plus 50 basis points, or (ii) an adjusted Eurodollar rate, plus, in either case (i) or (ii), the applicable margin within a range based on our consolidated leverage ratio. In connection with the amendment and restatement of the U.S. Bank Facility, the applicable margin ranges were reduced to zero at all times (from zero to 25 basis points) for base rate borrowings and decreased to 62.5 to 150 basis points (from 75 to 175 basis points) for Eurodollar borrowings.

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On January 24, 2008, we amended the facility to increase the amount of the accordion feature from $25.0 million to $200.0 million and increase the senior secured operating company leverage ratio from not more than 2.50 to 1.00 to not more than 3.25 to 1.00. The amendment also allows for the issuance of additional senior debt and sharing of related collateral with lenders other than the existing bank syndicate. On April 9, 2008, we exercised $21.0 million of the accordion feature with commitments from certain of our bank lenders, increasing the amount of the facility from $400.0 million to $421.0 million. On June 12, 2008, we exercised $49.0 million of the accordion feature with commitments from certain of our bank lenders, increasing the facility to $470.0 million. Under the terms of the amended credit facility, we may increase the total amount of the facility up to $600.0 million through further exercise of the accordion feature by us and one or more bank lenders. As of June 30, 2008, $429.0 million was outstanding on the U.S. Bank Facility, plus $9.6 million related to letters of credit.

The weighted average interest rate and debt outstanding under the revolving credit facility for the six months ended June 30, 2008 was 4.6% and $351.0 million, respectively. The weighted average interest rate and debt outstanding under the revolving credit facility for the six months ended June 30, 2007 was 6.7% and $194.2 million, respectively.

On July 13, 2008, a wholly owned subsidiary issued variable rate demand notes in the principal amount of $34.2 million, the proceeds of which will be used to provide permanent financing for our corporate headquarters and our Overland Park, Kansas center. The notes, which mature on July 1, 2033, bear interest at a variable rate that is adjusted weekly. Initially, this rate was 2.38%. The notes are backed by a letter of credit from General Electric Capital Corporation (GECC), for which we will pay GECC an annual fee of 1.40% of the maximum amount available under the letter of credit, as well as other drawing and reimbursement fees. In connection with the letter of credit, which expires June 1, 2023, the borrower subsidiary entered into a reimbursement agreement with GECC. The subsidiary’s obligations under the reimbursement agreement are secured by mortgages against the two aforementioned properties. We guaranteed the subsidiary’s obligations under the leases that will fund any reimbursement obligations.

We are in compliance in all material respects with all restrictive and financial covenants under our various credit facilities as of June 30, 2008.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We invest our excess cash in highly liquid short-term investments. These investments are not held for trading or other speculative purposes. Changes in interest rates affect the investment income we earn on our cash and cash equivalents and, therefore, impact our cash flows and results of operations. As of June 30, 2008 and December 31, 2007, our floating rate indebtedness was approximately $338.2 million and $187.8 million, respectively. If long-term floating interest rates were to have increased by 100 basis points during the six months ended June 30, 2008, our interest costs would have increased by approximately $1.2 million. If short-term interest rates were to have increased by 100 basis points during the six months ended June 30, 2008, our interest income from cash equivalents would have increased by less than $0.1 million. These amounts are determined by considering the impact of the hypothetical interest rates on our floating rate indebtedness and cash equivalents balances at June 30, 2008.

Item 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, the principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including the principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not applicable.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities in Second Quarter 2008

					Total Number of		Maximum Number of
	Total Number		Average		Shares Purchased as		Shares that May Yet be
	of Shares		Price Paid		Part of Publicly		Purchased Under the
Period	Purchased		per Share		Announced Plan (1)		Plan (1)
April 1 – 30, 2008		—		—		—		465,165
May 1 – 31, 2008		—		—		—		465,165
June 1 – 30, 2008		22,043	$	30.08		22,043		443,122
Total		22,043	$	30.08		22,043		443,122

(1) In June 2006, our Board of Directors authorized the repurchase of 500,000 shares of our common stock from time to time in the open market or otherwise for the primary purpose of offsetting the dilutive effect of shares issued pursuant to our Employee Stock Purchase Plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual Meeting of Shareholders held on April 24, 2008, the shareholders voted on the following:

1. Proposal to elect a board of seven directors, to serve until the next annual meeting of shareholders or until their successors have been duly elected and qualified. The following directors were elected based on the votes listed below:

Nominee	For		Withheld
Bahram Akradi		34,655,276		156,634
Giles H. Bateman		33,843,737		968,173
James F. Halpin		34,660,296		151,614
Guy C. Jackson		33,840,657		971,253
John B. Richards		34,630,514		181,396
Stephen R. Sefton		34,654,426		157,484
Joseph H. Vassalluzzo		34,625,260		186,650

2. Proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2008. The proposal passed on a vote of 34,643,831 in favor, 143,202 against, 24,877 abstentions and no broker non-votes.

3. Proposal to approve the Life Time Fitness, Inc. Executive Cash Bonus Plan. The proposal passed on a vote of 34,131,454 in favor, 607,088 against, 73,368 abstentions and no broker non-votes.

4. Proposal to approve the amendment and restatement of the Life Time Fitness, Inc. 2004 Long Term Incentive Plan. The proposal passed on a vote of 28,602,979 in favor, 734,348 against, 26,877 abstentions and 5,447,706 broker non-votes.

As of the close of business on the record date for the meeting, which was February 26, 2008, there were 38,874,037 shares of common stock outstanding and entitled to vote at the meeting. Each share of common stock was entitled to one vote per share.

ITEM 5. OTHER INFORMATION

Not applicable.

20

ITEM 6. EXHIBITS

     Exhibits filed with this report

Exhibit
No.	Description	Method of Filing
3.1	Amended and Restated Articles of Incorporation of the Registrant	Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-Q for the quarter ended June 30, 2004 (File No. 001-32230)
3.2	Amended and Restated Bylaws of the Registrant	Incorporated by reference to Exhibit 3.4 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113764), filed with the Commission on May 21, 2004
4	Specimen of Common Stock Certificate	Incorporated by reference to Exhibit 4 to Amendment No. 4 to the Registrant’s Registration Statement of Form S-1 (File No. 333-113764), filed with the Commission on June 23, 2004
10.1	Life Time Fitness, Inc. Executive Cash Bonus Plan	Incorporated by reference to Appendix A to the Registrant’s proxy statement for its 2008 Annual Meeting of Shareholders (File No. 001-32230), filed with the Commission on March 6, 2008
10.2	Amended and Restated Life Time Fitness, Inc. 2004 Long-Term Incentive Plan (effective as of April 24, 2008)	Incorporated by reference to Appendix B to the Registrant’s proxy statement for its 2008 Annual Meeting of Shareholders (File No. 001-32230), filed with the Commission on March 6, 2008
10.3	Summary of Non-Employee Director Compensation Package (effective April 24, 2008)	Filed Electronically
10.4	Indenture of Trust between LTF Real Estate VRDN I, LLC, as Borrower, and Manufacturers and Traders Trust Company, as Trustee for the LTF Real Estate VRDN I, LLC $34,235,000 Variable Rate Demand Notes, Series 2008, dated as of June 1, 2008	Filed Electronically
10.5	Reimbursement Agreement among General Electric Capital Corporation, GE Government Finance, Inc., and LTF Real Estate VRDN I, LLC for the LTF Real Estate VRDN I, LLC $34,235,000 Variable Rate Demand Notes, Series 2008, dated as of June 1, 2008	Filed Electronically
10.6	Lease Agreement between LTF Real Estate VRDN I, LLC and LTF Club Operations Company, Inc. dated as of June 13, 2008 (Chanhassen, MN – Headquarters)	Filed Electronically
10.7	Lease Agreement between LTF Real Estate VRDN I, LLC and LTF Club Operations Company, Inc. dated as of June 13, 2008 (Overland Park, KS)	Filed Electronically
10.8	Lease Guaranty and Negative Pledge Agreement dated as of June 1, 2008 by Life Time Fitness, Inc. in favor of LTF Real Estate VRDN I, LLC	Filed Electronically
10.9	Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of June 1, 2008 by LTF Real Estate VRDN I, LLC in favor of General Electric Capital Corporation (Chanhassen, MN)	Filed Electronically

21

Exhibit
No.	Description	Method of Filing
10.10	Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of June 1, 2008 by LTF Real Estate VRDN I, LLC in favor of General Electric Capital Corporation (Overland Park, KS)	Filed Electronically
10.11	Subordination, Attornment and Lessee-Lessor Estoppel Agreement dated as of June 1, 2008 by and among LTF Real Estate VRDN I, LLC, LTF Club Operations Company, Inc. and General Electric Capital Corporation (Chanhassen, MN)	Filed Electronically
10.12	Subordination, Attornment and Lessee-Lessor Estoppel Agreement dated as of June 1, 2008 by and among LTF Real Estate VRDN I, LLC, LTF Club Operations Company, Inc. and General Electric Capital Corporation (Overland Park, KS)	Filed Electronically
31.1	Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer	Filed Electronically
31.2	Rule 13a-14(a)/15d-14(a) Certification by Principal Financial Officer	Filed Electronically
32	Section 1350 Certifications	Filed Electronically

22

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, Life Time Fitness, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 1, 2008.

LIFE TIME FITNESS, INC.
By:	/s/ Bahram Akradi
	Name:	Bahram Akradi
	Title:	Chairman of the Board of Directors and Chief Executive Officer
	(Principal Executive Officer and Director)
By:	/s/ Michael R. Robinson
	Name:	Michael R. Robinson
	Title:	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)
By:	/s/ John M. Hugo
	Name:	John M. Hugo
	Title:	Vice President and Corporate Controller
	(Principal Accounting Officer)

23

INDEX TO EXHIBITS

Exhibit
No.	Description	Method of Filing
3.1	Amended and Restated Articles of Incorporation of the Registrant	Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 10-Q for the quarter ended June 30, 2004 (File No. 001-32230)
3.2	Amended and Restated Bylaws of the Registrant	Incorporated by reference to Exhibit 3.4 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113764), filed with the Commission on May 21, 2004
4	Specimen of Common Stock Certificate	Incorporated by reference to Exhibit 4 to Amendment No. 4 to the Registrant’s Registration Statement of Form S-1 (File No. 333-113764), filed with the Commission on June 23, 2004
10.1	Life Time Fitness, Inc. Executive Cash Bonus Plan	Incorporated by reference to Appendix A to the Registrant’s proxy statement for its 2008 Annual Meeting of Shareholders (File No. 001-32230), filed with the Commission on March 6, 2008
10.2	Amended and Restated Life Time Fitness, Inc. 2004 Long-Term Incentive Plan (effective as of April 24, 2008)	Incorporated by reference to Appendix B to the Registrant’s proxy statement for its 2008 Annual Meeting of Shareholders (File No. 001-32230), filed with the Commission on March 6, 2008
10.3	Summary of Non-Employee Director Compensation Package (effective April 24, 2008)	Filed Electronically
10.4	Indenture of Trust between LTF Real Estate VRDN I, LLC, as Borrower, and Manufacturers and Traders Trust Company, as Trustee for the LTF Real Estate VRDN I, LLC $34,235,000 Variable Rate Demand Notes, Series 2008, dated as of June 1, 2008	Filed Electronically
10.5	Reimbursement Agreement among General Electric Capital Corporation, GE Government Finance, Inc., and LTF Real Estate VRDN I, LLC for the LTF Real Estate VRDN I, LLC $34,235,000 Variable Rate Demand Notes, Series 2008, dated as of June 1, 2008	Filed Electronically
10.6	Lease Agreement between LTF Real Estate VRDN I, LLC and LTF Club Operations Company, Inc. dated as of June 13, 2008 (Chanhassen, MN – Headquarters)	Filed Electronically
10.7	Lease Agreement between LTF Real Estate VRDN I, LLC and LTF Club Operations Company, Inc. dated as of June 13, 2008 (Overland Park, KS)	Filed Electronically
10.8	Lease Guaranty and Negative Pledge Agreement dated as of June 1, 2008 by Life Time Fitness, Inc. in favor of LTF Real Estate VRDN I, LLC	Filed Electronically
10.9	Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of June 1, 2008 by LTF Real Estate VRDN I, LLC in favor of General Electric Capital Corporation (Chanhassen, MN)	Filed Electronically

24

Exhibit
No.	Description	Method of Filing
10.10	Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of June 1, 2008 by LTF Real Estate VRDN I, LLC in favor of General Electric Capital Corporation (Overland Park, KS)	Filed Electronically
10.11	Subordination, Attornment and Lessee-Lessor Estoppel Agreement dated as of June 1, 2008 by and among LTF Real Estate VRDN I, LLC, LTF Club Operations Company, Inc. and General Electric Capital Corporation (Chanhassen, MN)	Filed Electronically
10.12	Subordination, Attornment and Lessee-Lessor Estoppel Agreement dated as of June 1, 2008 by and among LTF Real Estate VRDN I, LLC, LTF Club Operations Company, Inc. and General Electric Capital Corporation (Overland Park, KS)	Filed Electronically
31.1	Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer	Filed Electronically
31.2	Rule 13a-14(a)/15d-14(a) Certification by Principal Financial Officer	Filed Electronically
32	Section 1350 Certifications	Filed Electronically

25

EX-10.3

Exhibit 10.3

Non-Employee Director Compensation Package
Effective April 24, 2008

Initial Compensation — Restricted Stock Grant

$100,000 of restricted stock based on fair market value at grant (that is, $100,000 divided by the closing price = the number of shares)

• Vesting ratably over a three-year period on each annual anniversary of the date of grant

• Date of grant is date of election to the Board or first day of the next open trading window if the date of election occurs during a closed-window period.

Annual Compensation

Stipend — $60,000

Audit Committee Chair and Compensation Committee Chair Fee — $15,000

Governance & Nominating Committee and Finance Committee Chair Fee — $10,000

Lead Director Fee— $25,000

Annual Restricted Stock Grant — $75,000 of stock (at time of grant), vesting ratably over a three-year period on each annual anniversary of the date of grant, issued annually on date of annual shareholders’ meeting or on the first day of next open trading window, in the event that the annual shareholders’ meeting occurs during a closed-window period.

Reimburse director for cost of purchasing a Life Time Fitness “family” Athletic membership

Terms

Restricted stock will be granted under the Life Time Fitness 2004 Long-Term Incentive Plan or such other equity compensation plan as in effect from time to time.

Stipend, Committee Chair and Lead Director fees to be paid in cash quarterly after the end of each calendar quarter, in arrears (pro-rated for any partial periods).

EX-10.4

Exhibit 10.4

INDENTURE OF TRUST

between

LTF REAL ESTATE VRDN I, LLC,

as Borrower,

and

MANUFACTURERS AND TRADERS TRUST COMPANY,

as Trustee

LTF REAL ESTATE VRDN I, LLC
$34,235,000 VARIABLE RATE DEMAND NOTES,
SERIES 2008

Dated as of June 1, 2008

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01.	Definitions	1
Section 1.02.	Content of Certificates and Opinions	9
Section 1.03.	Interpretation	10

ARTICLE II
THE NOTES

Section 2.01.	Authorization of Notes	10
Section 2.02.	Terms of the Notes	10
Section 2.03.	Interest on Notes	11
Section 2.04.	Conversion to Fixed Interest Rate	12
Section 2.05.	Execution of Notes	13
Section 2.06.	Transfer of Notes	14
Section 2.07.	Exchange of Notes	16
Section 2.08.	Note Registrar	16
Section 2.09.	Temporary Notes	16
Section 2.10.	Notes Mutilated, Lost, Destroyed or Stolen	16
Section 2.11.	Absolute and Unconditional Obligations	17
Section 2.12.	Book-Entry Only System	17
Section 2.13.	CUSIP Numbers	19

ARTICLE III
ISSUANCE OF NOTES; APPLICATION OF PROCEEDS

Section 3.01.	Issuance of the Notes	20
Section 3.02.	Establishment and Application of Note Fund	20

ARTICLE IV
REDEMPTION AND PURCHASE OF NOTES

Section 4.01.	Terms of Redemption	21
Section 4.02.	Selection of Notes for Redemption	22
Section 4.03.	Notice of Redemption	22
Section 4.04.	Partial Redemption of Notes	23
Section 4.05.	Effect of Redemption	23
Section 4.06.	Purchase of Notes by Tender Agent	24
Section 4.07.	Mandatory Tender of Notes	24

		Page
ARTICLE V REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.01.	Pledge and Assignment; Revenue Fund	25
Section 5.02.	Note Payments and Allocation	26
Section 5.03.	Priority of Moneys in Revenue Fund; Letter of Credit Account	27
Section 5.04.	Letter of Credit	29
Section 5.05.	Investment of Moneys	30
Section 5.06.	Additional Duties of Trustee	31
Section 5.07.	Alternate Credit Facility	32

ARTICLE VI
PARTICULAR REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 6.01.	Punctual Payment	32
Section 6.02.	Extension of Payment of Notes	32
Section 6.03.	Encumbrances	33
Section 6.04.	Accounting Records and Reports	33
Section 6.05.	Other Covenants	33
Section 6.06.	Further Assurances	33

ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF REGISTERED OWNERS

Section 7.01.	Events of Default; Acceleration; Waiver of Default	33
Section 7.02.	Institution of Legal Proceedings by Trustee	35
Section 7.03.	Application of Account Funds and Other Funds After Default	35
Section 7.04.	Trustee to Represent Registered Owners	36
Section 7.05.	Registered Owners’ Direction of Proceedings	37
Section 7.06.	Limitation on Registered Owners’ Right to Sue	37
Section 7.07.	Absolute Obligation of Borrower	37
Section 7.08.	Termination of Proceedings	38
Section 7.09.	Remedies Not Exclusive	38
Section 7.10.	No Waiver of Default	38
Section 7.11.	Consent to Defaults	38

ARTICLE VIII
TRUSTEE, THE REMARKETING AGENT AND TENDER AGENT

Section 8.01.	Duties, Immunities and Liabilities of Trustee	39
Section 8.02.	Merger or Consolidation	40

ii

		Page
Section 8.03.	Liability of Trustee	41
Section 8.04.	Right of Trustee to Rely on Documents	42
Section 8.05.	Preservation and Inspection of Documents	43
Section 8.06.	Compensation and Indemnification	43
Section 8.07.	Notice to Rating Agency	44
Section 8.08.	Qualifications of Remarketing Agent	44
Section 8.09.	Remarketing of Notes	44
Section 8.10.	Creation of Purchase Fund; Purchase of Notes Delivered to Tender Agent	46
Section 8.11.	Delivery of Notes	47
Section 8.12.	Delivery of Proceeds of Remarketing	48
Section 8.13.	No Purchases or Sales After Default	48
Section 8.14.	Qualifications of Tender Agent	48
Section 8.15.	Paying Agent	49
Section 8.16.	Several Capacities	49

ARTICLE IX
MODIFICATION OR AMENDMENT OF THIS INDENTURE

Section 9.01.	Amendments Permitted	49
Section 9.02.	Effect of Supplemental Indenture	50
Section 9.03.	Endorsement of Notes; Preparation of New Notes	51
Section 9.04.	Amendment of Particular Notes	51

ARTICLE X
DEFEASANCE

Section 10.01.	Discharge of Indenture	51
Section 10.02.	Discharge of Liability on Notes	52
Section 10.03.	Deposit of Money or Securities with Trustee	52
Section 10.04.	Payments After Discharge of Indenture	53

ARTICLE XI
MISCELLANEOUS

Section 11.01.	Successor Is Deemed Included in All References to Predecessor	54
Section 11.02.	Limitation of Rights to Parties and Registered Owners	54
Section 11.03.	Waiver of Notice	54
Section 11.04.	Severability of Invalid Provisions	54
Section 11.05.	Governing Law	54

iii

		Page
Section 11.06.	Notices	54
Section 11.07.	Evidence of Rights of Registered Owners	56
Section 11.08.	Disqualified Notes	57
Section 11.09.	Money Held for Particular Notes	57
Section 11.10.	Funds and Accounts	58
Section 11.11.	Execution in Several Counterparts	58
Section 11.12.	Actions Due on Saturdays, Sundays and Holidays	58
Section 11.13.	References to Credit Issuer	58
Section 11.14.	Usury	58
Section 11.15.	Waiver of Jury Trial	59
EXHIBIT A	FORM OF NOTE
EXHIBIT B	FORM OF PAYMENT REQUEST FORM

iv

INDENTURE OF TRUST

     THIS INDENTURE OF TRUST dated as of June 1, 2008 (this “Indenture”) between LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company (“Borrower”), and MANUFACTURERS AND TRADERS TRUST COMPANY, a New York state banking corporation with trust powers (“Trustee”).

W I T N E S S E T H:

     WHEREAS, Borrower proposes to issue the Notes (as hereinafter defined); and

     WHEREAS, in order to provide for the authentication and delivery of the Notes (as hereinafter defined), to establish and declare the terms and conditions upon which the Notes are to be issued and secured and to secure the payment of the principal and purchase price thereof and interest thereon, Borrower has authorized the execution and delivery of this Indenture; and

     WHEREAS, in order to further secure the payments of principal and purchase price of and interest on the Notes, Borrower has obtained and caused to be delivered to Trustee an irrevocable direct-pay letter of credit from General Electric Capital Corporation; and

     WHEREAS, all acts and proceedings required by law or necessary to make the Notes, when executed by Borrower and authenticated and delivered by Note Registrar (as hereinafter defined), the valid, binding and legal special obligations of Borrower, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Indenture has been in all respects duly authorized;

     NOW, THEREFORE, THIS INDENTURE WITNESSETH, that (a) in order to secure the payment of the principal and purchase price of and premium, if any, and interest on all Notes at any time issued and Outstanding (as hereinafter defined) under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Notes are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Notes by the Registered Owners (as hereinafter defined) thereof, (b) in order to secure on a subordinate basis Borrower’s obligations to Credit Issuer (as hereinafter defined) under the Reimbursement Agreement (as hereinafter defined) and (c) for other valuable consideration, the receipt whereof is hereby acknowledged, Borrower does hereby covenant and agree with Trustee, for the benefit of the respective Registered Owners from time to time of the Notes, as follows:

ARTICLE I

DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS

     Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Article shall, for all purposes of this Indenture and for the purpose of any certificate, opinion

or other document herein mentioned, have the meanings herein specified. Such definitions are equally applicable to both the singular and plural forms of any of the terms defined.

     “Accountant” means any firm of independent certified public accountants selected by Borrower and reasonably acceptable to Trustee and Credit Issuer.

     “Account Funds” has the meaning ascribed to such term in Section 5.01 hereof.

     “Act of Bankruptcy” means the entry of an order or decree by a court having jurisdiction in the matter for relief against Borrower or any Related Party in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of Borrower or any Related Party or of any substantial part of the property of Borrower or any Related Party, or ordering the winding up or liquidation of the affairs of Borrower or any Related Party; or the institution or commencement by or against Borrower or any Related Party of a voluntary or involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, provided, however, that in the event of an involuntary case such involuntary case or proceeding shall remain undismissed for a period of 60 days, or the consent by it to the entry of an order for relief against it in any involuntary case under any such law, or to the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other similar official) of Borrower or any Related Party or of any substantial part of the property of Borrower or any Related Party, or the making by Borrower or any Related Party of an assignment for the benefit of creditors, or the failure of it generally to pay its debts as they become due, or the admission by it in writing of such failure, or the taking of any action by Borrower or any Related Party in furtherance of any such action, or if a receiver of the business or of the property or assets of Borrower or any Related Party shall be appointed by any court, except a receiver appointed at the instance or request of Borrower or any Related Party.

     “Additional Payments” means all payments (other than Note Payments) required to be made by Borrower hereunder.

     “Alternate Credit Facility” means bond insurance or other similar credit enhancement facility meeting the requirements of Section 5.07 hereof.

     “Alternate Letter of Credit” means an alternate irrevocable letter of credit or similar credit facility issued by a commercial bank, savings institution or other financial institution or entity, the terms of which, other than the expiration date, shall in all material respects be the same as those of the initial Letter of Credit, delivered to Trustee pursuant to Section 5.04 hereof.

     “Authorized Denomination” means $100,000 or any multiple of $5,000 in excess of $100,000, or, if the Notes are converted into Notes bearing a Fixed Interest Rate, $5,000 and integral multiples thereof.

     “Authorized Representative” means with respect to Borrower, the person or persons at the time designated to act on behalf of Borrower by a written certificate signed by Borrower, furnished to Trustee and Credit Issuer containing the specimen signature of each such person.

2

     “Available Moneys” means moneys which are (a) continuously on deposit with Trustee in trust for a period of 124 days (or for a period of 367 days in the case of a Related Party) for the benefit of the Registered Owners in a separate and segregated account in which only Available Moneys are held and during and prior to which period no Act of Bankruptcy of Borrower or a Related Party occurs or (b) proceeds of (i) the Notes received contemporaneously with the issuance and sale of the Notes, (ii) a drawing under the Letter of Credit, (iii) any other moneys for which Trustee has received a written opinion of nationally recognized counsel experienced in bankruptcy matters and acceptable to Trustee to the effect that payment of such moneys to the Registered Owners would not constitute an avoidable preference under Section 547 of the United States Bankruptcy Code in the event Borrower or any Related Party were to become a debtor under the United States Bankruptcy Code, which opinion is acceptable to each rating agency then rating the Notes, or (iv) moneys derived from the investment of funds qualifying as Available Moneys under the foregoing clauses.

     “Beneficial Owner” means generally any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Notes and with respect to Notes held by DTC, those individuals, partnerships, corporations or other entities for whom the Direct Participants have caused DTC to hold the Notes.

     “Borrower” means LTF Real Estate VRDN I, LLC, a Delaware limited liability company.

     “Borrower Notes” means Notes tendered pursuant to Section 4.06 hereof or subject to mandatory tender pursuant to Section 4.07 hereof and purchased from funds described in Section 8.10(b)(ii) hereof.

     “Business Day” means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the State of New York or in any state in which the principal office of Credit Issuer, or the office of Tender Agent or Trustee designated for payment of the Notes, or the office of Credit Issuer designated for presentations under the Letter of Credit is located are closed or a day on which the New York Stock Exchange is closed.

     “Certificate,” “Statement,” “Request,” “Requisition” and “Order” of Borrower means, respectively, a written certificate, statement, request, requisition or order signed in the name of Borrower by an Authorized Representative of Borrower. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument. If and to the extent required by Section 1.02 hereof, each such instrument shall include the statements provided for in Section 1.02 hereof.

     “Credit Issuer” means initially GECC, as the issuer of the Letter of Credit, and upon the acceptance of any Alternate Credit Facility or Alternate Letter of Credit by Trustee as provided herein, the issuer of such Alternate Credit Facility or Alternate Letter of Credit, as the case may be.

     “Date of Delivery” means June 13, 2008.

3

     “Direct Participant” means any of those securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations for which DTC, from time to time, holds the Notes as securities depository.

     “DTC” means The Depository Trust Company, New York, New York, or any successor securities depository.

     “Eligible Account” means an account that is either (a) maintained with a federal or state-chartered depository institution or trust company that has a S&P short-term debt rating of at least ‘A-2’ (or, if no short-term debt rating, a long-term debt rating of ‘BBB+’); or (b) maintained with the corporate trust department of a federal depository institution or state-chartered depository institution subject to regulations regarding fiduciary funds on deposit, which, in either case, has corporate trust powers and is acting in its fiduciary capacity. In the event that an account required to be an “Eligible Account” no longer complies with the requirement, Trustee should promptly (and, in any case, within not more than 30 calendar days) move such account to another financial institution such that the Eligible Account requirement will again be satisfied.

     “Event of Default” means any of the events specified in Section 7.01 hereof.

     “Expiration Date” means the stated date upon which the Letter of Credit or Alternate Letter of Credit shall expire in accordance with its terms.

     “Fixed Interest Rate” means the interest rate borne by the Notes from and after the Fixed Interest Rate Date and determined in accordance with Sections 2.03(b) and 2.04 hereof.

     “Fixed Interest Rate Date” means the date on which the Notes begin to bear interest at the Fixed Interest Rate, which shall be an Interest Payment Date.

     “Fixed Rate Period” means the period from and including the Fixed Interest Rate Date designated pursuant to Section 2.04 hereof to and including the date next preceding the date of maturity on the Notes.

     “GECC” means General Electric Capital Corporation, a Delaware corporation, as the issuer of the Letter of Credit.

     “Government Obligations” means and includes any of the following securities, if and to the extent the same are non-callable and not subject to redemption at the option of Borrower, at the time legal for investment: direct obligations of, or obligations the full and timely payment of principal of and interest on which are unconditionally guaranteed by, the United States of America, including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America and including a receipt, certificate or any other evidence of a direct ownership interest of future payments in an obligation of, or unconditionally guaranteed by, the United States of America, or in specified portions thereof held by a custodian in safekeeping for the holders of such receipt, certificate or any other evidence of ownership (which may consist of specified portions of interest thereon) which is rated or assessed in the highest rating category of Moody’s and S&P to the extent each such rating agency is then rating the Notes, but excluding any share or interest in any unitary investment trust or mutual fund

4

unless such unitary investment trust or mutual fund is rated or assessed in the highest rating category of Moody’s and S&P to the extent each such rating agency is then rating the Notes.

     “Indenture” means this Indenture, as originally executed or as it may from time to time be supplemented, modified or amended by any Supplemental Indenture.

     “Information Services” means a national information service that disseminates notices of redemptions of notes such as the Notes.

     “Interest Account” means the account of that name in the Revenue Fund established pursuant to Section 5.02 hereof.

     “Interest Payment Date” means (i) with respect to interest accruing at the Weekly Interest Rate, the first Business Day of each calendar month, commencing on July 1, 2008 and (ii) with respect to interest accruing at the Fixed Interest Rate, each Semiannual Date, commencing with the first such date that is at least two months after the Fixed Interest Rate Date.

     “Investment Letter” means the form of Investment Letter required by the Remarketing Agreement to be executed by the purchaser of any Note.

     “Letter of Credit” means (a) that certain irrevocable direct pay letter of credit No. LF-001 issued by GECC pursuant to the terms and conditions of the Reimbursement Agreement, as the same may be amended or modified in accordance with its terms, naming Trustee as beneficiary and delivered on the date of issuance and delivery of the Notes; (b) in the event of delivery of an Alternate Letter of Credit, such Alternate Letter of Credit; or (c) in the event of delivery of an Alternate Credit Facility, such Alternate Credit Facility.

     “Letter of Credit Account” means the account of that name established in the Revenue Fund pursuant to Section 5.03 hereof.

     “Letter of Credit Substitution Date” means the date an Alternate Credit Facility or Alternate Letter of Credit is delivered to Trustee pursuant to the terms of this Indenture.

     “Liquidity Account” means the account of that name established in the Purchase Fund pursuant to Section 8.10 hereof.

     “Mandatory Tender Date” means the (a) the Fixed Interest Rate Date in case of Notes which are to be purchased upon conversion to the Fixed Interest Rate; and (b) any Letter of Credit Substitution Date, pursuant to which the Notes are required to be tendered for purchase in accordance with Section 4.07 hereof.

     “Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, or, if such corporation shall be dissolved, liquidated or replaced by Borrower as the rating agency for the Notes, or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by Borrower which is requested to provide a rating on the Notes.

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     “Net Proceeds” means the proceeds from insurance or from actual or threatened condemnation or eminent domain action with respect to the Property, less any costs reasonably expended by Borrower to collect such proceeds.

     “Non-Tendered Notes” has the meaning ascribed to such term in Section 4.07 hereof.

     “Note” or “Notes” means Borrower’s $34,235,000 Variable Rate Demand Notes, Series 2008 issued under this Indenture in the form attached hereto as Exhibit A.

     “Note Fund” means the fund of that name established pursuant to Section 3.02 hereof.

     “Note Payment Date” means any date on which any principal of, premium, if any, or interest on, any Outstanding Note shall be due and payable whether at maturity or on a scheduled Interest Payment Date or upon redemption, in each case in accordance with the terms of the Notes and this Indenture.

     “Note Payments” means the payments required to be made by Borrower pursuant to Section 5.02 hereof.

     “Note Registrar” means the Note registrar specified in Section 2.08 hereof.

     “Noteholder” means, as of any time, the Registered Owner of any Note as shown in the register kept by Note Registrar.

     “Organization Documents” mean Borrower’s articles or certificate of incorporation and bylaws if Borrower is a corporation, articles of organization and operating agreement if Borrower is a limited liability company, certificate of limited partnership and partnership agreement if Borrower is a partnership and trust agreement or declaration of trust if Borrower is a trust, as such Organization Documents may be amended from time to time.

     “Outstanding” when used as of any particular time with reference to Notes, means (subject to the provisions of Section 11.08 hereof) all Notes theretofore, or thereupon being, authenticated and delivered by Note Registrar under this Indenture except (a) Notes theretofore cancelled by Note Registrar or surrendered to Note Registrar for cancellation; (b) Notes with respect to which liability of Borrower shall have been discharged in accordance with Section 10.02 hereof, including Notes (or portions of Notes) referred to in Section 11.08 hereof; (c) Notes paid or for the transfer or exchange of or in lieu of or in substitution for which other Notes shall have been authenticated and delivered by Note Registrar pursuant to Section 2.10 hereof and any other provision of this Indenture; and (d) Notes which have been deemed purchased pursuant to Section 4.07 hereof.

     “Participating Underwriter” means any broker, dealer or municipal securities dealer acting as an underwriter in a primary offering of municipal securities subject to Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934, as amended.

     “Paying Agent” means Trustee and any other paying agent for the Notes appointed pursuant to the provisions of this Indenture.

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     “Payment Request Form” means the form of Payment Request Form attached hereto as Exhibit B executed by Borrower and Credit Issuer pursuant to the terms hereof.

     “Person” means an individual, corporation, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof.

     “Principal Account” means the account of that name in the Revenue Fund established pursuant to Section 5.02 hereof.

     “Property” has the meaning ascribed to such term in the Reimbursement Agreement.

     “Purchase Date” means (a) the date specified in each notice given by a Registered Owner pursuant to Section 4.06 hereof on which the Notes being tendered by such Registered Owner shall be purchased by Tender Agent and (b) the Mandatory Tender Date.

     “Purchase Fund” means the fund of that name established pursuant to Section 8.10 hereof.

     “Qualified Investments” means (a) securities that are general obligations of or are guaranteed as to the payment of principal and interest by the United States of America; (b) obligations, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following: Federal Home Loan Bank System, Government National Mortgage Association, Farmers Home Administration, Federal Home Loan Mortgage Corporation or Federal Housing Administration; (c) commercial paper issued by corporations organized under the laws of a state of the United States which is rated in the highest rating category by S&P’s or Moody’s; (d) money market funds registered under the Investment Company Act of 1940 whose shares are registered under the Securities Act of 1933 and which have a rating of “AAAm-G” or “AAAm” of S&P, including money market funds which Trustee or any of its affiliates operates or manages; or (e) certificates of deposit issued by or other forms of deposit in any national or state bank, including Trustee, to the extent that such deposits are fully insured by the Federal Deposit Insurance Corporation or any successor agency which is backed by the full faith and credit of the United States. Derivative products are not “Qualified Investments.”

     “Rate Mode” means the Weekly Mode or Fixed Interest Rate.

     “Record Date” means, prior to the Fixed Interest Rate Date, the Business Day preceding each Interest Payment Date, and after the Fixed Interest Rate Date, the 15th day of the calendar month preceding each Interest Payment Date, whether or not such day is a Business Day.

     “Redemption Account” means the account of that name established in the Revenue Fund pursuant to Section 5.02 hereof.

     “Registered Owner” means the Person in whose name a Note is registered.

     “Reimbursement Agreement” means the Reimbursement Agreement dated as of the date hereof among Borrower, Credit Issuer and GE Government Finance, Inc., as from time to time amended or supplemented in accordance with the terms thereof, or any other similar agreement

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entered into by Borrower and Credit Issuer in connection with the issuance of any Alternate Letter of Credit or Alternate Credit Facility.

     “Related Party” means (a) any general partner or member of Borrower; (b) Tenant (as defined in the Reimbursement Agreement) or (c) Lease Guarantor (as defined in the Reimbursement Agreement).

     “Remarketing Account” means the account of that name established in the Purchase Fund pursuant to Section 8.10 hereof.

     “Remarketing Agent” means the remarketing agent or agents appointed in accordance with Section 8.08 hereof. Remarketing Agent shall initially be Dougherty & Company LLC, a Delaware limited liability company. “Principal Office” of Remarketing Agent means the office thereof designated in writing to Trustee, Tender Agent, Credit Issuer and Borrower.

     “Remarketing Agreement” means the Remarketing Agreement dated as of the date hereof between Borrower and Remarketing Agent, as such agreement may from time to time be amended and supplemented in accordance with the terms thereof, to remarket the Notes delivered or deemed to be delivered for purchase by the Registered Owners thereof, and any other similar agreement entered into with any successor Remarketing Agent. No such amendment or supplement or similar agreement shall alter the rights or obligations of the Registered Owners of Notes to deliver their Notes for purchase as provided herein.

     “Revenue Fund” means the fund of that name established pursuant to Section 5.01 hereof.

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, its successors and their assigns, or, if such corporation shall be dissolved, liquidated or replaced by Borrower as the rating agency for the Notes, or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by Borrower which is requested to provide a rating on the Notes.

     “Semiannual Date” means each January 1 and July 1.

     “Semiannual Period” means a six-month period commencing on a Semiannual Date and ending on and including the day immediately preceding the next Semiannual Date.

     “Special Record Date” means the date established by Trustee pursuant to Section 2.02(c) hereof as a record date for the payment of defaulted interest on the Notes.

     “State” means the State of Minnesota.

     “Supplemental Indenture” means any indenture hereafter duly authorized and entered into between Borrower and Trustee, supplementing, modifying or amending this Indenture, but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.

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     “Tender Agent” means Manufacturers and Traders Trust Company, a New York state banking corporation having a designated corporate trust office at 213 Market Street, Harrisburg, PA 17101, or any successor appointed pursuant to Section 8.14 hereof.

     “Trustee” means Manufacturers and Traders Trust Company, a New York state banking corporation having a designated corporate trust office at 213 Market Street, Harrisburg, PA 17101, or its successor as Trustee hereunder as provided in Section 8.01 hereof.

     “Weekly Interest Rate” means the interest rate on the Notes determined pursuant to Section 2.03(a) hereof.

     “Weekly Mode” means the Rate Mode during which the Notes bear interest at a Weekly Interest Rate.

     “Weekly Rate Calculation Date” means Wednesday in each calendar week or, if any Wednesday is not a Business Day, the first Business Day preceding such Wednesday.

     “Weekly Rate Period” means the seven-day period commencing on the first Thursday following the corresponding Weekly Rate Calculation Date and running through Wednesday of the following calendar week, except that (i) the first Weekly Rate Period shall commence on the Delivery Date and end on and include the first Wednesday occurring on or after the Delivery Date, and (ii) the last Weekly Rate Period prior to the Fixed Interest Rate Date or final maturity date, whichever is earlier, shall end on and include the last day immediately preceding the Fixed Interest Rate Date or final maturity date, as applicable.

     Section 1.02. Content of Certificates and Opinions. Every certificate or opinion provided for in this Indenture with respect to compliance with any provision hereof shall include (a) a statement that the Person making or giving such certificate or opinion has read such provision and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the certificate or opinion is based; (c) a statement that, in the opinion of such Person, he or she has made or caused to be made such examination or investigation as is necessary to enable him or her to express an informed opinion with respect to the subject matter referred to in the instrument to which his or her signature is affixed; (d) a statement of the assumptions upon which such certificate or opinion is based, and that such assumptions are reasonable; and (e) a statement as to whether, in the opinion of such Person, such provision has been complied with.

     Any such certificate or opinion made or given by an officer or an Authorized Representative of Borrower may be based, insofar as it relates to legal, accounting or any business matter, upon a certificate or opinion of or representation by counsel, an Accountant or a management consultant, unless such officer knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which such certificate or statement may be based, as aforesaid, is erroneous. Any such certificate or opinion made or given by counsel, an Accountant or a management consultant may be based, insofar as it relates to factual matters (with respect to which information is in the possession of Borrower) upon a certificate or opinion of or representation by an officer of Borrower, unless such counsel, Accountant or management consultant knows, or in the exercise of reasonable care

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should have known, that the certificate or opinion or representation with respect to the matters upon which such Person’s certificate or opinion or representation may be based, as aforesaid, is erroneous. The same officer of Borrower, or the same counsel or Accountant or management consultant, as the case may be, need not certify to all of the matters required to be certified under any provision of this Indenture, but different officers, counsel, Accountants or management consultants may certify to different matters, respectively.

     Section 1.03. Interpretation.

     (a) Unless the context otherwise indicates, defined terms shall include all variations thereof and words expressed in the singular shall include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and shall be deemed to mean and include the neuter, masculine or feminine gender, as appropriate.

     (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction or effect hereof.

     (c) The date of this Indenture is intended as a date for the convenient identification thereof and is not intended to indicate that this Indenture was executed and delivered on such date. This Indenture was executed and delivered on the Date of Delivery.

     (d) Unless otherwise indicated, all references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; the words “herein,” “hereof,” “hereby,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.

ARTICLE II

THE NOTES

     Section 2.01. Authorization of Notes. There shall be issued under and secured by this Indenture a single series of Notes to be designated as “LTF Real Estate VRDN I, LLC Variable Rate Demand Notes, Series 2008” in the original principal amount of $34,235,000, to be dated as of the Date of Delivery and to mature fully (subject to prior redemption at the prices and dates and upon the terms and conditions hereinafter set forth) on June 1, 2033.

     Section 2.02. Terms of the Notes.

     (a) The Notes shall be issued as fully registered Notes without coupons in the Authorized Denominations. The Notes shall be in substantially the form set forth in Exhibit A hereto.

     (b) The Notes shall bear interest until payment of the principal thereof and interest thereon shall have been made or provided for in accordance with the provisions

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hereof, whether at maturity, upon redemption or otherwise. So long as the Notes accrue interest at a Weekly Interest Rate, interest shall be computed on the basis of a year of 360 days for the number of days actually elapsed. Interest accruing on the Notes at a Fixed Interest Rate shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

     (c) Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Registered Owner as of the Record Date for such payment of interest, and shall be paid to the Person in whose name the Note is registered at the close of business on a Special Record Date for the payment of such defaulted interest, to be fixed by Trustee, notice thereof being given to the Registered Owners not less than ten days prior to such Special Record Date.

     (d) Interest shall be paid on each Interest Payment Date in lawful money of the United States by check mailed to each Registered Owner at the address shown on the registration books maintained by Note Registrar pursuant to the terms hereof; provided, however, interest may also be paid by wire transfer to an address in the continental United States in the case of a Registered Owner of at least $1,000,000 aggregate principal amount of Notes upon written request of the Registered Owner thereof 15 days prior to the applicable Record Date to Note Registrar in a form satisfactory to Note Registrar.

     (e) The principal of the Notes shall be payable in lawful money of the United States of America on June 1, 2033 at the designated corporate trust office of Trustee at 213 Market Street, Harrisburg, PA 17101 or at such other office as Trustee may designate. Except as provided in Section 2.10 hereof, no payment of principal shall be made on any Note unless and until such Note is tendered to Trustee for cancellation, as the case may be.

     (f) The Notes shall be subject to redemption and purchase as provided in Article IV hereof.

     Section 2.03. Interest on Notes. The Notes shall bear interest for each day from and including the Date of Delivery until the Fixed Interest Rate Date or final maturity date, whichever is earlier, at the Weekly Interest Rate, provided that appropriate adjustments may be made for the initial period following the Date of Delivery. The Notes shall bear interest from and including the Fixed Interest Rate Date until the final maturity date of the Notes at the Fixed Interest Rate.

     (a) Weekly Interest Rate.

     (i) A Weekly Interest Rate shall be determined for each Weekly Rate Period as described below. For each Weekly Rate Period, the interest rate on the Notes in the Weekly Mode shall be the current market rate determined by Remarketing Agent on the immediately preceding Weekly Rate Calculation Date, in accordance with this Section. On each Weekly Rate Calculation Date, Remarketing Agent shall determine the Weekly Interest Rate for the next succeeding Weekly Rate Period as the rate which, if borne by the Notes in the

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Weekly Mode, would, in the judgment of Remarketing Agent, be the lowest interest rate necessary to enable Remarketing Agent to arrange for the sale of all of the Outstanding Notes in the Weekly Mode at a price equal to the principal amount thereof plus accrued interest thereon. Notice of such Weekly Interest Rate shall be given in writing by Remarketing Agent to Borrower, Trustee and Credit Issuer by the close of business on the Weekly Rate Calculation Date. Anything herein to the contrary notwithstanding, in no event shall the Weekly Interest Rate borne by the Notes in the Weekly Mode exceed the lesser of 15% per annum or the maximum rate permitted by law.

     (ii) If for any reason Remarketing Agent does not determine a Weekly Interest Rate for any Weekly Rate Period as aforesaid, the Weekly Interest Rate for that Weekly Rate Period shall be equal to the Weekly Interest Rate in effect for the immediately preceding Weekly Rate Period for the Notes.

     (iii) The determination of the Weekly Interest Rate by Remarketing Agent pursuant to this Indenture shall be conclusive and binding upon Borrower, Trustee, Remarketing Agent, Credit Issuer and the Registered Owners.

     (b) Fixed Interest Rate.

     (i) A Fixed Interest Rate shall be determined for the Fixed Rate Period as described below. The Fixed Interest Rate for Notes subject to the Fixed Interest Rate shall be determined by Remarketing Agent as the lowest rate of interest that, in the judgment of Remarketing Agent, would be necessary to enable Remarketing Agent to arrange for the sale of the Notes subject to the Fixed Interest Rate in a secondary market sale at a price equal to the principal amount thereof, plus accrued interest, on the first Business Day of the Fixed Rate Period. Notice of the Fixed Interest Rate shall promptly be given by telephone (promptly confirmed in writing) by Remarketing Agent to Trustee, Borrower and Credit Issuer, if any. Determination of the Fixed Interest Rate pursuant to this Section shall be conclusive and binding upon Trustee, Borrower, Credit Issuer, if any, Remarketing Agent and the Registered Owners and shall not exceed the lesser of 15% per annum or the highest rate permitted by law.

     Section 2.04. Conversion to Fixed Interest Rate. Borrower, with the prior written consent of Credit Issuer, unless the Letter of Credit then in effect shall expire or terminate in accordance with its terms upon any such conversion, shall have the option to convert the Notes from the Weekly Mode to a Fixed Interest Rate as herein provided on any Fixed Interest Rate Date Borrower shall select, provided that each Fixed Interest Rate Date shall be an Interest Payment Date and that the Notes shall be converted in whole and not in part. Borrower may exercise its option to direct the conversion of the Notes to a Fixed Interest Rate only one time. Borrower shall exercise such option by giving written notice to Trustee, Remarketing Agent and Credit Issuer, stating its election to convert the Rate Mode of the Notes to the Fixed Interest Rate, stating the Fixed Interest Rate Date therefor, not less than 60 days prior to such Fixed Interest Rate Date, or such shorter period of time as may be consented to by Trustee, Credit Issuer and Remarketing Agent, each such consent not to be unreasonably withheld. Upon receipt

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of such notice by Trustee, Trustee may conclusively assume that Remarketing Agent and Credit Issuer also received a copy of such notice. Notice of the exercise of an option to convert shall not be effective unless, within 10 days of the delivery of such notice, there shall have been delivered to Trustee (i) written consent of Credit Issuer to such conversion unless the Letter of Credit expires or terminates in accordance with its terms upon such conversion and (ii) if the Letter of Credit will expire or terminate in accordance with its terms on the Fixed Interest Rate Date and if an Alternate Credit Facility or Alternate Letter of Credit is to be delivered upon the conversion, a commitment for the delivery of an Alternate Credit Facility or Alternate Letter of Credit to secure the Notes to be effective on and as of the Fixed Interest Rate Date. In the case of a conversion in accordance with this Section 2.04, Trustee shall, at the expense of Borrower, give notice by first-class mail (postage prepaid) to the Registered Owners not less than 30 days prior to the proposed Fixed Interest Rate Date stating (i) that the interest rate on such Notes is scheduled to be converted to a Fixed Interest Rate through the maturity date, (ii) the proposed Fixed Interest Rate Date, (iii) that Borrower, on or before the tenth day prior to the proposed Fixed Interest Rate Date, may determine not to convert the Notes, in which case Trustee shall, at the expense of Borrower, notify the Registered Owners in writing to such effect, (iv) whether a Letter of Credit will secure the Notes after the conversion to the Fixed Interest Rate and, in the event that an Alternate Credit Facility or Alternate Letter of Credit is to be delivered in connection with the conversion, the name of the provider and its current ratings by each Rating Agency then rating the Notes and (v) that all such Outstanding Notes will be subject to a mandatory purchase on the Fixed Interest Rate Date at a price of par plus accrued and unpaid interest, if any, and that such mandatory purchase will occur even if any condition to the conversion is not met or the Notes to be converted are not remarketed in full. Trustee, Borrower, Credit Issuer and Remarketing Agent shall not be liable to any Registered Owners for failure to give any notice required above or for failure of any Registered Owners to receive any such notice. Upon conversion under this Section, the Notes being converted shall be subject to mandatory purchase on the Fixed Interest Rate Date. If any condition to which a conversion is subject is not satisfied in full or any Alternate Credit Facility or Alternate Letter of Credit required to be delivered in connection with such conversion is not delivered to Trustee or if the Notes being converted to a Fixed Interest Rate on such Fixed Interest Rate Date have not been fully remarketed by Remarketing Agent pursuant to Section 8.09 hereof, all by 2:00 p.m., New York time, on the Fixed Interest Rate Date, then the proposed conversion shall be deemed to have failed, but the mandatory tender of the Notes under Section 4.07 hereof still shall occur.

     Section 2.05. Execution of Notes. The Notes shall be executed in the name and on behalf of Borrower. The Notes shall then be delivered to Note Registrar for authentication by it. In case any of the officers who shall have signed or attested any of the Notes shall cease to be such officer or officers of Borrower before the Notes so signed or attested shall have been authenticated or delivered by Note Registrar or issued by Borrower, such Notes may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon Borrower as though those who signed and attested the same had continued to be such officers of Borrower, and also any Notes may be signed and attested on behalf of Borrower by such persons as at the actual date of execution of such Notes shall be the proper officers of Borrower although at the nominal date of such Notes any such person shall not have been such officer of Borrower.

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     Only such of the Notes as shall bear thereon a certificate of authentication substantially in the form set forth in Exhibit A hereto, with the manual signature of Note Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of Note Registrar shall be conclusive evidence that the Notes so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture.

     Section 2.06. Transfer of Notes.

     (a) Any Note may, in accordance with its terms, and subject to the transfer restrictions set forth in subsection (b) of this Section, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 hereof, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such registered Note for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form approved by Note Registrar. Transfer of a Note shall not be permitted by Note Registrar: (a) if Note Registrar has received notice from the Registered Owner of such Note that such Note will be delivered to Tender Agent for purchase on or before the next succeeding Interest Payment Date, (b) if Note Registrar receives such written instrument of transfer after the Record Date prior to the next succeeding Interest Payment Date or (c) the provisions of subsection (b) of this Section have not been satisfied.

     Whenever any Note or Notes shall be surrendered for transfer, Borrower shall execute and Note Registrar shall authenticate and deliver a new Note or Notes for a like aggregate principal amount in an Authorized Denomination. Note Registrar shall require the Registered Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer, and may in addition require the payment of a reasonable sum to cover expenses incurred by Borrower and Note Registrar in connection with such transfer.

     Notwithstanding the foregoing, prior to the Fixed Interest Rate Date, no Notes held by or for the account of Borrower shall be transferred upon the books required to be kept pursuant to Section 2.08 hereof.

     (b) Every Note that bears or is required under this subsection to bear the legend set forth in Exhibit A — Form of Note (the “Restricted Securities”) shall be subject to the restrictions on transfer set forth in this subsection (including those set forth in the legend set forth in Exhibit A — Form of Note (the “Transfer Restriction Legend”)) unless such restrictions on transfer shall be waived by written consent of Borrower, and the holder of each such Restricted Security, by such Noteholder’s acceptance thereof, agrees to be bound by all such restrictions on transfer. As used in this subsection, the term “transfer” encompasses any sale, pledge, loan, transfer or other disposition whatsoever of any Restricted Security.

     Until the expiration of the holding period applicable to sales thereof under paragraph (b)(1)(ii) of Rule 144 under the Securities Act of 1933, as amended (or any successor provision) (the “Securities Act”), any certificate evidencing such Note (and all securities issued in exchange therefor or substitution thereof) shall bear a legend in

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substantially the form of the Transfer Restriction Legend and the holder of such Restricted Security will deliver to such Person to whom such Note is transferred a notice substantially to the effect of the Transfer Restriction Legend, unless such Note has been sold pursuant to a registration statement that has been declared effective under the Securities Act (and which continues to be effective at the time of such transfer), or unless otherwise agreed by Borrower in writing, with written notice thereof to Trustee.

     No Person may transfer or exchange a Restricted Security or a beneficial interest in a Restricted Security (including, without limitation, the removal of the Transfer Restriction Legend thereon) unless such transfer or exchange is made (i) to Borrower or any subsidiary thereof, (ii) pursuant to an effective registration statement under the Securities Act, (iii) to a qualified institutional buyer in compliance with the applicable requirements of Rule 144A or (iv) pursuant to the exemption from registration provided by Rule 144 under the Securities Act, if available, or another exemption from the registration requirements of the Securities Act and, in the case of clauses (i), (iii) and (iv), if requested by the Note Registrar (or Borrower in the case of a transfer or exchange pursuant to clause (iv) above), certificates or an opinion of counsel in form reasonably acceptable to the Note Registrar (and Borrower in the case of a transfer or exchange pursuant to clause (iv) above) stating that (A) such transfer or exchange is in compliance with the Securities Act and applicable state securities law and (B) if such transferee or exchangee seeks the removal of the Transfer Restriction Legend, the restrictions on transfer contained herein and in the Transfer Restriction Legend are no longer required in order to maintain compliance with the Securities Act and applicable state securities law. Upon satisfaction of the requirements of this subsection with respect to the removal of the Transfer Restriction Legend, as appropriate, such Restricted Security or such beneficial interest in such Restricted Security shall be exchanged for an unrestricted Note or such beneficial interest in an unrestricted Note.

     Any Note may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of this Indenture as may be required by Trustee, DTC or by the National Association of Securities Dealers, Inc. in order for the Notes to be tradeable on The Portal Market or as may be required for the Notes to be tradeable on any other market developed for trading of securities pursuant to Rule 144A or required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange or automated quotation system upon which the Notes may be listed or traded or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Notes are subject.

     Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Trustee shall have no

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responsibility for the actions or omissions of any securities depositary, or for the accuracy of the books or records of any securities depositary.

     Section 2.07. Exchange of Notes. Notes may be exchanged at the designated corporate trust office of Trustee for a like aggregate principal amount of Notes of other Authorized Denominations. Note Registrar shall require the Registered Owner requesting such exchange to deliver such Notes to be exchanged and to pay any tax or other governmental charge required to be paid with respect to such exchange, and may in addition require the payment of a reasonable sum to cover expenses incurred by Borrower or Note Registrar in connection with such exchange. Thereupon, the Notes delivered to Note Registrar for exchange shall be cancelled by Note Registrar.

     Section 2.08. Note Registrar. Trustee is hereby designated and appointed as Note Registrar (the “Note Registrar”). Note Registrar will keep or cause to be kept at its designated corporate trust office, or at such other office as Note Registrar may designate, sufficient books for the registration and transfer of the Notes, which shall at all times be open to inspection during regular business hours by Borrower; and, upon presentation for such purpose, Note Registrar shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such books, Notes as hereinbefore provided.

     Section 2.09. Temporary Notes. The Notes may be issued in temporary form exchangeable for definitive Notes when ready for delivery. Any temporary Note may be printed, lithographed or typewritten, shall be in an Authorized Denomination, shall be in fully registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate and in a form acceptable to Paying Agent. Every temporary Note shall be executed by Borrower and be authenticated by Note Registrar upon the same conditions and in substantially the same manner as the definitive Notes. If Borrower issues temporary Notes it will execute and deliver definitive Notes as promptly thereafter as practicable, and thereupon the temporary Notes may be surrendered, for cancellation, in exchange therefor at the designated corporate trust office of Note Registrar and Note Registrar shall authenticate and deliver in exchange for such temporary Notes an equal aggregate principal amount of definitive Notes in Authorized Denominations. Until so exchanged, the temporary Notes shall be entitled to the same benefits under this Indenture as definitive Notes authenticated and delivered hereunder.

     Section 2.10. Notes Mutilated, Lost, Destroyed or Stolen. If any Note shall become mutilated, Borrower, at the expense of the Registered Owner of said Note, shall execute, and Note Registrar shall thereupon authenticate and deliver, a new Note of like tenor in exchange and substitution for the Note so mutilated, but only upon surrender to Note Registrar of the Note so mutilated. Every mutilated Note so surrendered to Note Registrar shall be cancelled by it and delivered to, or upon the order of, Borrower. If any Note shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to Note Registrar and, if such evidence be satisfactory to it and indemnity satisfactory to Note Registrar and Borrower shall be given, Borrower, at the expense of the Registered Owner, shall execute, and Note Registrar shall thereupon authenticate and deliver, a new Note of like tenor in lieu of and in substitution for the Note so lost, destroyed or stolen (or if any such Note shall have matured or shall be about to mature, instead of issuing a substitute Note, Borrower may pay the same without surrender thereof upon such maturity date). Note Registrar may require payment by the Registered Owner

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of a sum not exceeding the actual cost of preparing each new Note issued under this Section and the expenses which may be incurred by Borrower and Note Registrar in the premises. Any Note issued under the provisions of this Section in lieu of any Note alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of Borrower whether or not the Note so alleged to be lost, destroyed or stolen be at any time enforceable by anyone and shall be entitled to the benefits of this Indenture with all other Notes secured by this Indenture.

     Section 2.11. Absolute and Unconditional Obligations. The obligations of Borrower to make the Note Payments and other payments required by the terms hereof and to provide or cause to be provided the Letter of Credit pursuant to the terms hereof, and to perform and observe the other agreements on its part contained herein, shall be absolute and unconditional, irrespective of any defense or any rights of set-off, recoupment or counterclaim it might otherwise have, and during the term of this Indenture, Borrower shall pay absolutely all payments to be made pursuant to the terms hereof, the obligation to provide or cause to be provided the Letter of Credit pursuant to the terms hereof, and all other payments required hereunder, free of any deductions and without abatement, diminution or set-off. Until such time as the principal of, premium, if any, and interest on the Notes shall have been fully paid, or provision for the payment thereof shall have been made as required by this Indenture, Borrower (a) will not suspend or discontinue any payments required to be made by Borrower pursuant to this Indenture, including (without limitation) the payments provided for in Section 5.02 hereof and the obligation to provide or cause to be provided the Letter of Credit pursuant to Section 5.04 hereof; (b) will perform and observe all of its other covenants contained in this Agreement; and (c) except as provided in Article IV hereof, will not terminate this Indenture for any cause, including (without limitation) commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State, or any political subdivision of either of these, or any failure of Trustee to perform and observe any covenant, whether express or implied, or any duty, liability or obligation arising out of or connected with this Indenture.

     Section 2.12. Book-Entry Only System.

     (a) Except as otherwise provided in subsections (b) and (c) of this Section, the Notes initially authenticated and delivered hereunder shall be registered in the name of Cede & Co., as nominee of DTC or such other nominee as DTC shall request. Payments of interest on, principal of and any premium on the Notes shall be made to the account of Cede & Co. on each Note Payment Date at the address indicated for Cede & Co. in the registration books maintained by Note Registrar by transfer of immediately available funds. DTC has represented to Borrower that it will maintain a book-entry system in recording ownership interests of its participants (the “Direct Participants”) and the ownership interests of a purchaser of a beneficial interest in the Notes (a “Beneficial Owner”) will be recorded through book entries on the records of the Direct Participants.

     (b) The Notes shall be initially issued in the form of a separate single authenticated fully registered Note in the amount of $34,235,000. With respect to Notes so registered in the name of Cede & Co., Borrower, Trustee and Tender Agent shall have no responsibility or obligation to any Direct Participant or to any Beneficial Owner of such Notes. Without limiting the immediately preceding sentence, Borrower, Trustee and

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Tender Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any Direct Participant with respect to any beneficial ownership interest in the Notes, (ii) the delivery to any Direct Participant, Beneficial Owner or other person, other than DTC, of any notice with respect to the Notes, including any notice of redemption, (iii) the payment to any Direct Participant, Beneficial Owner or other person, other than DTC, of any amount with respect to the principal or redemption price of, or interest on, the Notes or (iv) any consent given or other action taken by DTC as Registered Owner of the Notes. Borrower, Trustee and Tender Agent may treat DTC as, and deem DTC to be, the absolute Registered Owner of each Note for all purposes whatsoever including (but not limited to) (A) payment of the principal or redemption price of, and interest on, each such Note, (B) giving notices of conversion or redemption and other matters with respect to such Notes and (C) registering transfers with respect to such Notes. Trustee shall pay the principal or redemption price of, and interest on, all Notes only to or upon the order of DTC, and all such payments shall be valid and effective to fully satisfy and discharge Borrower’s obligations with respect to such principal or redemption price, and interest, to the extent of the sum or sums so paid. No person other than DTC shall receive a Note evidencing the obligation of Borrower to make payments of principal or redemption price of, and interest on, the Notes pursuant to this Indenture. Upon delivery by DTC to Trustee of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the transfer provisions hereof, the word “Cede & Co.” in this Indenture shall refer to such new nominee of DTC.

     (c) (i) DTC may determine to discontinue providing its services with respect to the Notes at any time by giving reasonable written notice to Borrower, Trustee and Tender Agent and discharging its responsibilities with respect thereto under applicable law.

     (ii) Borrower, in its sole discretion and without the consent of any other person, may terminate, upon provision of notice to Trustee and Tender Agent, the services of DTC with respect to the Notes if Borrower determines that the continuation of the system of book-entry only transfers through DTC (or a successor securities depository) is not in the best interests of the Beneficial Owners of the Notes or is burdensome to Borrower, and shall terminate the services of DTC with respect to the Notes upon receipt by Borrower, Trustee and Tender Agent of written notice from DTC to the effect that DTC has received written notice from Direct Participants having interests, as shown in the records of DTC, in an aggregate principal amount of not less than fifty percent (50%) of the aggregate principal amount of the then Outstanding Notes to the effect, that: (A) DTC is unable to discharge its responsibilities with respect to such Notes, or (B) a continuation of the requirement that all of the Outstanding Notes be registered in the registration books kept by Trustee in the name of Cede & Co., as nominee of DTC, is not in the best interest of the Beneficial Owners of such Notes.

     (d) Upon the termination of the services of DTC with respect to the Notes pursuant to subsection (c)(ii)(B) hereof, or upon the discontinuance or termination of the

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services of DTC with respect to the Notes pursuant to subsection (c)(i) or subsection (c)(ii)(A) hereof after which no substitute securities depository willing to undertake the functions of DTC hereunder can be found or which, in the opinion of Borrower, is willing and able to undertake such functions upon reasonable and customary terms, the Notes shall no longer be restricted to being registered in the registration books kept by Note Registrar in the name of Cede & Co. as nominee of DTC. In such event, Borrower shall issue and Trustee shall transfer and exchange Note certificates as requested by DTC or Direct Participants of like principal amount, series and maturity, in Authorized Denominations to the identifiable Beneficial Owners in replacement of such Beneficial Owners’ beneficial interests in the Notes.

     (e) Notwithstanding any other provision of this Indenture to the contrary, so long as any Note is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to the principal or redemption price of, and interest on, such Note and all notices with respect to such Note shall be made and given, respectively, to DTC.

     (f) In connection with any notice or other communication to be provided to Registered Owners pursuant to this Indenture by Borrower, Tender Agent or Trustee with respect to any consent or other action to be taken by Registered Owners, Borrower, Tender Agent or Trustee, as the case may be, shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible.

     (g) Notwithstanding any provision herein to the contrary, Borrower and Trustee may agree to allow DTC, or its nominee, Cede & Co., to make a notation on any Note redeemed in part to reflect, for informational purposes only, the principal amount and date of any such redemption.

     (h) Notwithstanding any provision herein to the contrary, so long as the Notes are subject to a system of book-entry only transfers pursuant to this Section, any requirement for the delivery of Notes to Tender Agent in connection with a mandatory tender pursuant to Section 4.07 hereof shall be deemed satisfied upon the transfer, on the registration books of DTC, of the beneficial ownership interests in such Notes tendered for purchase to the account of Tender Agent, or a Direct Participant acting on behalf of Tender Agent.

     Section 2.13. CUSIP Numbers. Borrower in issuing the Notes may use “CUSIP” numbers (if then generally in use), and, if so, Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Registered Owners; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. Borrower will promptly notify Trustee in writing of any change in the “CUSIP” numbers.

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ARTICLE III

ISSUANCE OF NOTES; APPLICATION OF PROCEEDS

     Section 3.01. Issuance of the Notes. Upon satisfaction of the conditions precedent set forth in Section 3.01 of the Reimbursement Agreement as evidenced by the issuance of the Letter of Credit, Borrower shall execute and issue the Notes and Note Registrar shall authenticate and deliver Notes in the aggregate principal amount set forth in Section 2.01 hereof. The proceeds received from the sale of the Notes in the amount of $34,072,383.75 (which represents the principal amount of the Notes, $34,235,000, less underwriter’s discount of $162,616.25) shall be deposited in trust with Trustee, who shall deposit said proceeds in the Note Fund.

     Section 3.02. Establishment and Application of Note Fund.

     (a) Trustee shall establish, maintain and hold in trust a separate fund designated as the “Note Fund.” The moneys in the Note Fund shall be used and withdrawn as provided herein.

     (b) Before any payment from the Note Fund shall be made, Borrower shall file or cause to be filed with Trustee a Payment Request Form, executed by Borrower and Credit Issuer, fully completed and with all supporting documents described therein attached thereto; provided, however, moneys in the Note Fund shall not be disbursed unless and until Borrower satisfies the requirements set forth in Section 3.01 of the Reimbursement Agreement. Upon receipt of a Payment Request Form (which may be sent by facsimile transmission) executed on behalf of Credit Issuer and an Authorized Representative of Borrower, Trustee shall disburse proceeds from the Note Fund in such amounts and to such parties as directed therein. Upon receipt of a written request from Credit Issuer (which may be sent by facsimile transmission), Trustee shall disburse proceeds from the Note Fund in order to reimburse Credit Issuer for any real estate-related costs such as costs for the appraisal, environmental audit and engineer’s inspections.

     (c) Upon (i) the occurrence of an Event of Default or notice from Credit Issuer that an Event of Default has occurred, or (ii) any such time that there are no longer any Outstanding Notes, Trustee, at the direction of Credit Issuer, shall transfer any remaining balance in the Note Fund, to a separate account within the Redemption Account, which Trustee shall establish and hold in trust, and which shall be entitled the “Surplus Account.” The moneys in the Surplus Account shall be used and applied first to reimburse Credit Issuer for any draws theretofore made by Trustee under the Letter of Credit but not yet reimbursed (including, without limitation, any draws relating to the purchase of any Borrower Notes), and then to pay principal only in connection with the call and redemption of Notes to the maximum degree permissible in accordance with Section 4.01 hereof, and at the earliest possible dates at which Notes can be redeemed without payment of premium pursuant to this Indenture.

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ARTICLE IV

REDEMPTION AND PURCHASE OF NOTES

     Section 4.01. Terms of Redemption. The Notes are subject to redemption by Borrower if and to the extent Borrower is entitled to make and makes, or is required to make, a payment or prepayment pursuant to this Indenture. All such prepayments by Borrower shall be deposited in the Redemption Account. Borrower shall not call the Notes for optional redemption, and Trustee shall not give notice of any such optional redemption, unless Borrower has made or caused to be made all Note Payments due hereunder and any required principal payments required under the Reimbursement Agreement.

     The Notes shall be subject to redemption by Borrower upon the following terms in increments of $5,000, provided that in the event of redemption of less than all of the Notes, the amount which remains Outstanding shall be in Authorized Denominations:

     (a) Sinking Fund Redemption. The Notes are not subject to mandatory sinking fund redemption.

     (b) Optional Redemption During Weekly Mode. While the Notes are in the Weekly Mode, the Notes are subject to optional redemption, in whole on any Business Day or in part on any Interest Payment Date, at the option of Borrower, with the written approval of Credit Issuer, at a redemption price of 100% of the outstanding principal amount of the Notes to be redeemed, plus interest accrued thereon to the redemption date. Borrower shall be deemed to have exercised such option and Credit Issuer shall be deemed to have given such consent in connection with any redemptions scheduled pursuant to the Reimbursement Agreement, and such exercise and consent shall remain in effect unless and until Trustee receives contrary written notification from Credit Issuer.

     (c) No Optional Redemption After the Fixed Interest Rate Date. After the Fixed Interest Rate Date, the Notes are not subject to redemption at the option of Borrower.

     (d) Mandatory Redemption upon Expiration of Letter of Credit. The Notes shall be redeemed in whole, at a redemption price equal to 100% of the outstanding principal amount thereof, plus interest accrued thereon to the redemption date, on a redemption date not less than 15 days preceding the Expiration Date of the Letter of Credit if no Alternate Credit Facility or Alternate Letter of Credit has been delivered to Trustee in accordance with Section 5.04 or 5.07 hereof.

     (e) Mandatory Redemption upon Occurrence of Extraordinary Events. To the extent of a prepayment by Borrower as a result of the damage, destruction or condemnation of the Property and as provided in the Reimbursement Agreement, the Notes are subject to redemption, in whole on any Business Day or in part on the first Business Day of each calendar month, upon the written direction of Borrower and with the written approval of Credit Issuer, after payment of any amounts owed to Credit Issuer pursuant to the Reimbursement Agreement, prior to their stated maturity, on any date, at

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a redemption price equal to 100% of the outstanding principal amount of such Notes that are redeemed, plus interest accrued thereon to the redemption date.

     (f) Mandatory Redemption for Reimbursement Agreement Default. The Notes shall be redeemed in whole, at a redemption price equal to 100% of the outstanding principal amount thereof, plus interest accrued thereon to the redemption date, within five calendar days (and before the following Saturday if the fifth calendar day is a Saturday) from the date Trustee receives written notice from Credit Issuer that an event of default has occurred under the Reimbursement Agreement and directing Trustee to redeem the Notes.

     (g) Mandatory Redemption from Surplus Account. The Notes are subject to redemption in part on any Interest Payment Date at a redemption price equal to 100% of the outstanding principal amount thereof, plus accrued interest to the redemption date, on the next succeeding Interest Payment Date to the extent of amounts are deposited in the Surplus Account and directed to be used to redeem Notes as provided in Section 3.02(c) hereof.

     Section 4.02. Selection of Notes for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Notes, Trustee shall select the Notes to be redeemed from all Notes or such given portion thereof not previously called for redemption by lot in any manner which Trustee in its sole discretion shall deem appropriate and fair, to be credited against the principal of the Notes to be redeemed; provided, however, that in connection with an optional redemption of the Notes, redemption proceeds shall first be used to reimburse Credit Issuer for any draw on the Letter of Credit; provided, further that Borrower Notes shall be the first Notes selected for redemption and the redemption price for such Borrower Notes shall be paid to Credit Issuer; and provided, finally, that the Notes Outstanding after giving effect to any redemption shall be in Authorized Denominations. Upon selection of Notes for redemption on or prior to the Fixed Interest Rate Date, Trustee will promptly notify Tender Agent of the Notes selected for redemption.

     Section 4.03. Notice of Redemption.

     (a) Trustee shall mail notice of redemption (i) prior to the Fixed Interest Rate Date, not less than 15 days before such redemption date (except in the case of redemptions pursuant to Section 4.01(f) hereof, in which case notice shall be given as soon as practicable), and (ii) after the Fixed Interest Rate Date, not less than 30 days before such redemption date (except in the case of redemptions pursuant to Section 4.01(f) hereof, in which case notice shall be given as soon as practicable) to the respective Registered Owners of any Notes designated for redemption at their addresses on the registration books maintained by Note Registrar. Each notice of redemption shall identify the Notes to be redeemed (including CUSIP numbers), state the redemption date, the place or places of redemption, if less than all of the Notes are to be redeemed, the distinctive numbers of the Notes to be redeemed, and in the case of Notes to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of said Notes the principal thereof or of said specified portion of the principal thereof in the

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case of a Note to be redeemed in part only, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Notes be then surrendered.

     (b) Notice of redemption of Notes shall be given by Trustee, at the expense of Borrower, for and on behalf of Borrower.

     (c) In the case of redemption pursuant to Section 4.01 hereof in connection with refunding obligations to be issued for such purpose, notice of such redemption may be cancelled if such refunding obligations are not issued on or prior to the date fixed for such redemption.

     (d) Receipt of such notice shall not be a condition precedent to such redemption and failure so to mail any such notice to a Registered Owner shall not affect the validity of the proceedings for the redemption of Notes of any Registered Owner.

     (e) Trustee shall, at the same time the notice in subsection (a) above is mailed, also send a copy of the notice by certified mail or by overnight delivery to Tender Agent, Remarketing Agent, DTC and any Information Service. Failure to provide notice to Tender Agent, Remarketing Agent, a Securities Depository or to an Information Service shall not affect the validity of proceedings for the redemption of Notes.

     Section 4.04. Partial Redemption of Notes. Upon surrender of any Note redeemed in part only, Borrower shall execute and Note Registrar shall authenticate and deliver to the Registered Owner thereof, at the expense of Borrower, a new Note or Notes of Authorized Denominations equal in aggregate principal amount to the unredeemed portion of the Note surrendered.

     Section 4.05. Effect of Redemption.

     (a) In the case of a prepayment in full of the Notes by Borrower pursuant to Section 4.01 hereof, the amount to be paid by Borrower shall be a sum sufficient, together with other funds deposited with Trustee and available for such purpose, to pay (a) the redemption price specified in this Indenture for all Outstanding Notes, plus all interest accrued and to accrue to the redemption date, (b) all reasonable and necessary fees and expenses of Trustee, Credit Issuer and any Paying Agent allowable pursuant to this Indenture or the Reimbursement Agreement accrued and to accrue through final payment of the Notes and (c) all other liabilities of Borrower accrued and to accrue under this Indenture. In the case of partial prepayment of the Notes by Borrower pursuant to Section 4.01 hereof, the amount to be paid by Borrower shall be a sum sufficient, together with other funds deposited with Trustee and available for such purpose, to pay the redemption price specified in this Indenture, for the Notes that are to be redeemed, plus all interest accrued and to accrue to the redemption date, and to pay expenses of redemption of such Notes.

     (b) Only Available Moneys can be used for the redemption of the Notes. Borrower shall cause Available Moneys for payment of the redemption price of the Notes, together with interest accrued to the date fixed for redemption and other amounts

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payable hereunder, to be delivered to Trustee. Provided that Trustee has received such Available Moneys, the Notes (or portions thereof) so called for redemption shall become due and payable on the redemption date designated in the notice of redemption, interest on the Notes (or portions thereof) so called for redemption shall cease to accrue, said Notes (or portions thereof) shall cease to be entitled to any benefit or security under this Indenture, and the Registered Owners of said Notes shall have no rights in respect thereof except to receive payment of said principal, premium, if any, and interest accrued to the date fixed for redemption.

     Subject to Section 4.04 hereof, all Notes redeemed pursuant to the provisions of this Article shall be cancelled upon surrender thereof by Trustee and delivered to or upon the order of Borrower.

     Section 4.06. Purchase of Notes by Tender Agent. Prior to the Fixed Interest Rate Date, the Notes may be delivered by the Registered Owners thereof to Tender Agent at its designated corporate trust office, or such other place as Tender Agent may designate in writing to Registered Owners, Trustee, Credit Issuer, Borrower and Remarketing Agent. Any Note so delivered shall be purchased by Tender Agent on demand of the Registered Owner thereof on the close of any Business Day at a purchase price equal to the principal amount thereof plus accrued interest to but not including the date of purchase (unless such date is an Interest Payment Date, in which case the purchase price will be the principal amount of such Note); provided that Tender Agent will be under no obligation to use its own funds to purchase such Notes and provided further that sufficient funds in the Purchase Fund are immediately available for purchase of the Notes and upon delivery to Tender Agent of an irrevocable written notice by 3:00 p.m., New York time, (if not received by 3:00 p.m., New York time, on a Business Day it shall be deemed received on the next succeeding Business Day), which states (i) the name and address of the Registered Owner, (ii) the number or numbers of the Note or Notes to be purchased, (iii) the aggregate principal amount of the Note or Notes to be purchased, and (iv) the date on which the Note is or Notes are to be purchased, which date shall be a Business Day not prior to the seventh calendar day next succeeding the date of delivery of such written notice and delivery to Tender Agent at or prior to 9:00 a.m., New York time, on the Purchase Date specified in the aforesaid notice, of the Note or Notes to be tendered; provided, however, that any Note for which a notice of the exercise of the purchase option has been given as provided in this subsection and which is not so delivered shall be deemed delivered on the date of purchase and shall be purchased in accordance with this Indenture.

     All Notes, or portions thereof, purchased pursuant to this Section shall be purchased in an amount equal to an Authorized Denomination. Trustee shall upon request of Tender Agent calculate the purchase price of any Notes purchased pursuant to this Section and shall notify Tender Agent of such amount prior to the Purchase Date.

     Section 4.07. Mandatory Tender of Notes. On each Mandatory Tender Date, the Notes shall be subject to mandatory tender for purchase on such Mandatory Tender Date at a purchase price equal to the principal amount thereof, plus accrued interest, if any. The Registered Owners of all of the Outstanding Notes shall be required to tender their Notes for purchase by Tender Agent on the Mandatory Tender Date. All Notes which on the Mandatory Tender Date have not been tendered for purchase (the “Non-Tendered Notes”) shall be deemed

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purchased by Tender Agent on the Mandatory Tender Date at a price of the principal amount thereof plus unpaid interest accrued, if any, to such date. Replacement Notes for the Non-Tendered Notes may be remarketed and delivered to new Registered Owners as instructed by Borrower or Remarketing Agent. Tender Agent shall hold in trust for the Registered Owners of the Non-Tendered Notes the purchase price thereof, and after the Mandatory Tender Date such Registered Owners will no longer be entitled to any of the benefits of this Indenture except for the payment of such purchase price.

ARTICLE V

REVENUES; FUNDS AND ACCOUNTS;
PAYMENT OF PRINCIPAL AND INTEREST

     Section 5.01. Pledge and Assignment; Revenue Fund.

     (a) Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, all amounts (including proceeds of the sale of Notes) held in any fund or account established pursuant to this Indenture (the “Account Funds”), except to the extent provided in Sections 5.05, 7.03, 8.06 and 8.10(a) hereof) are hereby pledged by Borrower to secure the payment of the principal and purchase price of and interest on the Notes in accordance with their terms and the provisions of this Indenture and thereafter, on a basis subordinate thereto, to secure Borrower’s obligations to Credit Issuer under the Reimbursement Agreement. Said pledge shall constitute a lien on and security interest in such assets and shall attach, be perfected and be valid and binding from and after delivery by Trustee of the Notes without any physical delivery thereof or further act.

     (b) Trustee agrees that, so long as Trustee holds any Account Funds, Trustee shall hold the same as the collateral agent and bailee of Credit Issuer (but only to the extent of amounts paid by Credit Issuer under the Letter of Credit for which Credit Issuer has not received reimbursement from Borrower) for purposes of perfecting the lien and security interest of Credit Issuer therein. Upon receipt of written notice from Credit Issuer that Borrower has failed to reimburse Credit Issuer for a draw under the Letter of Credit as required by the Reimbursement Agreement, Trustee shall either cause all accounts and investments (but only to the extent of amounts paid by Credit Issuer under the Letter of Credit for which Credit Issuer has not received reimbursement from Borrower) which are the subject of the preceding sentence to be titled in such a manner to reflect that Credit Issuer has an interest therein as described in the preceding sentence or ensure that each Person with whom Trustee places or through whom Trustee invests any moneys which are the subject of the preceding sentence is advised of Credit Issuer’s interest therein as described in the preceding sentence and instructed to mark its records to reflect such interest. Trustee shall not pledge, hypothecate, transfer or release all or any portion of the Account Funds to any persons (including, without limitation, Borrower) other than Registered Owners of the Notes in payment thereof or in any manner not in accordance with this Indenture or the Reimbursement Agreement without the written consent of Credit Issuer, except as otherwise required by a court of law.

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     (c) All Note Payments shall be promptly deposited by Trustee upon receipt thereof in a special fund designated as the “Revenue Fund” which Trustee shall establish, maintain and hold in trust; except as otherwise provided in Section 5.02 hereof, all moneys received by Trustee and required to be deposited in the Note Fund shall be promptly deposited in the Note Fund and all moneys received by Trustee and required to be deposited in the Redemption Account shall be promptly deposited in the Redemption Account, which Trustee shall establish, maintain and hold in trust. All Note Payments and other amounts deposited with Trustee shall be held, disbursed, allocated and applied by Trustee only as provided in this Indenture. All moneys held by Tender Agent for the payment of the principal or purchase price of, premium, if any, and interest on the Notes, shall be held by Tender Agent in trust for the payment of such Notes.

     Section 5.02. Note Payments and Allocation.

     (a) On or before each Note Payment Date, until the principal of, premium, if any, and interest on the Notes shall have been fully paid or provision for such payment shall have been made as provided in this Indenture, Borrower covenants and agrees to pay to Trustee as a Note Payment, a sum equal to the amount payable on such Note Payment Date as principal of, and premium, if any, and interest on the Notes as provided in this Indenture. The Note Payments made pursuant to this subsection shall at all times be sufficient to pay the total amount of interest and principal (whether at maturity or upon redemption or acceleration) and premium, if any, becoming due and payable on the Notes on each Note Payment Date, provided that any amount held by Trustee in the Revenue Fund on the due date for a Note Payment pursuant to the immediately preceding sentence shall be credited against the Note Payment due on such date to the extent available for such purpose under the terms of this Indenture; and provided further that, subject to the provisions of this subsection, if at any time the amounts held by Trustee in the Revenue Fund are sufficient to pay all of the principal of and interest and premium, if any, on the Notes as such payments become due, Borrower shall be relieved of any obligation to make any further Note Payments under the provisions of this subsection. Notwithstanding the foregoing, if on any date the amount held by Trustee in the Revenue Fund is insufficient to make any required payments of principal of (whether at maturity or upon redemption or acceleration) and interest and premium, if any, on the Notes as such payments become due, Borrower, immediately upon receipt of notice of such deficiency from Trustee, shall forthwith pay such deficiency as a Note Payment hereunder.

     (b) To the extent Trustee has on deposit a Note Payment from Borrower pursuant to subsection (a) of this Section after any payment obligation hereunder has been satisfied by a draw under the Letter of Credit, Trustee shall promptly use such Note Payment to reimburse Credit Issuer for such drawing or, if Credit Issuer has been reimbursed directly by Borrower, such funds shall be returned to Borrower. Upon Trustee’s receipt of written notice from Credit Issuer that Borrower will begin to make payments directly to Credit Issuer pursuant to the Reimbursement Agreement sufficient to reimburse Credit Issuer for draws on the Letter of Credit, Borrower shall no longer be required to make such portion of Note Payments directly to Trustee pursuant to the terms hereof.

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     (c) Note Payments received by Trustee from Borrower shall be deposited by Trustee into the following respective accounts (each of which Trustee shall establish and maintain within the Revenue Fund), in the following amounts, in the following order of priority, and the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of funds sufficient to make any earlier required deposit) at the time of deposit shall be satisfied before any transfer is made to any account subsequent in priority, and provided, that no moneys representing drawings under the Letter of Credit shall be transferred into the Interest Account, the Principal Account or the Redemption Account of the Revenue Fund:

     FIRST, to the Interest Account, the amount paid by Borrower and designated as or attributable to interest on the Notes in the most recent Note Payment, so that the aggregate of such amounts will, on the next Interest Payment Date, equal the amount of interest due on the Notes on such Interest Payment Date.

     SECOND, to the Principal Account, the amount paid by Borrower and designated as or attributable to principal of the Notes in the most recent Note Payment, so that the aggregate of such amounts will, on the next succeeding principal payment date, equal the amount of principal due (whether at maturity or by acceleration) on such principal payment date.

     THIRD, to the Redemption Account, the aggregate amount of principal and premium, if any, next coming due by redemption permitted (as directed in writing by Borrower or as provided in the last sentence of Section 4.01(b)) or required under Article IV hereof, or any portion thereof paid by Borrower.

     Section 5.03. Priority of Moneys in Revenue Fund; Letter of Credit Account.

     (a) Funds for the payment of the principal or redemption price of and interest on the Notes shall be derived from the following sources in the order of priority indicated below; provided, however, that except as otherwise specifically provided herein amounts in the respective accounts within the Revenue Fund shall be used to pay the principal or redemption price of and interest on the Notes held by Registered Owners other than Borrower prior to the payment of the principal and interest on the Notes held by Borrower; and provided, further, that if principal or redemption price (or any portion thereof) of and interest on the Notes is paid with moneys described in subparagraph (i) of this Section 5.03(a), any other moneys on deposit in the respective accounts in the Revenue Fund shall be applied to immediately reimburse Credit Issuer by wire transfer in the amount of any such drawings:

     (i) moneys paid into the Letter of Credit Account of the Revenue Fund representing the proceeds of drawings by Trustee under the Letter of Credit;

     (ii) moneys paid into the Interest Account, if any, representing accrued interest received at the initial sale of the Notes and proceeds from the investment thereof which shall be applied to the payment of interest on the Notes;

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     (iii) moneys paid into the Revenue Fund pursuant to Section 10.01(b) hereof and proceeds from the investment thereof, which constitute Available Moneys;

     (iv) moneys deposited into the Redemption Account pursuant to Section 3.02(c) hereof and proceeds from the investment thereof;

     (v) any other moneys (not derived from drawings under the Letter of Credit) paid into the Revenue Fund and proceeds from the investment thereof, which constitute Available Moneys; and

     (vi) any other moneys paid into the Revenue Fund and proceeds from the investment thereof, which are not Available Moneys.

     (b) Trustee shall create within the Revenue Fund a separate account called the “Letter of Credit Account,” which account shall be an Eligible Account, and all moneys drawn under the Letter of Credit shall be deposited and disbursed either in the Letter of Credit Account or the Liquidity Account established pursuant to Section 8.10 hereof. None of Borrower, any Related Party or Trustee shall have any legal, equitable or beneficial right, title or interest in the Letter of Credit Account or the Liquidity Account. The Letter of Credit Account and the Liquidity Account shall be established and maintained by Trustee and Tender Agent, respectively, and held in trust apart from all other moneys and securities held under this Indenture or otherwise, and over which Trustee and Tender Agent, respectively, shall have the exclusive and sole right of withdrawal for the exclusive benefit of the Registered Owners of the Notes with respect to which each drawing is made.

     (c) Trustee shall draw moneys under the Letter of Credit in accordance with the terms thereof in amounts necessary to make full and timely payments of principal of, premium, if any, and interest on the Notes, other than Notes owned by or for the account of Borrower (including Borrower Notes), which amounts on such Notes owned by or for the account of Borrower shall not be paid from moneys drawn under the Letter of Credit but shall be deemed to be paid by Borrower, when due, whether at maturity, redemption (including optional redemptions scheduled pursuant to the Reimbursement Agreement), acceleration, an Interest Payment Date or otherwise. In addition, Trustee shall draw moneys under the Letter of Credit in accordance with the terms thereof to the extent necessary to make full and timely payments required to be made pursuant to, and in accordance with, Article VIII hereof to pay the purchase price of Borrower Notes. Trustee shall notify Borrower of any proposed drawing on the Letter of Credit (other than with respect to scheduled payments of principal and interest) as and when it notifies Credit Issuer.

     (d) If on the Fixed Interest Rate Date there shall have been delivered to Trustee an Alternate Credit Facility or if at any time there shall have been delivered to Trustee an Alternate Letter of Credit, then Trustee shall accept such Alternate Credit Facility or Alternate Letter of Credit, as applicable, and promptly surrender the previously held Letter of Credit to the issuing bank for cancellation, and shall promptly

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take all actions requested by the issuing bank to convey to such bank or otherwise relinquish all of its right, title and interest in any security held jointly by the issuing bank and Trustee. If at any time there shall cease to be any Notes Outstanding hereunder, Trustee shall promptly surrender the Letter of Credit to Credit Issuer for cancellation. Trustee shall comply with the procedures set forth in the Letter of Credit relating to the surrender thereof.

     Section 5.04. Letter of Credit. Borrower shall at all times throughout the term of this Indenture (but subject to Sections 2.04 and 5.07 hereof) maintain or cause to be maintained the Letter of Credit with respect to the Notes. The Letter of Credit shall be an obligation of Credit Issuer to pay to Trustee, against presentation of sight drafts and certificates required by Credit Issuer, up to (a) an amount equal to the aggregate principal amount of the Notes then Outstanding as necessary to pay the principal of such Notes, whether at maturity, redemption, acceleration or otherwise or upon the purchase of such Notes upon the optional tender of the Notes pursuant to Section 4.06 hereof and on the Mandatory Tender Date, and (b) an amount equal to 60 days (or such other number of days as may be required to obtain a rating on the Notes) of interest on the Notes calculated at an interest rate of 15% per annum on the basis of a 360-day year for the number of days actually elapsed while the Notes bear interest at a Weekly Interest Rate and an amount equal to 180 days (or such other number of days as may be required to obtain a rating on the Notes if the Notes are then rated) of interest on the Notes calculated at the actual interest rate or rates on the Notes on the basis of a 360-day year of twelve 30-day months while the Notes bear interest at the Fixed Interest Rate to pay interest on the Notes when due.

     (a) On any Business Day, Borrower may, at its option, provide or cause to be provided to Trustee an Alternate Letter of Credit and Borrower shall, in any event, cause to be delivered to Trustee an extension of the Expiration Date of the Letter of Credit or an Alternate Letter of Credit at least (a) 45 days before the Expiration Date of the then-existing Letter of Credit while the Notes bear interest at the Weekly Interest Rate or (b) 45 days before the Expiration Date of the then existing Letter of Credit while the Notes bear interest at the Fixed Interest Rate. At least 35 days prior to the Letter of Credit Substitution Date, Borrower shall provide Trustee, Credit Issuer, Tender Agent and Remarketing Agent with a written notice of its intention to provide an Alternate Letter of Credit pursuant to this Section. Such notice shall include the proposed Letter of Credit Substitution Date, which shall be an Interest Payment Date, and identify the provider of the Alternate Letter of Credit. An Alternate Letter of Credit shall be an irrevocable direct-pay letter of credit or other irrevocable credit facility delivered to Trustee on or prior to 11:00 a.m., New York time, on the Letter of Credit Substitution Date, issued by a savings institution, commercial bank or other financial institution or entity, the terms of which shall in all material respects be the same as the Letter of Credit. On or prior to the date of the delivery of an Alternate Letter of Credit to Trustee, Borrower shall cause to be furnished to Trustee (i) such opinions regarding the validity of the Alternate Letter of Credit as any rating agency then rating the Notes may reasonably require, and (ii) written evidence from Moody’s, if the Notes are then rated by Moody’s, and S&P, if the Notes are then rated by S&P, to the effect that such rating agency has reviewed the proposed Alternate Letter of Credit and that the substitution of the proposed Alternate Letter of Credit will not, by itself, result in a reduction of its long-term rating of

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the Notes below “A” if the Notes are rated by S&P or below “A2” if the Notes are rated by Moody’s.

     (b) It is understood and agreed that with proper notification to Trustee and Borrower, Credit Issuer can declare that a default has occurred under the Reimbursement Agreement with Borrower and such default will cause a mandatory redemption of the Notes pursuant to Section 4.01(f) hereof.

     (c) Subject to the provisions of Section 5.03(d) hereof, Trustee shall hold and maintain the Letter of Credit for the benefit of the Registered Owners until the Letter of Credit expires in accordance with its terms. Trustee shall diligently observe all terms, covenants and conditions of the Letter of Credit, including payment when due of any draws on the Letter of Credit, and the provisions relating to the payment of draws on, and reinstatement of amounts that may be drawn under, the Letter of Credit, and will not consent to, agree to or permit any amendment or modification of the Letter of Credit which would adversely affect the rights or security of the Registered Owners of the Notes. If at any time during the term of the Letter of Credit, any successor Trustee shall be appointed and qualified under this Indenture, the resigning or removed Trustee shall request that Credit Issuer transfer the Letter of Credit to the successor Trustee in accordance with the procedures for transfer specified in the Letter of Credit. If the resigning or removed Trustee fails to make this request, the successor Trustee shall do so before accepting appointment. Trustee shall send notice to Credit Issuer and Borrower of the expiration of the Letter of Credit at least two months prior to the date of such expiration.

     At least 30 days prior to the Letter of Credit Substitution Date, Trustee shall send a written notice to the Registered Owners relating to Borrower’s election to deliver an Alternate Credit Facility or Alternate Letter of Credit to Trustee. Such notice shall (a) specify the proposed Letter of Credit Substitution Date, (b) require the Registered Owners of all of the Outstanding Notes to tender their Notes for purchase on the Mandatory Tender Date pursuant to Section 4.07 hereof, and (c) state that all Outstanding Notes not purchased on or before the Mandatory Tender Date will be deemed to be purchased on the Mandatory Tender Date at a price equal to the principal amount thereof, plus unpaid interest, if any, accrued to such date.

     Section 5.05. Investment of Moneys. Subject to the following sentence, all moneys in any of the funds or accounts established pursuant to this Indenture shall be invested by Trustee as directed in writing (which may be in the form of a facsimile transmission), such writing to specify the particular investment to be made, by an Authorized Representative of Borrower in Qualified Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture; provided, however, that: (a) moneys on deposit in the Letter of Credit Account and the Purchase Fund and any moneys held pursuant to Section 4.07 hereof shall be held uninvested; (b) any moneys held in trust for the payment or redemption of Notes pursuant to Article X hereof shall be invested as provided in Section 10.03 hereof; and (c) moneys described in clause (ii), (iii), (iv) or (v) of Section 5.03(a) hereof shall be invested in Qualified Investments described in clause (d) of the definition thereof which mature not later than the date on which such moneys will be required to pay the Notes or the interest thereon. All moneys in any of the funds or accounts established pursuant to this Indenture,

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subject to the limitations set forth in (a) through (c) of the first sentence above, shall be invested by Trustee in Qualified Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture.

     Qualified Investments may be purchased at such prices as may be directed by Borrower or its agent. All Qualified Investments shall be acquired as directed by Borrower subject to limitations as to maturities set forth in this Section, and such additional limitations or requirements consistent with the foregoing as may be established by Request of Borrower. Notwithstanding any other provision herein, in the absence of written investment instructions from Borrower directing Trustee by 11:30 a.m., New York time, of the Business Day preceding the day when investments are to be made, Trustee is directed to invest available funds not described in clauses (a), (b) or (c) of the first paragraph of this Section in the Federated Treasury Obligations Fund #398. Trustee shall not be liable for any losses, fees, taxes or other charges resulting from any investments, reinvestments or liquidations of investment made pursuant to the provisions of this Indenture except for its own gross negligence or willful misconduct; provided, however, the exculpatory provisions provided in this sentence shall apply to Trustee only in its trustee capacity and not in its capacity as investment provider.

     All interest, profits and other income received from the investment of moneys in any fund established pursuant to this Indenture shall be deposited in the Revenue Fund, except that any such interest, profits and other income received from the investment of any moneys held in trust for the payment or redemption of Notes pursuant to Article X shall be applied as provided in Article X hereof. Notwithstanding anything to the contrary contained in this paragraph, an amount of interest received with respect to any Qualified Investment equal to the amount of accrued interest, if any, paid as part of the purchase price of such Qualified Investment shall be credited to the fund from which such accrued interest was paid.

     For the purpose of determining the amount in any fund, all Qualified Investments credited to such fund shall be valued at the market value of such Qualified Investments.

     Trustee may act as principal or agent in the making or disposing of any investment. Trustee may sell at the best price obtainable by it in Trustee’s sole discretion, or present for redemption, any Qualified Investment so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Qualified Investment is credited, and Trustee shall not be liable or responsible for any loss resulting from such investment except for its own gross negligence or willful misconduct. For investment purposes only, Trustee may commingle moneys held in the Interest Account and Principal Account of the Revenue Fund.

     Section 5.06. Additional Duties of Trustee. While the Notes bear interest at the Weekly Interest Rate, Trustee shall send to Borrower an invoice for the interest accrued on the Notes for the current Interest Period which is to be paid hereunder as soon as such amount is available. While the Notes bear interest at the Fixed Interest Rate, 20 days prior to each Interest Payment Date, Trustee shall send to Borrower an invoice for the interest due on the Notes on the next succeeding Interest Payment Date which is to be paid hereunder. Trustee shall send to Credit Issuer a copy of each invoice sent to Borrower. If full payment of any such invoice is not received by the date Borrower is required to make such payment hereunder, Trustee shall

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promptly notify in writing Credit Issuer and Borrower of such nonpayment or underpayment by Borrower. Trustee shall promptly give Credit Issuer written notice upon the failure of Borrower to make any principal payment hereunder.

     Section 5.07. Alternate Credit Facility. If Borrower exercises its option to convert the interest rate borne by the Notes from the Weekly Interest Rate to the Fixed Interest Rate pursuant to the terms and provisions of this Indenture, Borrower may cause to be delivered to Trustee an Alternate Credit Facility, effective as of the Fixed Interest Rate Date, in lieu of keeping the Letter of Credit in place as required by Section 5.04 hereof.

     Such Alternate Credit Facility must meet the following conditions:

     (a) the terms of the Alternate Credit Facility must provide an unconditional obligation of the issuer of the Alternate Credit Facility to pay all amounts with respect to the principal of, premium, if any, and interest on the Notes when the same shall become due; and

     (b) the term of the Alternate Credit Facility must extend to the final maturity of the Notes.

     On or prior to the date of the delivery of an Alternate Credit Facility to Trustee, Borrower shall cause to be furnished to Trustee (i) such opinions regarding the validity of the Alternate Credit Facility as any rating agency then rating the Notes may reasonably require, and (ii) written evidence from Moody’s, if the Notes are then rated by Moody’s, and S&P, if the Notes are then rated by S&P, to the effect that such rating agency has reviewed the proposed Alternate Credit Facility and that the substitution of the proposed Alternate Credit Facility for the Letter of Credit will not, by itself, result in a reduction of its long term rating of the Notes below “A” if the Notes are rated by S&P or below “A2” if the Notes are rated by Moody’s.

ARTICLE VI

PARTICULAR REPRESENTATIONS, WARRANTIES AND COVENANTS

     Section 6.01. Punctual Payment. Borrower shall punctually pay or cause to be paid the principal, premium, if any, and interest to become due in respect of all the Notes, in strict conformity with the terms of the Notes and of this Indenture, according to the true intent and meaning thereof.

     Section 6.02. Extension of Payment of Notes. Borrower shall not directly or indirectly extend or assent to the extension of the maturity of any of the Notes or the time of payment of any claims for interest by the purchase or funding of such Notes or claims for interest or by any other arrangement and in case the maturity of any of the Notes or the time of payment of any such claims for interest shall be extended, such Notes or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Notes then outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of Borrower to issue notes for the purpose of refunding any Outstanding Notes, and such issuance shall not be deemed to constitute an extension of maturity of Notes.

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     Section 6.03. Encumbrances. Borrower shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Account Funds while any of the Notes are Outstanding, except the pledge created by this Indenture and the Reimbursement Agreement. Subject to this limitation, Borrower expressly reserves the right to enter into one or more other indentures for any of its company purposes, and reserves the right to issue other obligations for such purposes.

     Section 6.04. Accounting Records and Reports. Trustee shall keep or cause to be kept proper books of record and account in which complete and correct entries shall be made of all transactions relating to the receipt, investment, disbursement, allocation and application of the Note Payments, the proceeds of the Notes received by Trustee and all funds and accounts held hereunder. Such records shall specify the account or fund to which each investment (or portion thereof) held by Trustee is to be allocated and shall set forth, in the case of each Qualified Investment, (a) its purchase price, (b) identifying information, including par amount, coupon rate, and payment dates, (c) the amount received at maturity or its sale price, as the case may be, (d) the amounts and dates of any payments made with respect thereto, and (e) the dates of acquisition and disposition or maturity.

     Such records shall be open to inspection by any Registered Owner, Borrower and Credit Issuer at any reasonable time during regular business hours on reasonable notice.

     Section 6.05. Other Covenants. Trustee shall promptly collect all amounts due from Borrower hereunder, shall perform all duties imposed upon it hereunder and shall diligently enforce, and take all steps, actions and proceedings reasonably necessary for the enforcement of all of the obligations of Borrower.

     Section 6.06. Further Assurances. Borrower shall make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Registered Owners of the Notes of the rights and benefits provided in this Indenture.

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES OF REGISTERED OWNERS

     Section 7.01. Events of Default; Acceleration; Waiver of Default. Each of the following events shall constitute an “Event of Default” hereunder:

     (a) default in the due and punctual payment of the principal of, or premium (if any) on, any Note when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise;

     (b) default in the due and punctual payment of any installment of interest on any Note, when and as such interest installment shall become due and payable and the continuation of such failure for a period of five days after the due date for such payment;

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     (c) failure to pay the purchase price of any Note tendered in accordance with the provisions of Sections 4.06 and 4.07 hereof and the continuation of such failure for a period of five days after such purchase price has become due and payable;

     (d) failure by Borrower to fully and timely observe and perform its obligations under Section 5.04 hereof;

     (e) failure by Borrower to perform or observe any of the other covenants, agreements or conditions on its part in this Indenture or in the Notes contained, and the continuation of such failure for a period of 30 days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given (i) to Credit Issuer and Borrower by Trustee, (ii) to Credit Issuer, Borrower and Trustee by the Registered Owners of not less than 25% in aggregate principal amount of the Notes at the time Outstanding or (iii) to Borrower and Trustee by Credit Issuer; provided, however, that if the failure stated in such notice cannot be corrected within such 30-day period, an extension of such time will not be unreasonably withheld if corrective action is instituted by Borrower within the applicable period and diligently pursued until the default is corrected; or

     (f) the occurrence and continuance of an Event of Default under the Reimbursement Agreement.

     During the continuance of an Event of Default, unless the principal of all the Notes shall have already become due and payable, Trustee shall, at the direction of Credit Issuer, or upon the occurrence of an Event of Default described in (a), (b), (c) or (d) above, Trustee shall by notice in writing to Tender Agent, Remarketing Agent, Borrower, Credit Issuer and the Registered Owners, declare the principal of all the Notes then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Notes contained to the contrary notwithstanding. Upon any such declaration Trustee shall immediately draw upon any then existing Letter of Credit in accordance with the terms thereof and apply the amount so drawn to pay the principal of and interest on the Notes (other than Borrower Notes) so declared to be due and payable. Interest on the Notes shall cease to accrue upon the declaration of acceleration. Trustee shall notify the Registered Owners of the date of acceleration and the cessation of accrual of interest on the Notes in the same manner as for a notice of redemption.

     The preceding paragraph, however, is subject to the condition that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, and before the Letter of Credit has been drawn upon in accordance with its terms and honored, there shall have been deposited with Trustee a sum sufficient to pay all the principal of the Notes matured prior to such declaration and all matured installments of interest (if any) upon all the Notes, with interest on such overdue installments of principal as provided in this Indenture, and the reasonable expenses of Trustee, and any and all other defaults known to Trustee (other than in the payment of principal of and interest on the Notes due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of Trustee or provision deemed by Trustee to be adequate shall have been made therefor, then, and

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in every such case, the Registered Owners of at least a majority in aggregate principal amount of the Notes then Outstanding, by written notice to Borrower and to Trustee, may, on behalf of the Registered Owners of all the Notes, rescind and annul such declaration and its consequences and waive such default; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power as a consequence thereof.

     Section 7.02. Institution of Legal Proceedings by Trustee. Upon the occurrence of an Event of Default, subject to the satisfaction of the conditions of Section 7.11 hereof, Trustee in its discretion may, and upon the written request of Credit Issuer or the Registered Owners of a majority in principal amount of the Notes then Outstanding and upon being indemnified to its satisfaction therefor shall, proceed to protect or enforce its rights or the rights of the Registered Owners of Notes under this Indenture by a suit in equity or action at law, either for the specific performance of any covenant or agreement contained herein or therein, or in aid of the execution of any power herein or therein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as Trustee shall deem most effectual in support of any of its rights or duties hereunder.

     Section 7.03. Application of Account Funds and Other Funds After Default. If an Event of Default shall occur and be continuing, all Account Funds and any other funds then held or thereafter received by Trustee under any of the provisions of this Indenture (subject to Sections 5.05 and 11.10 hereof) shall be applied by Trustee as follows and in the following order:

     (a) to the payment of any reasonable expenses necessary in the opinion of Trustee to protect the interests of the Registered Owners of the Notes and payment of reasonable fees and expenses of Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Indenture; provided, however, that moneys in the Letter of Credit Account of the Revenue Fund and the Purchase Fund shall not be used for the payment of any such expenses;

     (b) to the payment of the principal of and interest then due on the Notes (upon presentation of the Notes to be paid, and stamping thereon of the payment if only partially paid, or surrender thereof if fully paid) subject to the provisions of this Indenture (including Section 6.02 hereof), as follows:

     (i) Unless the principal of all of the Notes shall have become or have been declared due and payable,

     FIRST, to the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and

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     SECOND, to the payment to the persons entitled thereto of the unpaid principal of any Notes which shall have become due, whether at maturity or by call for redemption, with interest on the overdue principal at the rate borne by the respective Notes, and, if the amount available shall not be sufficient to pay in full all the Notes, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any discrimination or preference.

     (ii) If the principal of all of the Notes shall have become or have been declared due and payable, to the payment of the principal and interest then due and unpaid upon the Notes, with interest on the overdue principal at the rate borne by the Notes, and, if the amount available shall not be sufficient to pay in full the whole amount so due and unpaid, then to the payment thereof ratably, without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, or of any Note over any other Note, according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or preference; provided, however, that neither moneys derived from drawings under the Letter of Credit, Available Moneys, moneys being aged to become Available Moneys, nor the proceeds from remarketing of the Notes shall be used to pay any of the items listed in clause (a) of this Section; and provided, further, that moneys held in the Purchase Fund shall only be used to pay the purchase price of the Notes.

     (c) To the payment of Credit Issuer of any amounts due and owing under the Reimbursement Agreement and the payment of the remainder, if any, to Borrower.

     Section 7.04. Trustee to Represent Registered Owners. Trustee is hereby irrevocably appointed (and the successive respective Registered Owners of the Notes, by taking and holding the same, shall be conclusively deemed to have so appointed Trustee) as trustee and true and lawful attorney-in-fact of the Registered Owners of the Notes for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Registered Owners under the provisions of the Notes, this Indenture and applicable provisions of any other law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in Trustee to represent the Registered Owners, Trustee in its discretion may, and upon the written request of the Registered Owners of not less than 25% in aggregate principal amount of the Notes then Outstanding, and upon being indemnified to its satisfaction therefor (except any actions required to be taken by Section 7.03 hereof, in which event no indemnification shall be required), shall, proceed to protect or enforce its rights or the rights of such Registered Owners by such appropriate action, suit, mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in Trustee or in such Registered Owners under this Indenture or any other law; and upon instituting such proceeding, Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Account Funds and other assets pledged under this Indenture, pending such proceedings. All rights of action under this Indenture or the Notes or otherwise

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may be prosecuted and enforced by Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by Trustee shall be brought in the name of Trustee for the benefit and protection of all the Registered Owners of such Notes, subject to the provisions of this Indenture (including Section 6.02 hereof).

     Section 7.05. Registered Owners’ Direction of Proceedings. Anything in this Indenture to the contrary notwithstanding, the Registered Owners of a majority in aggregate principal amount of the Notes then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to Trustee, to direct the method of conducting all remedial proceedings taken by Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, and that Trustee shall have the right to decline to follow any such direction which in the opinion of Trustee would be unjustly prejudicial to Registered Owners not parties to such direction or for which it has not been provided adequate indemnity to its satisfaction.

     Section 7.06. Limitation on Registered Owners’ Right to Sue. No Registered Owner of any Note shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture or any other applicable law with respect to such Note, unless (a) such Registered Owner shall have given to Trustee written notice of the occurrence of an Event of Default; (b) the Registered Owners of not less than 25% in aggregate principal amount of the Notes then Outstanding shall have made written request upon Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such Registered Owner or said Registered Owners shall have tendered to Trustee indemnity reasonable to it against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, Trustee.

     Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Registered Owner of Notes of any remedy hereunder or under law; it being understood and intended that no one or more Registered Owners of Notes shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of this Indenture or the rights of any other Registered Owners of Notes, or to enforce any right under this Indenture or other applicable law with respect to the Notes, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Registered Owners of the Outstanding Notes, subject to the provisions of this Indenture (including Section 6.02 hereof).

     Section 7.07. Absolute Obligation of Borrower. Nothing in Section 7.06 hereof or in any other provision of this Indenture, or in the Notes, contained shall affect or impair the obligation of Borrower, which is absolute and unconditional, to pay the principal of and interest on the Notes to the respective Registered Owners of the Notes at their respective dates of maturity, or upon acceleration or call for redemption, as herein provided, or affect or impair the right of such Registered Owners, which is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Notes.

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     Section 7.08. Termination of Proceedings. In case any proceedings taken by Trustee or any one or more Registered Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to Trustee or the Registered Owners, then in every such case Borrower, Credit Issuer, Trustee and the Registered Owners, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of Borrower, Credit Issuer, Trustee and the Registered Owners shall continue as though no such proceedings had been taken. Trustee shall deliver copies of all proceedings taken by Trustee under this Indenture to Tender Agent.

     Section 7.09. Remedies Not Exclusive. No remedy herein conferred upon or reserved to Trustee, Credit Issuer or to the Registered Owners of the Notes is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.

     Section 7.10. No Waiver of Default. In the event any agreement or covenant contained in this Indenture should be breached by Borrower and thereafter waived by Trustee or the Registered Owners of the Notes, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. No delay or omission of Trustee or of any Registered Owner of the Notes to exercise any right or power arising upon the occurrence of any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy given by this Indenture to Trustee or to the Registered Owners of the Notes may be exercised from time to time and as often as may be deemed expedient.

     Section 7.11. Consent to Defaults. Notwithstanding any other provisions of this Indenture, so long as the Letter of Credit is in full force and effect and Credit Issuer has not wrongfully dishonored and is not continuing wrongfully to dishonor drawings under the Letter of Credit and all payments of principal or purchase price of and interest on the Notes have been timely made, no Event of Default shall be declared (except in a case resulting from the failure of Borrower to pay fees or indemnification amounts to Trustee), nor any remedies exercised with respect to any such Events of Default by Trustee or by the Registered Owners and no Event of Default shall be waived by Trustee or the Registered Owners to the extent they may otherwise be permitted hereunder, except at the prior written direction of Credit Issuer. Unless an Alternate Credit Facility has been provided, no Event of Default can be waived, in any circumstance, unless the Letter of Credit has been fully reinstated and is in full force and effect as evidenced in writing by Credit Issuer to Trustee.

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ARTICLE VIII

TRUSTEE, THE REMARKETING
AGENT AND TENDER AGENT

     Section 8.01. Duties, Immunities and Liabilities of Trustee.

     (a) Trustee shall, prior to an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture. Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of its own affairs.

     (b) Trustee may at any time and for any reason be removed by an instrument or concurrent instruments in writing appointing a successor Trustee filed with Trustee so removed and Borrower and executed by the Registered Owners of a majority in aggregate principal amount of the Notes Outstanding. Trustee may also be removed at any time for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provisions of this Indenture with respect to the duties and obligations of Trustee, by Borrower (so long as no Event of Default has occurred and is continuing) or by any court of competent jurisdiction upon the application of Credit Issuer or by the Registered Owners of a majority in aggregate principal amount of the Notes Outstanding. Notwithstanding the foregoing, Trustee may not be removed until a successor Trustee acceptable to Credit Issuer has been appointed and has assumed the duties and responsibilities of successor Trustee under this Indenture.

     (c) Trustee may at any time resign by giving written notice of such resignation to Borrower and Credit Issuer and by giving the Registered Owners notice of such resignation by mail at the addresses shown on the registration books maintained by Note Registrar. Upon receiving such notice of resignation, Borrower shall promptly appoint, with the consent of Credit Issuer, a successor Trustee by an instrument in writing. Trustee shall not be relieved of its duties until such successor Trustee has accepted its appointment.

     (d) Any removal or resignation of Trustee and appointment of a successor Trustee acceptable to Credit Issuer shall become effective only upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed and have accepted appointment within 45 days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Registered Owner (on behalf of himself and all other Registered Owners) may petition at the expense of Borrower any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture, shall signify its acceptance of such appointment by executing and delivering to Borrower, Credit Issuer and to its predecessor Trustee a written acceptance thereof and a written instrument by

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the successor Trustee indemnifying the predecessor Trustee for all costs or claims arising after the acceptance of appointment hereunder relating to such successor Trustee’s performance of its duties under this Indenture, and thereupon and after the payment by Borrower of all unpaid fees and expenses (including legal fees and expenses) of the predecessor Trustee such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the Request of Borrower or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, Borrower shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection, Borrower shall mail a notice of the succession of such Trustee to the trusts hereunder to each rating agency which is then rating the Notes, to the Registered Owners at the addresses shown on the registration books maintained by Note Registrar and to Credit Issuer. If Borrower fails to mail such notice within 15 days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of Borrower.

     (e) Any Trustee appointed under the provisions of this Section in succession to Trustee shall be a trust company or bank having the powers of a trust company, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time Trustee shall cease to be eligible in accordance with the provisions of this subsection, Trustee shall resign immediately in the manner and with the effect specified in this Section.

     Section 8.02. Merger or Consolidation. Any company into which Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under Section 8.01(e) hereof, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.

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     Section 8.03. Liability of Trustee.

     (a) The recitals of facts herein and in the Notes contained shall be taken as statements of Borrower, and Trustee shall assume no responsibility for the correctness of the same, or make any representations as to the validity or sufficiency of this Indenture or of the Notes. In addition, Trustee shall assume no responsibility with respect to this Indenture or Notes other than in connection with the duties or obligations assigned to or imposed upon Trustee herein or in the Notes. Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Notes. Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own gross negligence or willful misconduct. Trustee may become the Registered Owner of Notes with the same rights it would have if it were not Trustee and, to the extent permitted by law, may act as depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Registered Owners, whether or not such committee shall represent the Registered Owners of a majority in principal amount of the Notes then Outstanding.

     Trustee may execute any of the trusts or powers set forth herein and perform the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to the advice of counsel of its selection concerning all matters of trusts and its duties herein.

     (b) Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the actions taken or omitted by Trustee constitute willful misconduct or that Trustee was grossly negligent in ascertaining the pertinent facts.

     (c) Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Registered Owners of not less than a majority in aggregate principal amount of the Notes at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to Trustee or exercising any trust or power conferred upon Trustee under this Indenture.

     (d) Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Registered Owners pursuant to the provisions of this Indenture unless such Registered Owners shall have offered to Trustee satisfactory security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby; provided, however, that Trustee shall not be entitled to any security or indemnity with respect to its obligation to draw under the Letter of Credit to pay the principal or purchase price of or interest on the Notes.

     (e) Trustee shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture except for its own gross negligence or willful misconduct.

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     (f) Trustee shall not be deemed to have knowledge of any default or Event of Default hereunder unless and until it shall have actual knowledge thereof, or shall have received written notice thereof at its designated corporate trust office. Except as otherwise expressly provided herein, Trustee shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or of any of the documents executed in connection with the Notes or as to the existence of a default or Event of Default thereunder. Trustee shall not be responsible for the validity or effectiveness of any collateral given to or held by it.

     (g) No provision of this Indenture shall require Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights or powers. Trustee shall, however, in any case make drawings under the Letter of Credit, pay principal or purchase price of or interest on the Notes as it becomes due and accelerate the Notes as required by this Indenture, notwithstanding anything to the contrary herein.

     (h) The rights, privileges, protections, immunities and benefits given to Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

     (i) Trustee may request that Borrower deliver an officer’s certificate of Borrower executed on its behalf by an Authorized Representative of Borrower setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which officer’s certificate may be signed by any person authorized to sign an officer’s certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

     Section 8.04. Right of Trustee to Rely on Documents. Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Trustee may consult with counsel of its selection, who may be counsel of or to Borrower, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.

     Trustee shall not be bound to recognize any person as the Registered Owner of a Note unless and until such Note is submitted for inspection, if required, and its title thereto is satisfactorily established if disputed.

     Whenever in the administration of the trusts imposed upon it by this Indenture Trustee shall deem it necessary or desirable that a factual matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a Certificate of Borrower, and such Certificate shall be full warrant to Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Certificate,

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but in its discretion Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable.

     Section 8.05. Preservation and Inspection of Documents. All documents received by Trustee under the provisions of this Indenture shall be retained in its possession and shall be subject at all reasonable times to the inspection of Borrower, Credit Issuer and any Registered Owner and their agents and representatives duly authorized in writing, at reasonable hours and under reasonable conditions.

     Section 8.06. Compensation and Indemnification.

     (a) Borrower shall pay to Trustee and Tender Agent from time to time such compensation as shall be agreed in writing between Borrower and Trustee for all services rendered under this Indenture, and also all reasonable expenses, charges, legal and consulting fees and other disbursements and those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under this Indenture, and Trustee and Tender Agent each shall have a lien therefor on any and all funds (except moneys on deposit in the Purchase Fund and the Letter of Credit Account, Available Moneys, moneys being aged to become Available Moneys and funds held for the payment of Notes or the interest thereon which is past due or for which notice of redemption has been mailed) at any time held by it under this Indenture which lien shall be prior and superior to the lien of the Registered Owners of the Notes.

     (b) Borrower releases Trustee from, and covenants and agrees that Trustee shall not be liable for, and covenants and agrees to indemnify and hold harmless Trustee and its officers, employees and agents from and against any and all losses, claims, damages, liabilities or expenses, of every conceivable kind, character and nature whatsoever arising out of, resulting from, or in any way connected with (a) the Property, or the conditions, occupancy, use, possession, conduct or management of, or work done in or about, or from the planning, design, acquisition, installation or construction of, the Property or any part thereof; (b) the issuance of any Notes or any certifications or representations made in connection therewith by Borrower and the carrying out of any of the transactions contemplated by the Notes or this Indenture; (c) Trustee’s acceptance or administration of the trusts under this Indenture, or the exercise or performance of any of its powers or duties under this Indenture; or (d) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading, in the official statement utilized by any underwriter in connection with the sale or offering of any Notes; provided that in each case such release and indemnity shall not be required for damages that result from the willful misconduct or gross negligence on the part of the party seeking such indemnity. The indemnity required by this Section shall be only to the extent that any loss sustained by Trustee exceeds the net proceeds Trustee receives from any insurance carried by Borrower with respect to the loss sustained. Borrower further covenants and agrees to pay or to reimburse Trustee and Tender Agent and their officers, employees and agents for any and all costs, reasonable attorneys fees and expenses, liabilities or expenses incurred in connection with investigating, defending against or otherwise in connection with any

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such losses, claims, damages, liabilities, expenses or actions, except to the extent that the same arise out of the willful misconduct or gross negligence of the party claiming such payment or reimbursement. The provisions of this Section shall survive the payment and retirement of the Notes and the termination of this Indenture.

     Section 8.07. Notice to Rating Agency. Borrower and Trustee shall give written notice to each rating agency then rating the Notes of each of the following: (a) a successor Trustee or Tender Agent is appointed hereunder; (b) this Indenture, the Remarketing Agreement or the Letter of Credit is amended or supplemented in any manner; (c) the Notes are converted to a Fixed Interest Rate pursuant to Section 2.04 hereof or defeased pursuant to Section 10.01 hereof or accelerated pursuant to Section 7.01 hereof or redeemed in whole pursuant to Section 4.01 hereof; or (d) the expiration, substitution, termination or extension of the Letter of Credit. Trustee makes this covenant as a matter of courtesy and accommodation only and shall not be liable to any Person for any failure to comply therewith.

     Section 8.08. Qualifications of Remarketing Agent. Remarketing Agent shall be a member of the National Association of Securities Dealers, Inc. or be a banking corporation or trust company, having a capitalization of at least $10,000,000 and shall be authorized by law to perform all the duties imposed upon it by this Indenture. Remarketing Agent may at any time resign and be discharged of the duties and obligations created by this Indenture by giving at least 30 days’ notice to Borrower, Credit Issuer, Tender Agent, Trustee, S&P and Moody’s, to the extent each rating agency is then rating the Notes. With the prior written consent of Credit Issuer, Borrower may remove Remarketing Agent at any time by an instrument signed by Borrower and filed with Remarketing Agent, Credit Issuer, Tender Agent and Trustee. Borrower, with the written consent and approval of Credit Issuer, shall appoint a successor Remarketing Agent.

     Remarketing Agent shall designate to Trustee its principal office and signify its acceptance of the duties and obligations imposed on it hereunder by a written instrument of acceptance delivered to Borrower and Trustee and Tender Agent under which Remarketing Agent will agree to perform the obligations of Remarketing Agent set forth in Section 8.09 hereof.

     The initial Remarketing Agent is Dougherty & Company LLC.

     Section 8.09. Remarketing of Notes.

     (a) Tender Agent shall immediately provide Remarketing Agent, Credit Issuer and Trustee with telephonic notice, promptly confirmed by written notice by 11:00 a.m., New York time, on the next succeeding Business Day of the receipt by Tender Agent of a tender notice from any Registered Owner pursuant to Section 4.06 hereof or the receipt by Tender Agent of a notice from Borrower of its election to substitute an Alternate Letter of Credit for the then existing Letter of Credit and providing Remarketing Agent, Credit Issuer and Trustee with the information contained in such notices. Upon receipt of such telephonic notice, Remarketing Agent shall use its best efforts to remarket the Notes described in such notice, any such remarketing to be made at a price equal to the principal amount thereof plus accrued interest.

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     (b) Remarketing Agent shall (i) by 3:00 p.m., New York time, on the Business Day prior to the Purchase Date, give facsimile or telephonic notice, promptly confirmed by a written notice, to Trustee, Tender Agent, Borrower and Credit Issuer (A) directing Tender Agent to, subject to Section 2.12 hereof, make available for pick up by 10:00 a.m., New York time, on the Purchase Date, at the designated corporate trust office of Tender Agent any Notes for which Remarketing Agent has arranged sales pursuant to this Section and (B) stating the principal amount of Notes sold pursuant to subsection (a) of this Section, and (ii) deliver or cause to be delivered to Tender Agent at or prior to 10:00 a.m., New York time, on the Purchase Date the principal of and interest accrued to such Purchase Date on the Note or Notes to be so purchased that have been remarketed by Remarketing Agent, in immediately available funds. Upon receipt of amounts for the purchase of Notes from Remarketing Agent, Tender Agent shall immediately give telephonic notice to Trustee, Borrower and Credit Issuer, promptly confirmed in writing, of (A) the proceeds received from Remarketing Agent to be applied to the purchase of the Notes tendered for purchase, and (B) the amount that must be drawn under the Letter of Credit for Notes that have been tendered as to which Tender Agent has not received the principal of and interest accrued thereon to the Purchase Date from Remarketing Agent. None of the moneys so provided to Tender Agent for purchase of Notes may be derived directly or indirectly from Borrower or any Related Party and therefore the Notes may not be remarketed to any such entity or person. The notice by Remarketing Agent shall specify the names, addresses and taxpayer identification numbers of the purchasers of, and the principal amount and denominations of, any such Notes for which it has found purchasers as of such date and the principal amount of any such Notes for which it has not found purchasers as of such date. Subject to Section 2.12 hereof, Tender Agent shall make available for pick up new Notes properly executed, registered in the name(s) and issued in Authorized Denominations as may be specified in the notice by Remarketing Agent to Tender Agent by 10:00 a.m., New York time, on the Purchase Date. Remarketing Agent and Tender Agent shall hold all moneys available for the purchase of Notes in trust solely for the benefit of the purchaser of the Notes until Notes purchased with such moneys shall have been delivered to or for the account of such purchaser, and such moneys shall not be commingled with any other moneys. Under no circumstances shall Tender Agent be obligated to expend any of its own funds in connection with this Indenture.

     (c) On the date Notes are to be purchased pursuant to Section 8.10 hereof, Trustee shall, prior to 12:00 noon, New York time, draw on the Letter of Credit in accordance with the provisions thereof to the extent of the purchase price of the Notes for which Tender Agent has not received proceeds from the remarketing of such Notes as evidenced by the notice from Tender Agent to Trustee and shall immediately transfer or direct the proceeds of such draw to Tender Agent to pay the purchase price of such Notes on the Purchase Date. Borrower Notes shall be registered in the name of Borrower and held by Tender Agent in trust until the Notes are remarketed.

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     Section 8.10. Creation of Purchase Fund; Purchase of Notes Delivered to Tender Agent.

     (a) There is hereby created and established with Tender Agent in a trust capacity a separate fund to be designated as the “Purchase Fund” and there shall be created within the Purchase Fund (i) a separate account called the “Remarketing Account”, which shall be an Eligible Account, into which all moneys representing the proceeds of remarketing pursuant to Section 8.09 hereof (which moneys shall be in a form immediately available on the Purchase Date) shall be deposited and (ii) a separate account called the “Liquidity Account”, which shall be an Eligible Account, into which the proceeds of drawings by Trustee under the Letter of Credit shall be deposited. None of Borrower, any Related Party nor Trustee shall have any legal, equitable or beneficial right, title or interest in the moneys held by Remarketing Agent or by Tender Agent in the Purchase Fund or the Remarketing Account or Liquidity Account therein. The Purchase Fund and each such Account shall be established and maintained by Tender Agent and held in trust apart from all other moneys and securities held under this Indenture or otherwise, and Tender Agent shall have the exclusive and sole right of withdrawal for the exclusive benefit of the Persons tendering or purchasing Notes with respect to which amounts were deposited into the Purchase Fund and the Accounts created therein.

     On each day on which Notes have been tendered for purchase or are deemed to have been tendered for purchase pursuant to this Indenture after paying or making provision for the payment of the purchase price of such Notes as provided in this Indenture, Tender Agent shall promptly remit to Credit Issuer any moneys, but not exceeding the amount drawn on the Letter of Credit for such purchase, on deposit in the Liquidity Account not used to purchase Notes.

     (b) Funds for the purchase of Notes at the principal amount thereof plus any unpaid interest accrued to the Purchase Date shall be paid out of the Purchase Fund in the order of priority indicated:

     (i) from the Remarketing Account, proceeds from the remarketing of Notes pursuant to Section 8.09 hereof; and

     (ii) from the Liquidity Account, moneys representing proceeds of a drawing by Trustee under the Letter of Credit.

     (c) In the event that Notes are not purchased pursuant to this Section, Trustee shall pay the principal amount of Notes tendered pursuant to Section 4.06 hereof or Notes subject to mandatory tender pursuant to Section 4.07 hereof with moneys on deposit in the Revenue Fund pursuant to Section 5.02 hereof and cancel such Notes.

     (d) Tender Agent shall:

     (i) hold all Notes delivered to it pursuant to Sections 4.06, 4.07 or 8.11 hereof in trust solely for the benefit of the respective Registered Owners which shall have so delivered such Notes until moneys representing the purchase

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price for such Notes shall have been delivered to or for the account of or to the order of such Registered Owners;

     (ii) hold all moneys delivered to it under this Section for the purchase of Notes in trust solely for the benefit of the Person which shall have so delivered such moneys until the Notes purchased with such moneys shall have been delivered to or for the account of such Person;

     (iii) only make such payments called for under this Indenture from immediately available funds transferred to Tender Agent for payment pursuant to this Indenture which funds are on deposit in an appropriate account maintained by Tender Agent;

     (iv) under no circumstances be obligated to expend any of its own funds in connection with this Indenture;

     (v) in acting with regard to the purchase of Notes under this Indenture be acting as a conduit and shall not be purchasing Notes for its own account, and in the absence of written notice from Borrower or Trustee, shall be entitled to assume that any Note tendered to it, or deemed tendered to it for purchase, is entitled under this Indenture to be so purchased; and

     (vi) notify Remarketing Agent by telephone, telegram or other form of electronic communication of the contents of, and promptly deliver to Borrower, Trustee, Remarketing Agent and Credit Issuer a copy of, each notice delivered to it in accordance with Section 4.06 hereof and, immediately upon the delivery to it of Notes in accordance with Section 4.06 hereof, give facsimile or telephonic notice to Borrower, Trustee and Credit Issuer specifying the principal amount of the Notes so delivered.

     Section 8.11. Delivery of Notes.

     (a) Notes purchased by Tender Agent with the moneys described in subsection (b)(i) of Section 8.10 hereof shall be made available by Tender Agent to the new purchasers.

     (b) (i) Notes purchased with the moneys described in subsection (c) of Section 8.10 hereof shall be cancelled.

     (ii) Notes purchased by Tender Agent with moneys described in subsection (b)(ii) of Section 8.10 hereof shall be held by Tender Agent in trust for the benefit of Credit Issuer as Borrower Notes in the name of Borrower on the registration books of DTC with respect to book-entry Notes.

     (c) Notes which have been delivered to Tender Agent and which thereafter have been sold shall be delivered to such new owners as Remarketing Agent or Credit Issuer may designate to Tender Agent, but only upon (i) written confirmation to Trustee by Credit Issuer that the stated amount of the Letter of Credit has been reinstated with

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respect to the principal of the Notes being so re-registered and delivered, together with the portion of the Letter of Credit used to pay accrued interest for the purchase of such Notes, (ii) written confirmation to Tender Agent by Trustee that the stated amount of the Letter of Credit has been reinstated with respect to the principal of the Notes being so re-registered and delivered together with the portion of the Letter of Credit used to pay accrued interest for the purchase of such Notes and (iii) written notice to Tender Agent by Trustee to release the Borrower Notes to such new owners.

     Borrower shall cooperate with Trustee and Tender Agent to cause the necessary arrangements to be made and to be thereafter continued whereby funds from the sources specified herein will be made available for the purchase of Notes presented at the designated corporate trust office of Tender Agent and whereby Notes executed by Borrower and authenticated by Tender Agent shall be made available to the extent necessary for delivery pursuant to this Section.

     Section 8.12. Delivery of Proceeds of Remarketing. The proceeds of the remarketing by Remarketing Agent of any Notes delivered to Tender Agent, any Borrower Notes or any Notes delivered to Remarketing Agent by any other Registered Owner, shall be turned over to Credit Issuer or such other Registered Owner, as the case may be.

     Section 8.13. No Purchases or Sales After Default. Anything in this Indenture to the contrary notwithstanding, there shall be no purchases or sales of Notes pursuant to this Article if there shall have occurred and be continuing an Event of Default described in clauses (a) through (c) of Section 7.01 hereof.

     Section 8.14. Qualifications of Tender Agent. Tender Agent shall be a bank or trust company or another institution having the powers of a trust company, authorized to perform all duties imposed upon it by this Indenture and the Remarketing Agreement, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal or state authority. If such bank or trust company or other institution publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such bank or trust company or other institution shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Tender Agent may at any time resign and be discharged of the duties and obligations created by this Indenture by giving at least 60 days’ notice to Borrower, Remarketing Agent and Trustee. With the written consent of Credit Issuer, Tender Agent may be removed at any time by Borrower, by filing an instrument, signed by Borrower, filed with Tender Agent, Remarketing Agent and Trustee.

     The initial Tender Agent appointed under this Indenture is Manufacturers and Traders Trust Company. Borrower, with the written consent and approval of Credit Issuer, shall appoint a successor Tender Agent and such successor Tender Agent shall evidence its acceptance of such appointment by executing and delivering to Credit Issuer and Borrower a written acceptance thereof. In the event Borrower fails to appoint a successor Tender Agent prior to the effective date of the removal or resignation of the current Tender Agent, the existing Tender Agent shall

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remain in place until a successor Tender Agent is appointed. If a successor Tender Agent is not appointed within 30 days as provided herein, Trustee shall be appointed as the successor Tender Agent.

     Section 8.15. Paying Agent. Borrower, with the written approval of Credit Issuer, may appoint and at all times have a Paying Agent in such cities as Borrower deems desirable, for the payment of the principal of, and the interest (and premium, if any) on, the Notes. Borrower hereby appoints Trustee as paying agent. Trustee shall not be responsible for the failure of Credit Issuer or any other party to make funds available to Trustee.

     Section 8.16. Several Capacities. Anything in this Indenture to the contrary notwithstanding, the same entity may serve hereunder as Trustee, Tender Agent, Note Registrar and Paying Agent and in any other combination of such capacities, to the extent permitted by law.

ARTICLE IX

MODIFICATION OR AMENDMENT OF THIS INDENTURE

     Section 9.01. Amendments Permitted.

     (a) This Indenture and the rights and obligations of Borrower and of the Registered Owners of the Notes and of Trustee may be modified or amended from time to time and at any time by an indenture or indentures supplemental thereto, which Borrower and Trustee may enter into with the written consent of Credit Issuer and the Registered Owners of a majority in aggregate principal amount of all Notes then Outstanding, which consent Borrower and Credit Issuer shall file with Trustee. No such modification or amendment shall (i) extend the fixed maturity of any Note, reduce the amount of principal thereof, extend the time of payment or change the method of computing the rate of interest thereon or extend the time of payment of interest thereon, without the consent of the Registered Owner of each Note so affected; (ii) reduce the aforesaid percentage of Notes the consent of the Registered Owners of which is required to effect any such modification or amendment; or (iii) permit the creation of any lien on the Account Funds and other assets pledged under this Indenture prior to or on a parity with the lien created by this Indenture or deprive the Registered Owners of the Notes of the lien created by this Indenture on such Account Funds and other assets (except as expressly provided in this Indenture), without the consent of the Registered Owners of all of the Notes then Outstanding, or (iv) adversely affect the interests of Tender Agent without its prior written consent. It shall not be necessary for the consent of the Registered Owners to approve the particular form of any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by Borrower and Trustee of any Supplemental Indenture pursuant to this subsection (a), Trustee shall mail a copy of the Supplemental Indenture to Tender Agent and mail a notice to be prepared by Borrower, setting forth in general terms the substance of such Supplemental Indenture, to each rating agency then rating the Notes and the Registered Owners of the Notes at the address shown on the registration books of Note

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Registrar. However, any failure to give such notice, or any defect therein, shall not in any way impair or affect the validity of any such Supplemental Indenture.

     (b) This Indenture and the rights and obligations of Borrower, Trustee and the Registered Owners of the Notes may also be modified or amended from time to time and at any time by an indenture or indentures supplemental hereto, which Borrower and Trustee may enter into without the consent of any Registered Owners but with the written consent of Credit Issuer, but only to the extent permitted by law including (without limitation) for any one or more of the following purposes:

     (i) to add to the covenants and agreements of Borrower contained in this Indenture other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Notes or to surrender any right or power herein reserved to or conferred upon Borrower;

     (ii) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in this Indenture, or in regard to matters or questions arising under this Indenture, as Borrower may deem necessary or desirable which do not adversely affect the rights of the Registered Owners hereunder;

     (iii) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute;

     (iv) to make such provisions for the purpose of conforming to the terms and provisions of any Alternate Letter of Credit or Alternate Credit Facility or to obtain a rating on the Notes which do not adversely affect the rights of the Registered Owners hereunder; and

     (v) to modify, amend or supplement this Indenture in any other respect which does not adversely affect the rights of the Registered Owners hereunder. Trustee shall give notice of any such modification or amendment to each rating agency then rating the Notes.

     (c) Trustee may in its discretion, but shall not be obligated to, enter into any such Supplemental Indenture authorized by subsections (a) or (b) of this Section which materially adversely affects Trustee’s own rights, duties or immunities under this Indenture or otherwise. In executing, or accepting the additional trusts created by, any Supplemental Indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, Trustee shall be entitled to receive, and shall be fully protected in relying upon, an opinion of counsel stating that the execution of such Supplemental Indenture is authorized or permitted by this Indenture.

     Section 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified

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and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of Borrower, Trustee, Credit Issuer and all Registered Owners of Notes Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

     Section 9.03. Endorsement of Notes; Preparation of New Notes. Notes delivered after the execution of any Supplemental Indenture pursuant to this Article may, and if Borrower so determines shall, bear a notation by endorsement or otherwise in form approved by Borrower as to any modification or amendment provided for in such Supplemental Indenture, and, in that case, upon demand of the Registered Owner of any Note Outstanding at the time of such execution and presentation of his Note for the purpose at the office of Note Registrar or at such additional offices as Note Registrar may select and designate for that purpose, a suitable notation shall be made on such Note. If the Supplemental Indenture shall so provide, new Notes so modified as to conform, in the opinion of Borrower, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by Borrower and authenticated by Note Registrar, and upon demand of the Registered Owners of any Notes then Outstanding shall be exchanged at the principal office of Note Registrar, without cost to any Registered Owner, for Notes then Outstanding upon surrender for cancellation of such Notes in equal aggregate principal amounts of the same maturity.

     Section 9.04. Amendment of Particular Notes. The provisions of this Article shall not prevent any Registered Owner from accepting any amendment as to the particular Notes held by such Registered Owner, provided that due notation thereof is made on such Notes.

ARTICLE X

DEFEASANCE

     Section 10.01. Discharge of Indenture. The Notes may be paid by Borrower in any of the following ways, provided that Borrower also pays or causes to be paid any other sums payable hereunder by Borrower:

     (a) by paying or causing to be paid with Available Moneys the principal of, interest and premium, if any, on the Notes, as and when the same become due and payable;

     (b) by depositing with Trustee, in trust, at or before maturity, money or securities in the necessary amount (as provided in Section 10.03 hereof) to pay or redeem with Available Moneys all Notes then Outstanding; or

     (c) by delivering to Trustee, for cancellation by it, the Notes then Outstanding.

     If the Notes are paid by Borrower pursuant to Section 10.01(b) hereof prior to the Fixed Interest Rate Date, Borrower shall provide to Trustee written evidence from Moody’s, if the Notes are then rated by Moody’s, and S&P, if the Notes are then rated by S&P, to the effect that

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such payment will not result in a withdrawal of its rating on the Notes or a reduction from the rating which then exists as to the Notes. If Borrower shall also pay or cause to be paid all other sums payable hereunder by Borrower, then and in that case, at the election of Borrower (evidenced by a Certificate of Borrower, filed with Trustee, signifying the intention of Borrower to discharge all such indebtedness and this Indenture), and notwithstanding that any Notes shall not have been surrendered for payment, this Indenture and the pledge of the Account Funds and other assets made under this Indenture and all covenants, agreements and other obligations of Borrower under this Indenture shall cease, terminate, become void and be completely discharged and satisfied except only as provided in Sections 8.06(b) and 10.02 hereof. In such event, upon Request of Borrower, Trustee shall cause an accounting for such period or periods as may be requested by Borrower to be prepared and filed with Borrower and shall execute and deliver to Borrower all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and Trustee shall pay over, transfer, assign or deliver all moneys or securities or other property held by it pursuant to this Indenture which are not required for the payment of obligations to be paid from Additional Payments or for the payment or redemption of Notes not theretofore surrendered for such payment or redemption in the following order (i) first, to Credit Issuer to the extent of any amounts due to Credit Issuer pursuant to the Reimbursement Agreement, and (ii) otherwise, to Borrower, provided that moneys in the Letter of Credit Account, the Liquidity Account and the Remarketing Account shall be returned to Credit Issuer to the extent that Borrower’s obligations under the Reimbursement Agreement have not otherwise been satisfied.

     Section 10.02. Discharge of Liability on Notes. Upon the deposit with Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as provided in Section 10.03 hereof) to pay or redeem all Outstanding Notes (whether upon or prior to the maturity or the redemption date of such Notes), provided that, if any of such Notes are to be redeemed prior to maturity, notice of such redemption shall have been given as provided in Article IV or provision satisfactory to Trustee shall have been made for the giving of such notice, then all liability of Borrower in respect of such Notes shall cease, terminate and be completely discharged, except only that the Registered Owners thereof shall thereafter be entitled to payment of the principal or redemption price, as applicable, of and interest on such Notes by Borrower, and Borrower shall remain liable for such payment, but only out of such money or securities deposited with Trustee as aforesaid for their payment; provided, further, however, that the provisions of Section 10.04 hereof shall apply in all events. In the event any of said Notes are not to be redeemed within the next succeeding 60 days, Borrower shall have given Trustee in form satisfactory to it irrevocable instructions for it to mail, as soon as practicable in the same manner as a notice of redemption is mailed pursuant to Article IV hereof, a notice to the Registered Owners of such Notes that the deposit required above has been made with Trustee and that said Notes are deemed to have been paid in accordance with this Section and stating such maturity or redemption dates upon which moneys are to be available for the payment of the principal or redemption price, as applicable, of said Notes.

     Section 10.03. Deposit of Money or Securities with Trustee. Whenever in this Indenture it is provided or permitted that there be deposited with or held in trust by Trustee money or securities in the necessary amount to pay or redeem any Notes, the money or securities so to be deposited or held may include money or securities held by Trustee in the funds and

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accounts established pursuant to this Indenture (exclusive of the Note Fund, the Purchase Fund and the Letter of Credit Account) and shall be:

     (a) Available Moneys in an amount equal to the principal amount of such Notes, all unpaid interest thereon to maturity, and the purchase price of such Notes except that, in the case of Notes which are to be redeemed prior to maturity and in respect of which notice of such redemption shall have been given as in Article IV hereof provided or provision satisfactory to Trustee shall have been made for the giving of such notice, the amount to be deposited or held shall be the redemption price of such Notes and all unpaid interest thereon to the redemption date; or

     (b) Government Obligations purchased with Available Moneys which when due will provide money sufficient in the opinion of an Accountant delivered to Trustee and Credit Issuer, at Borrower’s expense, to pay the principal or redemption price, as applicable, of, all unpaid interest to maturity, or to the redemption date, as the case may be, on the Notes to be paid or redeemed, as such principal and interest become due, and the purchase price of such Notes; provided that, in the case of Notes which are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in Article IV hereof or provision satisfactory to Trustee shall have been made for the giving of such notice; and provided further that Government Obligations purchased pursuant to this paragraph shall not be subject to redemption prior to their maturity other than at the option of the holder thereof unless the moneys to be available from the redemption of such securities on the earliest date on which such securities are subject to redemption, other than at the option of the holder thereof, shall be at least equal to the amount of money expected to be derived in connection with such securities in determining that the provisions of this paragraph have been satisfied;

provided, in each case, that Trustee shall have been irrevocably instructed (by the terms of this Indenture or by Request of Borrower) to apply such money to the payment of such principal or redemption price, as applicable, and interest with respect to such Notes.

     Section 10.04. Payments After Discharge of Indenture. When there are no longer any Notes Outstanding, and all fees, charges and expenses of Trustee, Tender Agent and any Paying Agents have been paid or provided for, and all expenses of Borrower relating to this Indenture have been paid or provided for, and all other amounts payable hereunder have been paid, and this Indenture has been discharged and satisfied, and subject to the escheat laws of the State, Trustee shall pay any moneys remaining in any fund established and held hereunder in the following order (a) first, to Credit Issuer to the extent of any amounts due to Credit Issuer pursuant to the Reimbursement Agreement, and (b) otherwise to Borrower, provided that moneys in the Letter of Credit Account, the Liquidity Account and the Remarketing Account shall be returned to Credit Issuer to the extent that Borrower’s obligations under the Reimbursement Agreement have not otherwise been satisfied.

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ARTICLE XI

MISCELLANEOUS

     Section 11.01. Successor Is Deemed Included in All References to Predecessor. Whenever in this Indenture either Borrower or Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of Borrower or Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.

     Section 11.02. Limitation of Rights to Parties and Registered Owners. Nothing in this Indenture or in the Notes expressed or implied is intended or shall be construed to give to any Person other than Trustee, Tender Agent, Credit Issuer, Borrower and the Registered Owners of the Notes, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of Trustee, Credit Issuer, Borrower and the Registered Owners of the Notes. Credit Issuer is expressly made a third party beneficiary to this Indenture.

     Section 11.03. Waiver of Notice. Whenever in this Indenture the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing by the Person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

     Section 11.04. Severability of Invalid Provisions. If any one or more of the provisions contained in this Indenture or in the Notes shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Borrower hereby declares that it would have entered into this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Notes pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.

     Section 11.05. Governing Law. This Indenture shall be governed exclusively by and construed in accordance with the applicable laws of the State for contracts executed and delivered, and to be completely performed, in the State without giving effect to conflicts of law provisions.

     Section 11.06. Notices. If a Registered Owner delivers a written request to Trustee setting forth the appropriate telecopier number and other necessary information to enable Trustee to deliver notices by telecopier or other telecommunication device notices shall be delivered to such Registered Owner in the manner requested unless otherwise provided herein and confirmed in writing as soon as practicable. In all other events, notices shall be delivered to each Registered Owner by first-class mail, postage prepaid, at the address set forth for such Registered

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Owner on the registration books required to be maintained by Note Registrar pursuant to Section 2.08 hereof.

     All other notices, certificates, requests, demands and communications provided for hereunder shall be in writing and shall be (a) personally delivered, (b) sent by first class United States mail, (c) sent by overnight courier of national reputation, or (d) transmitted by telecopy, in each case addressed to the party to whom notice is being given at its address as set forth below and, if telecopied, transmitted to that party at its telecopier number set forth below or, as to each party, at such other address or telecopier number as may hereafter be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section. All such notices, requests, demands and other communications shall be deemed to have been given on (a) the date received if personally delivered, (b) when deposited in the mail if delivered by mail, (c) the date sent if sent by overnight courier, or (d) the date of transmission if delivered by telecopy.

If to Borrower:	LTF Real Estate VRDN I, LLC
	2092 Corporate Place
	Chanhassen, MN 55317
	Attn: Treasurer
With a copy to:	Faegre & Benson LLP
	2200 Wells Fargo Center
	90 South Seventh Street
	Minneapolis, MN 55402
	Attn: Scott Anderegg, Esq.
If to Trustee:	Manufacturers and Traders Trust Company
	Mail Code: PA1-HM22
	213 Market Street
	Harrisburg, PA 17101
	Attn: Corporate Trust Administration
If to Tender Agent:	Manufacturers and Traders Trust Company
	Mail Code: PA1-HM22
	213 Market Street
	Harrisburg, PA 17101
	Attn: Corporate Trust Administration
If to Credit Issuer:	General Electric Capital Corporation
	40 Old Ridgebury Road
	Danbury, CT 06810
	Attn: Syndications—VRDB
With a copy to:	GE Government Finance, Inc.
	8400 Normandale Lake Boulevard, Suite 470
	Minneapolis, MN 55437
	Attn: Vice President—Risk Management

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If to Remarketing Agent:	Dougherty & Company LLC
	90 South Seventh Street
	Suite 4400
	Minneapolis, MN 55402
	Attn: David B. Juran
If to Rating Agency:	Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.
	55 Water Street, 42nd Floor
	New York, NY 10041
	Attn: LOC Surveillance
	E-mail: nyloc@standardandpoors.com
If to DTC:	Notices required to be given under this Indenture to DTC by facsimile transmission shall be sent to DTC’s Call Notification Department at (212) 855-7246. Notices to DTC by mail or any other means shall be sent to:
	The Depository Trust Company
	55 Water Street
	New York, NY 10004

     Section 11.07. Evidence of Rights of Registered Owners. Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Registered Owners may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Registered Owners in person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any person of Notes transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of Trustee and of Borrower if made in the manner provided in this Section.

     The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument acknowledged to such notary public or other officer the execution thereof or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer.

     The ownership of registered Notes shall be proved by the Note registration books held by Note Registrar.

     Any request, consent or other instrument or writing of the Registered Owner of any Note shall bind every future Registered Owner of the same Note and the Registered Owner of every Note issued in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by Trustee or Borrower in accordance therewith or reliance thereon.

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     Section 11.08. Disqualified Notes. In determining whether the Registered Owners of the requisite aggregate principal amount of Notes have concurred in any demand, request, direction, consent or waiver under this Indenture, Notes which are owned or held by or for the account of Borrower (including Borrower Notes), or by any other obligor on the Notes, or by any person directly or indirectly controlling or controlled by, or under direct or indirect common control with, Borrower or any other obligor on the Notes, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. Notes so owned which have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of Trustee the pledgee’s right to vote such Notes and that the pledgee is not a person directly or indirectly controlling or controlled by, or under direct or indirect common control with, Borrower or any other obligor on the Notes. In case of a dispute as to such right, any decision by Trustee taken upon the advice of counsel shall be full protection to Trustee.

     Section 11.09. Money Held for Particular Notes.

     (a) The money held by Trustee for the payment of the interest, principal, or premium due on any date with respect to particular Notes (or portions of Notes in the case of Notes redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Registered Owners of the Notes entitled thereto (subject, however, to the provisions of Section 10.04 hereof) for a period of two years but without any liability for interest thereon.

     (b) Upon the expiration of the period specified in subsection (a) above, except as provided in subsection (c) below, funds held by Trustee pursuant to this Indenture shall be paid, subject to any prior payments pursuant to the provisions of Section 10.04 hereof, to Borrower, and funds held by Tender Agent shall be paid to Trustee and thereafter paid, subject to the provisions of Section 10.04 hereof, to Borrower, upon direction of an Authorized Representative of Borrower, and, subject to the escheat laws of the State, thereafter Registered Owners shall be entitled to look only to Borrower for payment, and then only to the extent of the amount so deposited with Borrower, and all liability of Borrower or Trustee with respect to such money shall thereupon cease, and Borrower shall not be liable for any interest thereon and shall not be regarded as a trustee of such money.

     (c) Any moneys held by Trustee or Tender Agent, as the case may be, in the Letter of Credit Account or the Liquidity Account for the payment of the principal, premium, or purchase price of any Notes not so applied to the payment of the Notes within two years after the date on which the same shall have become due shall be transferred to Credit Issuer. Upon the expiration of the period specified in subsection (a) above, any moneys held by Tender Agent representing the proceeds of the remarketing of the Notes but which were not so applied to the payment of Notes shall be transferred to Credit Issuer. All such moneys shall be subject to escheat to the State in accordance with the laws thereof. Registered Owners shall be entitled to look only to Credit Issuer for payment from such moneys, and all liability of Borrower, Trustee or Tender Agent with respect to such money shall thereupon cease, and Trustee, Tender Agent, Credit Issuer or

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Borrower shall not be liable for any interest thereon and such parties shall not be regarded as a trustee of such money.

     Section 11.10. Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by Trustee may be established and maintained in the accounting records of Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account, but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with generally accepted corporate trust industry standards, to the extent practicable, and with due regard for the requirements of Section 6.05 hereof and for the protection of the security of the Notes and the rights of every Registered Owner thereof and Credit Issuer’s interest created herein.

     Section 11.11. Execution in Several Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as Borrower and Trustee shall preserve undestroyed, shall together constitute but one and the same instrument.

     Section 11.12. Actions Due on Saturdays, Sundays and Holidays. Except as otherwise provided in this Indenture, if any date on which a payment, notice or other action required by this Indenture falls on other than a Business Day, then that action or payment need not be taken or made on such date, but may be taken or made on the next succeeding Business Day with the same force and effect as if made on such date.

     Section 11.13. References to Credit Issuer. Notwithstanding any provisions contained herein to the contrary, Credit Issuer shall be entitled to take all actions and exercise all rights hereunder for its own account so long as Credit Issuer has not wrongfully dishonored any drawings under the Letter of Credit and Credit Issuer is not in liquidation, bankruptcy or receivership proceedings. After the expiration or termination of the Letter of Credit and after all obligations owed to Credit Issuer pursuant to the Reimbursement Agreement have been paid in full or discharged, all references to Credit Issuer contained herein (other than in Section 10.04 hereof) shall be null and void and of no further force and effect.

     Section 11.14. Usury. Notwithstanding anything to the contrary contained herein or in the Notes, the obligations of Borrower to Noteholders hereunder and under the Notes are subject to the limitation that payments of interest, amounts deemed by applicable law to be interest, and late charges to Noteholders shall not be required to the extent that receipt of any such payment by Noteholders would be contrary to provisions of applicable law limiting the maximum rate of interest that may be charged or collected by Noteholders. The portion of any such payment received by Noteholders that is in excess of the maximum interest permitted by such provisions of law shall be credited to the principal balance of the Notes or if such excess portion exceeds the outstanding principal balance of the Notes, then such excess portion shall be refunded to Borrower. All interest paid or agreed to be paid to Noteholders shall, to the extent permitted by applicable law, be amortized, prorated, allocated and/or spread throughout the full term of the Notes (including, without limitation, the period of any renewal or extension thereof) so that interest for such full term shall not exceed the maximum amount permitted by applicable law.

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     Section 11.15. Waiver of Jury Trial. TRUSTEE AND BORROWER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS INDENTURE. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS INDENTURE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS INDENTURE OR ANY RELATED TRANSACTIONS. IN THE EVENT OF LITIGATION, THIS INDENTURE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

[REMAINDER OF PAGE INTENTIONALLY BLANK;
EXECUTION PAGE FOLLOWS]

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     IN WITNESS WHEREOF, Borrower has caused this Indenture to be signed in its name by one of the duly authorized officers of Borrower, and Trustee, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by one of its duly authorized signatories, all as of the day and year first above written.

Borrower:	LTF REAL ESTATE VRDN I, LLC
	By:
	Print:	Eric J. Buss
	Its:	Secretary
Trustee:	MANUFACTURERS AND TRADERS TRUST COMPANY, as trustee
	By:
	Print:
	Title:

[EXECUTION PAGE OF INDENTURE OF TRUST]

Exhibit A to Indenture

FORM OF NOTE

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THIS NOTE UNDER PARAGRAPH (b)(1)(ii) OF RULE 144 UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO BORROWER (AS DEFINED BELOW) OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (2)(D) ABOVE), IT WILL FURNISH TO MANUFACTURERS AND TRADERS TRUST COMPANY, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE) (AND TO BORROWER AS PROVIDED BELOW), SUCH CERTIFICATIONS OR LEGAL OPINIONS AS TRUSTEE (OR BORROWER IN THE CASE OF A TRANSFER PURSUANT TO CLAUSE 2(C) ABOVE) MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE LAW; AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THIS NOTE PURSUANT TO CLAUSE (2)(D) ABOVE OR UPON ANY TRANSFER OF THIS NOTE UNDER PARAGRAPH (b)(1)(ii) OF RULE 144 UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION). THE INDENTURE CONTAINS A PROVISION REQUIRING TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTION.

No. R-1 $34,235,000

LTF REAL ESTATE VRDN I, LLC
VARIABLE RATE DEMAND NOTES,
SERIES 2008

Maturity Date	Original Issue Date	CUSIP
June 1, 2033	June 13, 2008	50217N AA1

Registered Owner: CEDE & CO.

Principal Sum: THIRTY-FOUR MILLION TWO HUNDRED THIRTY-FIVE THOUSAND DOLLARS

     LTF Real Estate VRDN I, LLC, a Delaware limited liability company (“Borrower”), for value received, hereby promises to pay to the Registered Owner specified above, or registered assigns, on the maturity date set forth above (subject to any right of prior redemption hereinafter mentioned), the principal sum set forth above, in lawful money of the United States of America, and to pay interest thereon in like lawful money from and including the Interest Payment Date (as defined herein) next preceding the date of registration of this Note (this “Note”) (unless this Note is registered after a Record Date (as defined herein) and on or before the next succeeding Interest Payment Date or on an Interest Payment Date, in which event it shall bear interest from and including such Interest Payment Date, or unless this Note is registered on or prior to July 1, 2008, in which event it shall bear interest from and including the date of initial issuance and delivery (the “Date of Delivery”)), until payment of such principal sum shall be discharged as provided in the Indenture (as defined herein), at the rates per annum determined as set forth below. The interest on this Note will be payable on July 1, 2008 and thereafter on each Interest Payment Date. The term “Interest Payment Date” means (a) with respect to interest accruing at the Weekly Interest Rate (as defined herein), the first Business Day (as defined herein) of each calendar month, commencing on July 1, 2008 and (b) with respect to interest accruing at the Fixed Interest Rate (as defined herein), each Semiannual Date (as defined herein), commencing with the first such date that is at least two months after the Fixed Interest Rate Date. The principal (or redemption price) hereof is payable upon presentation hereof at the designated corporate trust office of Manufacturers and Traders Trust Company (together with any successor as trustee under the Indenture, the “Trustee”), at 213 Market Street, Harrisburg, PA 17101 or at such other office as Trustee may designate. Interest hereon is payable by check mailed, except as provided in the Indenture, to the person whose name appears on the Note registration books of Trustee as the Registered Owner hereof as of the close of business on the Record Date, in each case, at such person’s address as it appears on such registration books. The term “Record Date” means, prior to the Fixed Interest Rate Date, the Business Day preceding any Interest Payment Date, and after the Fixed Interest Rate Date, the 15th day of the calendar month preceding any Interest Payment Date, whether or not such day is a Business Day.

     In addition to the terms and words defined elsewhere in this Note, the following terms and words shall, for purposes of this Note, have the following meanings:

     “Business Day” means a day which is not a Saturday, Sunday or legal holiday on which banking institutions in the State of New York or in any state in which the principal office of Credit Issuer, or the office of Tender Agent or Trustee designated for payment of Notes, or the office of Credit Issuer designated for presentations under the Letter of Credit is located are closed or a day on which the New York Stock Exchange is closed.

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     “Fixed Interest Rate” means the interest rate borne by the Notes from and after the Fixed Interest Rate Date and determined in accordance with Sections 2.03 and 2.04 of the Indenture.

     “Fixed Interest Rate Date” means the date on which the Notes begin to bear interest at the Fixed Interest Rate, which shall be an Interest Payment Date.

     “Fixed Rate Period” means the period from and including the Fixed Interest Rate Date designated pursuant to Section 2.04 of the Indenture to and including the date next preceding the date of maturity on the Notes.

     “Rate Mode” means the Weekly Mode or Fixed Interest Rate.

     “Semiannual Date” means each January 1 and July 1.

     “Semiannual Period” means a six-month period commencing on a Semiannual Date and ending on and including the day immediately preceding the next Semiannual Date.

     “Weekly Interest Rate” means the interest rate on the Notes determined pursuant to Section 2.03(a) of the Indenture.

     “Weekly Mode” means the Rate Mode during which the Notes bear interest at a Weekly Interest Rate.

     “Weekly Rate Calculation Date” means Wednesday in each calendar week or, if any Wednesday is not a Business Day, the first Business Day preceding such Wednesday.

     “Weekly Rate Period” means the seven-day period commencing on the first Thursday following the corresponding Weekly Rate Calculation Date and running through Wednesday of the following calendar week, except that (i) the first Weekly Rate Period shall commence on the Delivery Date and end on and include the first Wednesday occurring on or after the Delivery Date and (ii) the last Weekly Rate Period prior to the Fixed Interest Rate Date or final maturity date, whichever is earlier, shall end on and include the last day immediately preceding the Fixed Interest Rate Date or final maturity date, as applicable.

     Borrower, Manufacturers and Traders Trust Company, as tender agent (“Tender Agent”), Trustee, any paying agent, and any agent of Borrower, Tender Agent or Trustee may treat the person in whose name this Note is registered as the absolute owner hereof for the purpose of receiving payment as herein provided and for all other purposes, and Borrower, Tender Agent, Trustee, any paying agent or any such agent shall not be affected by notice to the contrary.

     This Note is one of a duly authorized issue of notes of Borrower designated as captioned above (the “Notes”) pursuant to an Indenture of Trust dated as of June 1, 2008 (the “Indenture”) between Borrower and Trustee. The payment of principal of and interest on the Notes is secured by an irrevocable direct pay Letter of Credit No. LF-001 (the “Letter of Credit”) issued by General Electric Capital Corporation (“Credit Issuer”). Such Letter of Credit may be renewed or substituted by an alternate letter of credit of another financial institution or an alternate credit facility as provided in the Indenture.

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     Reference is hereby made to the Indenture (a copy of which is on file at said office of Trustee) and all indentures supplemental thereto for a description of the rights thereunder of the registered owners of the Notes, of the nature and extent of the security, of the rights, duties and immunities of Trustee and Tender Agent and of the rights and obligations of Borrower thereunder, to all the provisions of which Indenture the Registered Owner of this Note, by acceptance hereof, assents and agrees.

     The Notes and the interest thereon are payable solely from Note Payments (as defined in the Indenture) and Account Funds (as defined in the Indenture) and are secured by a pledge of said Account Funds (except as provided in the Indenture), including proceeds of the sale of the Notes, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture. The Notes are further secured by the Letter of Credit.

     The Notes shall bear interest from and including the Date of Delivery of the Notes to and including a date specified in the Indenture at the rate specified in the Indenture. Thereafter, so long as the Notes accrue interest at a Weekly Interest Rate, the Notes shall bear interest, calculated on the basis of a year of 360 days and the actual number of days elapsed at a rate per annum equal to the Weekly Interest Rate. Interest accruing on the Notes at a Fixed Interest Rate shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

     A Weekly Interest Rate shall be determined for each Weekly Rate Period as described below. For each Weekly Rate Period, the interest rate on the Notes in the Weekly Mode shall be the current market rate determined by Remarketing Agent on the immediately preceding Weekly Rate Calculation Date, in accordance with Section 2.03(a) of the Indenture. On each Weekly Rate Calculation Date, Remarketing Agent shall determine the Weekly Interest Rate for the next succeeding Weekly Rate Period as the rate which, if borne by the Notes in the Weekly Mode, would, in the judgment of Remarketing Agent, be the lowest interest rate necessary to enable Remarketing Agent to arrange for the sale of all of the Outstanding Notes in the Weekly Mode at a price equal to the principal amount thereof plus accrued interest thereon. Notice of such Weekly Interest Rate shall be given in writing by Remarketing Agent to Borrower, Trustee and Credit Issuer by the close of business on the Weekly Rate Calculation Date. Notwithstanding anything herein to the contrary, in no event shall the Weekly Interest Rate borne by the Notes in the Weekly Mode exceed the lesser of 15% per annum or the maximum rate permitted by applicable law.

     If for any reason Remarketing Agent does not determine a Weekly Interest Rate for any Weekly Rate Period as aforesaid, the Weekly Interest Rate for that Weekly Rate Period shall be equal to the Weekly Interest Rate in effect for the immediately preceding Weekly Rate Period for the Notes.

     The determination of the Weekly Interest Rate by Remarketing Agent pursuant to the Indenture shall be conclusive and binding upon Borrower, Trustee, Remarketing Agent, Credit Issuer, the Registered Owners and the other registered owners.

     The Fixed Interest Rate for Notes subject to the Fixed Interest Rate shall be determined by Remarketing Agent as the lowest rate of interest that, in the judgment of Remarketing Agent,

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would be necessary to enable Remarketing Agent to arrange for the sale of the Notes subject to the Fixed Interest Rate in a secondary market sale at a price equal to the principal amount thereof, plus accrued interest, on the first Business Day of the Fixed Rate Period. Notice of the Fixed Interest Rate shall promptly be given by telephone (promptly confirmed in writing) by Remarketing Agent to Trustee, Borrower and Credit Issuer, if any. Determination of the Fixed Interest Rate pursuant to this Section shall be conclusive and binding upon Trustee, Borrower, Credit Issuer, if any, Remarketing Agent, and the Registered Owners and shall not exceed the lesser of 15% per annum or the maximum rate permitted by applicable law.

     The Rate Mode applicable to Notes shall be subject to conversion as provided in Section 2.04 of the Indenture. Trustee, Borrower, Credit Issuer and Remarketing Agent shall not be liable to any Registered Owners for failure to give any notice required in connection with any such conversion or for failure of any Registered Owners to receive any such notice.

     The Notes are subject to mandatory tender for purchase on the date an alternate letter of credit is substituted for the Letter of Credit (the “Letter of Credit Substitution Date”). The Fixed Interest Rate Date and the Letter of Credit Substitution Date are also referred to as the “Mandatory Tender Date.”

     All Notes which on the Mandatory Tender Date have not been tendered for purchase (the “Non-Tendered Notes”) shall be deemed purchased by Tender Agent on the Mandatory Tender Date at a price of the principal amount thereof plus unpaid interest, if any, accrued to such date. Replacement Notes for the Non-Tendered Notes may be remarketed and delivered to new owners as instructed by Borrower or Remarketing Agent. Tender Agent shall hold in escrow for the owners of the Non-Tendered Notes the purchase price thereof, and after the Mandatory Tender Date such owners will no longer be entitled to any of the benefits of the Indenture except for the payment of such purchase price.

     The Indenture provides that prior to the Fixed Interest Rate Date, the Notes may be delivered by the registered owners thereof to Tender Agent at its designated corporate trust office or at such other place as Tender Agent may designate in writing to the registered owners of the Notes. Any Note so delivered or notice with respect to which is received shall be purchased by Tender Agent on demand of the registered owner thereof on the close of any Business Day at a purchase price equal to the principal amount thereof plus accrued interest to but not including the date of purchase (unless such date is an Interest Payment Date, in which case the purchase price will be the principal amount of such Note) upon delivery to Tender Agent of an irrevocable written notice by 3:00 p.m., New York time, (if not received by 3:00 p.m., New York time, on a Business Day it shall be deemed received on the next succeeding Business Day), which states (i) the name and address of the Registered Owner, (ii) the number or numbers of the Note or Notes to be purchased, (iii) the aggregate principal amount of the Note or Notes to be purchased, and (iv) the date on which the Note is or Notes are to be purchased, which date shall be a Business Day not prior to the seventh calendar day next succeeding the date of delivery of such written notice and delivery to Tender Agent at or prior to 9:00 a.m., New York time, on the Purchase Date specified in the aforesaid notice, of the Note or Notes to be tendered; provided, however, that any Note for which a notice of the exercise of the purchase option has been given as provided in this paragraph and which is not so delivered shall be deemed delivered on the date of purchase and shall be purchased in accordance with this Indenture.

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     The Notes are subject to redemption by Borrower upon the following terms in increments of $5,000.00, provided that in the event of redemption of less than all of the Notes, the amount which remains Outstanding shall be in Authorized Denominations (as defined in the Indenture):

     (a) The Notes are not subject to sinking fund redemption.

     (b) While the Notes are in the Weekly Mode, the Notes are subject to redemption, in whole on any Business Day or in part on any Interest Payment Date, at the option of Borrower, with the written approval of Credit Issuer, at a redemption price of 100% of the outstanding principal amount of the Notes redeemed, plus interest accrued thereon to the redemption date.

     (c) After the Fixed Interest Rate Date, the Notes are not subject to redemption at the option of Borrower.

     (d) The Notes shall be redeemed in whole, at a redemption price equal to 100% of the outstanding principal amount thereof plus interest accrued thereon to the redemption date, on a redemption date not less than 15 days preceding the expiration date of the Letter of Credit selected by Trustee if no Alternate Credit Facility or Alternate Letter of Credit has been delivered to Trustee in accordance with the Indenture.

     (e) To the extent of a prepayment by Borrower as a result of the damage, destruction or condemnation of the Property and as provided in the Reimbursement Agreement, the Notes are subject to redemption, in whole on any Business Day or in part on the first Business Day of each calendar month, after payment of any amounts owed to Credit Issuer pursuant to the Reimbursement Agreement, prior to their stated maturity, on any date, at a redemption price equal to 100% of the outstanding principal amount of such Notes that are redeemed, plus interest accrued thereon to the redemption date.

     (f) The Notes shall be redeemed in whole at a redemption price equal to 100% of the outstanding principal amount thereof, plus interest accrued thereon to the redemption date, within five calendar days (and before the following Saturday if the fifth calendar day is a Saturday) from the date Trustee receives written notice from Credit Issuer that an event of default has taken place under the Reimbursement Agreement and directing Trustee to redeem the Notes.

     If an Event of Default (as defined in the Indenture) shall occur, the principal of all Notes may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture. The Indenture provides that in certain events such declaration and its consequences may be rescinded.

     The Notes are issuable as fully registered Notes without coupons in denominations of $100,000 or any multiple of $5,000 in excess of $100,000. This Note is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, but only in the manner, subject to the limitations and upon payment of the charges, if any, provided in the Indenture, and upon surrender and cancellation of this Note. Upon such transfer a new registered

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Note or Notes, of authorized denomination or denominations, for the same aggregate principal amount, will be issued to the transferee in exchange therefor.

     The Indenture and the rights and obligations of Borrower and of the registered owners of the Notes and of Trustee or Tender Agent may be modified or amended from time to time and at any time (and in certain cases without the consent of the registered owners of the Notes) in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall (a) extend the fixed maturity of this Note, or reduce the amount of principal hereof, or extend the time of payment or change the method of computing the rate of interest hereon, or extend the time of payment of interest hereon, without the consent of the Registered Owner hereof, (b) reduce the percentage of Notes the consent of the registered owners of which is required to effect any such modification or amendment, (c) permit the creation of any lien on the Account Funds and other assets pledged as security for the Notes prior to or on a parity with the lien created by the Indenture, or deprive the registered owners of the Notes of the lien created by the Indenture on such Account Funds and other assets (except as expressly provided in the Indenture), without the consent of the registered owners of all Notes then outstanding, or (d) adversely affect the interests of Tender Agent without its prior written consent. Trustee shall not be required to consent to any such amendment which materially adversely affects its rights, duties and immunities under the Indenture or otherwise, all as more fully set forth in the Indenture.

     If moneys or securities shall have been set aside and held for the payment or redemption of Notes and the interest installments therefor to the maturity or redemption date thereof in accordance with the Indenture, such Notes shall be deemed to be paid within the meaning provided in the Indenture and the pledge of the Account Funds and other assets made under the Indenture and all covenants, agreements and other obligations of Borrower under the Indenture shall cease, terminate, become void and be completely discharged and satisfied.

     This Note shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been signed by Trustee.

     Notwithstanding anything to the contrary contained in this Note or the Indenture, the obligations of Borrower to Registered Owner hereunder and under the Indenture are subject to the limitation that payments of interest, amounts deemed by applicable law to be interest, and late charges to Registered Owner shall not be required to the extent that receipt of any such payment by Registered Owner would be contrary to provisions of applicable law limiting the maximum rate of interest that may be charged or collected by Registered Owner. The portion of any such payment received by Registered Owner that is in excess of the maximum interest permitted by such provisions of law shall be credited to the principal balance of this Note or if such excess portion exceeds the outstanding principal balance of this Note, then such excess portion shall be refunded to Borrower. All interest paid or agreed to be paid to Registered Owner shall, to the extent permitted by applicable law, be amortized, prorated, allocated and/or spread throughout the full term of this Note (including, without limitation, the period of any renewal or extension thereof) so that interest for such full term shall not exceed the maximum amount permitted by applicable law.

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[REMAINDER OF PAGE INTENTIONALLY LEFT BANK;
EXECUTION PAGE FOLLOWS]

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     IN WITNESS WHEREOF, LTF Real Estate VRDN I, LLC has caused this Note to be executed in its name and on its behalf by the manual signature of an authorized representative of Borrower as of the date set forth above.

Borrower:	LTF REAL ESTATE VRDN I, LLC
	By:
	Print: Eric J. Buss
	Its: Secretary

[EXECUTION PAGE OF NOTE]

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CERTIFICATE OF AUTHENTICATION AND REGISTRATION

This is one of the Notes described in the within-mentioned Indenture, which has been registered on                      ___, 20___.

MANUFACTURERS AND TRADERS TRUST
COMPANY, as Trustee
By
	Authorized Signatory

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ASSIGNMENT

     For value received the undersigned do(es) hereby sell, assign and transfer unto                                                                                                                                                                                                                                   (Insert name, address, zip code and Social Security, taxpayer or other identification numbers of Assignee) the within-mentioned registered Note and hereby irrevocably constitute(s) and appoint(s)                                                                                   attorney, to transfer the same on the books of Note Registrar with full power of substitution in the premises.

Dated:	Notice: The signature on this Assignment must correspond with the name of the Registered Owner as it appears upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever.
	Signature guaranteed:
	(NOTE: Signature must be guaranteed by an Eligible Guarantor Institution)

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Exhibit B to Indenture

FORM OF PAYMENT REQUEST FORM

Payment Request Form No. ___

     LTF Real Estate VRDN I, LLC (“Borrower”) hereby requests Manufacturers and Traders Trust Company, as trustee (“Trustee”) under the Indenture of Trust dated as of June 1, 2008 (the “Indenture”) between Borrower and Trustee, to make payment from the Note Fund (as defined in the Indenture), to the following party or parties, at the addresses set forth below:

     In connection therewith, the undersigned officer of Borrower hereby certifies as follows:

     1. All of the provisions of the Indenture and the Reimbursement Agreement dated as of June 1, 2008 (the “Reimbursement Agreement”) among General Electric Capital Corporation (“Credit Issuer”), GE Government Finance, Inc. and Borrower are incorporated herein by reference and capitalized terms used herein and not defined shall have the meanings assigned to them in the Indenture.

     2. All of Borrower’s representations, covenants and warranties contained in the Reimbursement Agreement were true and accurate in all material respects as of the date made, and remain true and accurate in all material respects as of the date of this Payment Request Form, and Borrower has fully and satisfactorily performed all of its covenants and obligations to date required under the Reimbursement Agreement. No Default or Event of Default has occurred under the Reimbursement Agreement. Borrower has satisfied all of the conditions contained in Section 3.01 of the Reimbursement Agreement.

     3. Borrower understands that Credit Issuer and Trustee are relying on the certifications herein with regard to and in connection with approving the disbursement requested hereby.

BORROWER:

LTF REAL ESTATE VRDN I, LLC

By:

Print: Eric J. Buss

Its: Secretary

APPROVED BY CREDIT ISSUER:

GENERAL ELECTRIC CAPITAL CORPORATION

By:

Title:

Date:

EX-10.5

Exhibit 10.5

REIMBURSEMENT AGREEMENT

among

GENERAL ELECTRIC CAPITAL CORPORATION,

GE GOVERNMENT FINANCE, INC.,

and

LTF REAL ESTATE VRDN I, LLC,

LTF REAL ESTATE VRDN I, LLC
$34,235,000 VARIABLE RATE DEMAND NOTES,
SERIES 2008

Dated as of June 1, 2008

TABLE OF CONTENTS

	Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms		2
Section 1.02. Rules of Construction		9
ARTICLE II
APPLICATION, REIMBURSEMENT AND OTHER PAYMENTS
Section 2.01. Application for Credit Enhancement		10
Section 2.02. Reimbursement and other Payment Obligations		10
Section 2.03. Credit Enhancement Fees		13
Section 2.04. Administration Account and Terms of Escrow Accounts		14
Section 2.05. Saturday, Sunday or Non-Business Day; Moneys		15
Section 2.06. Manner and Time of Payment		15
Section 2.07. Application of Funds		15
Section 2.08. Computation of Interest		15
Section 2.09. Interest After Default		15
Section 2.10. Late Charges		15
Section 2.11. Substitution of Letter of Credit or Replacement of Credit Enhancer		16
Section 2.12. The Remarketing Agreement		16
Section 2.13. Extension of Expiration Date		16
ARTICLE III
CONDITIONS PRECEDENT TO THE EXTENSION OF CREDIT AND DISBURSEMENTS
Section 3.01. Execution and Delivery of Closing Documents		16
Section 3.02. Disbursements from the Note Fund		19
Section 3.03. Conditions of Disbursement		19
ARTICLE IV
BORROWER’S OBLIGATIONS UNCONDITIONAL		20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BORROWER		21
ARTICLE VI
TITLE TO PROPERTY; SECURITY INTEREST
Section 6.01. Title to Collateral		24
Section 6.02. Security Interest in Collateral		24
Section 6.03. Change in Name or Company Structure of Borrower; Change in Location of Borrower’s Chief Executive Office and Chief Principal Office		24
Section 6.04. Liens and Encumbrances to Title		25
Section 6.05. Assignment of Insurance		25
ARTICLE VII
AFFIRMATIVE COVENANTS OF BORROWER

	Page
Section 7.01. Reporting Requirements		25
Section 7.02. Books and Records; Inspection and Examination		26
Section 7.03. Compliance With Laws		26
Section 7.04. Reserved		26
Section 7.05. Payment of Taxes and Other Claims		26
Section 7.06. Preservation and Maintenance of Property; Leaseholds		27
Section 7.07. Insurance; Indemnifications		28
Section 7.08. Preservation of Existence		34
Section 7.09. Performance by GECC		34
Section 7.10. Limitations of Liability		35
Section 7.11. Alterations		35
Section 7.12. Rating Agency Fees		36
ARTICLE VIII
NEGATIVE COVENANTS
Section 8.01. Lien		37
Section 8.02. Sale of Assets		37
Section 8.03. Consolidation and Merger		37
Section 8.04. Accounting		37
Section 8.05. Transfers		37
Section 8.06. Reserved		37
Section 8.07. Use of Property		37
Section 8.08. Interest Rate Mode		37
ARTICLE IX
DAMAGE AND DESTRUCTION; CONDEMNATION
Section 9.01. Damage and Destruction		37
Section 9.02. Condemnation		38
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01. Events of Default		39
Section 10.02. Remedies		41
Section 10.03. No Remedy Exclusive		42
Section 10.04. Right to Advance or Post Funds		42
ARTICLE XI
MISCELLANEOUS
Section 11.01. Costs and Expenses of GECC and GEGF		43
Section 11.02. Disclaimer of Warranties		43
Section 11.03. Notices		43
Section 11.04. Further Assurance and Corrective Instruments		44
Section 11.05. Binding Effect; Time of the Essence		44
Section 11.06. Severability		44
Section 11.07. Amendments		44
Section 11.08. Execution in Counterparts		44
Section 11.09. Applicable Law		45

ii

	Page
Section 11.10. No Further Credits		45
Section 11.11. Substitution of Letter of Credit		45
Section 11.12. Conflict with Other Documents		45
Section 11.13. Captions		45
Section 11.14. Entire Agreement		45
Section 11.15. Usury		45
Section 11.16. Bound Transcripts		46
Section 11.17. Waiver of Jury Trial		46
EXHIBITS

Exhibit A – Copy of Letter of Credit
Exhibit B – Redemption Deposits

iii

REIMBURSEMENT AGREEMENT

GECC:	General Electric Capital Corporation
	40 Old Ridgebury Road
	Danbury, CT 06810
	Attn: Syndications—VRDB
	Telecopier: (203) 796-5769
GEGF:	GE Government Finance, Inc.
	Suite 470
	8400 Normandale Lake Boulevard
	Minneapolis, MN 55437
	Attn: Vice President—Risk Management
	Telephone: (952) 987-5600
	Telecopier: (952) 897-5601
Borrower:	LTF Real Estate VRDN I, LLC
	2902 Corporate Place
	Chanhassen, MN 55317
	Attention: Treasurer
	Telephone: (952) 229-7120
	Telecopier: (952) 947-0099

     THIS REIMBURSEMENT AGREEMENT dated as of June 1, 2008 (this “Agreement”) is among LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company (together with its successors and assigns, “Borrower”), GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (together with its successors and assigns, “GECC”), and GE GOVERNMENT FINANCE, INC., a Delaware corporation (together with its successors and assigns, “GEGF”).

     WHEREAS, pursuant to the terms of that certain Indenture of Trust dated as of the date hereof (the “Indenture”) between Borrower and Manufacturers and Traders Trust Company, a New York state banking corporation with trust powers, as trustee (“Trustee”), Borrower has agreed to issue its Notes (as hereinafter defined) in the aggregate principal amount of $34,235,000;

     WHEREAS, in connection with the issuance of the Notes, Borrower is delivering or causing to be delivered to Trustee, for the benefit of the holders of the Notes, an irrevocable letter of credit to secure the payment of the principal of, and interest on, the Notes and to provide for the payment of the purchase price thereof in accordance with the terms of the Indenture; and

     WHEREAS, Borrower has requested that GEGF cause GECC to issue to Trustee the Letter of Credit (as hereinafter defined); and

     WHEREAS, GECC has agreed to issue the Letter of Credit upon satisfaction of, and subject to the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the foregoing premises and in order to induce GECC to issue the Letter of Credit for the benefit of Trustee and for the account of Borrower, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.01. Certain Defined Terms. In addition to those terms defined elsewhere in this Agreement and the Exhibits annexed hereto, as used in this Agreement and the Exhibits annexed hereto, the following terms shall have the indicated meanings, unless otherwise specifically defined herein:

     “Administration Account” has the meaning assigned in Section 2.04 hereof.

     “Agreement” means this Reimbursement Agreement, including all of the exhibits, appendices and schedules attached hereto, all of which are incorporated herein by this reference and made a part hereof, as the same may hereafter be amended from time to time.

     “Alteration” means any demolition, alteration, installation, removal, improvement or expansion of or to the Property or any portion thereof, including, without limitation, any Remodeling.

     “Borrower” means LTF Real Estate VRDN I, LLC, a Delaware limited liability company.

     “Borrower Notes” has the meaning assigned to such term in the Indenture.

     “Borrower Documents” means, collectively, this Agreement, the Indenture, the Notes, the Remarketing Agreement, the Purchase Agreement, the Mortgages, the Environmental Indemnity Agreements, the Subordination Agreements, the Leases and any other agreements, instruments, certificates, statements, or other documents executed by Borrower in connection therewith, including (without limitation) all documents described in Section 3.01 that are executed by Borrower.

     “Business Day” means any day other than a Saturday or Sunday or a day on which commercial banks located in New York, New York or the city in which the principal corporate trust office of Trustee is located are authorized or obligated by law or executive order to close.

     “Cash Collateral Account” has the meaning assigned in Section 10.02 hereof.

     “Change of Control” means the occurrence of the failure of Borrower or Tenant to be Controlled by one or more Qualified Equityholders (individually or collectively); provided,

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however, that for so long as Life Time Fitness, Inc. directly or indirectly owns all membership interests in Borrower and Tenant, transfers or issuances of interests in Life Time Fitness, Inc. on a national securities exchange or through the NASDAQ national markets system shall not be deemed a Change of Control. “Control” of any entity means the ownership, directly or indirectly, of at least 51% of the equity interests in, and the right to at least 51% of the distributions from, such entity and the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such entity, whether through the ability to exercise voting power, by contract or otherwise. “Controlled” and “Controlling” each have the meanings correlative thereto.

     “Closing Date” means June 13, 2008.

     “Collateral” means the Property, together with (i)  all of Borrower’s rights in or to all securities, funds, moneys, deposits and other property at any time held in or subject to the Escrow Accounts, the Cash Collateral Account, the Note Fund, the Costs of Issuance Fund and the Revenue Fund, (ii) all of Borrower’s right to receive any payment on any Notes owned by Borrower, including (without limitation) the Borrower Notes, (iii) all accessions thereto, (iv) all substitutions for any of the foregoing property, and (v) products and proceeds of any of the foregoing property (including, without limitation, any property of Borrower acquired with such proceeds).

     “Costs of Issuance Fund” has the meaning assigned to such term in the Indenture.

     “Credit Enhancement Fees” has the meaning assigned in Section 2.03(a) hereof.

     “Damaged Property Amount” means an amount equal to the product of (a) the then-current Stated Amount, and (b) a percentage equal to the original appraised value of the Damaged Property divided by the original appraised value of all of the Property.

     “Default” means any condition or event which, with the giving of notice, the passage of time, or both, would constitute an Event of Default.

     “Environmental Indemnity Agreement” means each Environmental Indemnity Agreement Regarding Hazardous Substances dated of even date herewith by Borrower, Tenant and Lease Guarantor for the benefit of GECC, as hereafter modified or amended.

     “Environmental Laws” means any federal, state and local laws relating to emissions, discharges, releases of Hazardous Wastes or Materials into ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Wastes or Materials.

     “Escrow Accounts” means, collectively, the Administration Account, the Reimbursement Account and the Cash Collateral Account and any other similar accounts or funds provided hereunder.

     “Event of Default” means any of the events listed as an Event of Default in Section 10.01 hereof.

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     “Expiration Date” means, with respect to the Letter of Credit, the date on which GECC’s obligations thereunder expire or terminate as set forth therein.

     “Extended Expiration Date” means June 1, 2033.

     “GAAP” means generally accepted accounting principles applied on a consistent basis.

     “GECC” means General Electric Capital Corporation, a Delaware corporation, and its successors and assigns.

     “GEGF” means GE Government Finance, Inc., a Delaware corporation, and its successors and assigns.

     “Governmental Authority” means any municipal, county, state or Federal governmental authority, or other governmental agency, department, bureau, board, commission or instrumentality or any of them, having or claiming jurisdiction over the Property, Borrower, Trustee, GECC or GEGF.

     “Hazardous Waste or Materials” means any substance or material defined in or designated as hazardous or toxic wastes, hazardous or toxic material, a hazardous, toxic or radioactive substance, or other similar term, by any Environmental Law now or hereafter in effect.

     “Improvement” has the meaning assigned to such term in each Mortgage.

     “Indemnified Parties” means GECC, GEGF and their officers, directors, shareholders, counsel, employees, agents and servants and their respective heirs, successors and assigns.

     “Initial Stated Amount” means $35,090,875, the maximum amount available to be drawn under the Letter of Credit as of the Closing Date.

     “Installment Payments” has the meaning assigned to such term in Section 2.02(a)(v) hereof.

     “Interest Drawing” means a drawing made on the Letter of Credit with respect to the payment of interest on the Notes.

     “Interest-Purchase Drawing Amount” means the amount of a Purchase Drawing made on the Letter of Credit with respect to the payment of the portion of the purchase price corresponding to accrued interest on Notes tendered for purchase in accordance with the terms of the Indenture.

     “Lease” means each Lease Agreement dated as of June 13, 2008 between Borrower and Tenant.

     “Lease Guarantor” means Life Time Fitness, Inc., a Minnesota corporation.

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     “Lease Guarantor Documents” means, collectively, the Lease Guaranty and the Environmental Indemnity Agreements and any other agreements, instruments, certificates, statements or other documents executed by Lease Guarantor in connection therewith.

     “Lease Guaranty” means the Lease Guaranty and Negative Pledge Agreement dated as of June 1, 2008 by Lease Guarantor for the benefit of GECC, as assignee of Borrower.

     “Letter of Credit” means that certain irrevocable, transferable, direct-pay letter of credit issued by GECC for the benefit of Trustee, for the account of Borrower, in the Initial Stated Amount, a copy of which is attached hereto as Exhibit A, as hereafter amended, extended and/or substituted.

     “Loan Documents” means, collectively, this Agreement, the Indenture, the Notes, the Purchase Agreement, the Remarketing Agreement, the Mortgages, the Environmental Indemnity Agreements, the Subordination Agreements and any other agreements, instruments, certificates or documents now or hereafter delivered by Borrower or any other party to GECC, GEGF or Trustee, evidencing, securing or otherwise relating to the Notes or the Obligations or any of the foregoing documents, including all of the documents described in Article III hereof, together with all amendments, modifications, renewals, substitutions and replacements of or to any of the foregoing.

     “Local Time” means, as of the date such determination is made, the local time in New York, New York.

     “Make Whole Amount” means the positive difference, if any, between (a) the net present value of the stream of remaining Installment Payments discounted to the date of prepayment at a per annum interest rate equal to the then Reinvestment Rate, and (b) the principal balance of the Purchase Drawing Amount outstanding as of the prepayment date before any such prepayment. For the purposes hereof, the “stream of remaining payments” shall equal the sum of each Installment Payment. “Reinvestment Rate” means a per annum interest rate equal to the sum of (a) 2.75% and (b) the stated yield of Interest Rate Swaps having a life equal to remaining term of the Installment Payments published in the Federal Reserve Statistical Release H.15(519) on the Business Day immediately preceding the prepayment date; provided, however, if no such Interest Rate Swaps have a life that exactly corresponds to such remaining term, the yields of the two Interest Rate Swaps with lives immediately above and below such remaining term will be interpolated on a straight line basis.

     “Material Adverse Effect” means a material adverse effect upon (i) the ability of Borrower, Tenant or Lease Guarantor to perform, or of GECC to enforce, any material provision of any Loan Documents, (ii) the enforceability of any material provision of any Loan Documents, (iii) the value, use or enjoyment of either Property or the operation thereof, and (iv) the financial or operating condition of Borrower, Lease Guarantor or Tenant.

     “Maximum Rate” means the highest rate of interest permissible under applicable law.

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     “Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by GECC, with the consent of Borrower.

     “Mortgage” means each Mortgage, Assignment of Leases and Rents, Financing Statement and Fixture Filing dated as of even date herewith by Borrower in favor of GECC, as hereafter modified or amended.

     “Note Fund” has the meaning assigned to such term in the Indenture.

     “Note Interest Payment Date” means each “Interest Payment Date” with respect to the Notes, as that term is defined in the Indenture.

     “Notes” means Borrower’s $34,235,000 Variable Rate Demand Notes, Series 2008.

     “Obligations” means (a) all loans, advances, debts, liabilities and obligations for the performance of covenants, task or duties or for payment of monetary amounts (whether or not such performance is then required or contingent or such amounts are liquidated or determinable) owing by Borrower to GECC or GEGF, and (b) all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement, letter of credit agreement, reimbursement agreement or other instrument, whether arising by reason of extension of credit, loan, guarantee, opening of a letter of credit, supplying any credit enhancement or direct letter of credit, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment) absolute or contingent, due or to become due, now existing or hereafter arising and however acquired, provided that any such loan, advance, debt, liability or obligation described in clause (a) or (b) above has arisen in connection with, related to, arising under, out of or pursuant to or in any way or manner respecting or pertaining to the Property or to this Agreement, any of the other Loan Documents or otherwise arising out of any of the transactions contemplated thereby. This term includes (without limitation) all obligations of Borrower to GECC or GEGF pursuant to Article II hereof and all other obligations to reimburse GECC or GEGF in respect of principal, interest (including all interest that accrues after the commencement of any case or proceeding by or against Borrower in bankruptcy, whether or not allowed in such case or proceeding), Credit Enhancement Fees, charges, expenses, attorneys’ fees and any other sum owing to GECC or GEGF chargeable to Borrower hereunder or under any of the other Loan Documents.

     “Payment Obligations” means those obligations of Borrower under Article II hereof.

     “Permitted Exceptions” means (a) rights, claims and interests of the Trustee under the Indenture in and to the Note Fund, Costs of Issuance Fund and Revenue Fund and (ii) those liens, encumbrances and charges defined as “Permitted Exceptions” in the Mortgages.

     “Person” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, trustee, estate, limited liability company, unincorporated organization, real

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estate investment trust, government or any agency or political subdivision thereof, or any other form of entity.

     “Post-Default Rate” means three percent per annum in excess of the Reimbursement Rate, but in no event to exceed the Maximum Rate.

     “Principal Drawing” means a drawing made on the Letter of Credit with respect to the payment of principal of the applicable series of Notes by virtue of maturity, redemption, acceleration or otherwise.

     “Principal-Purchase Drawing Amount” means the amount of a Purchase Drawing made on the Letter of Credit with respect to the payment of the portion of the purchase price corresponding to the principal amount of Notes tendered for purchase in accordance with the terms of the Indenture.

     “Property” has the meaning assigned to such term in the Mortgages.

     “Purchase Agreement” means the Purchase Agreement dated as of June 1, 2008 between Borrower and Remarketing Agent, as hereafter modified or amended.

     “Purchase Amortization Rate” means an annual fixed rate of interest that is determined on the day that is 90 days after any Purchase Drawing and equals the sum of (a) 2.75% and (b) the rate posted for 10-year Interest Rate Swaps from the most recently published Federal Reserve Statistical Release H.15(519).

     “Purchase Drawing” means a drawing made on the Letter of Credit with respect to the payment of the purchase price of Notes tendered for purchase in accordance with the terms of the Indenture.

     “Purchase Drawing Balance” has the meaning assigned in Section 2.02(a)(v) hereof.

     “Qualified Equityholder” means (i) Lease Guarantor, (ii) U.S. Bank National Association or a wholly owned subsidiary thereof, or a bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, real estate company, investment fund or an institution substantially similar to any of the foregoing, provided in each case under this clause (ii) that such Person (x) has total assets (in name or under management) in excess of $2,000,000,000 and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity in excess of $1,000,000,000 (in both cases, exclusive of the Property), and (y) is regularly engaged in the business of owning and operating comparable properties in major metropolitan areas, (iii) with respect to Tenant, any replacement lender to Lease Guarantor or (iv) any other Person approved by GECC.

     “Rating Agency” means Moody’s or S&P, as applicable.

     “Reimbursement Account” has the meaning assigned in Section 2.02(b) hereof.

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     “Reimbursement Rate” means the annual prime rate of interest announced from time to time in The Wall Street Journal, Eastern Edition.

     “Remarketing Agent” means Dougherty & Company LLC, or any other company designated as Remarketing Agent in accordance with the terms of the Indenture.

     “Remarketing Agreement” means the Remarketing Agreement dated of even date herewith between Borrower and Remarketing Agent, as hereafter modified or amended.

     “Remodeling” means remodeling, refurbishing, expansion, demolition and other improvement work performed by or on behalf of Borrower or Tenant to the interior or exterior of the Property including without limitation the replacement of floor coverings or wall coverings, constructing, renovating or reconfiguring office, retail or other spaces of the Property, upgrading mechanical systems including but not limited to electrical, plumbing and HVAC systems, and constructing, modifying or otherwise installing improvements customarily found in other properties owned or leased by any affiliate of Lease Guarantor that does not: (a) reduce the interior square footage of the Improvements by more than 5% in the aggregate; (b) affect the structural elements of any of the Improvements; (c) demonstrably lessen the fair market value or fair rental value of the Property (taken together as an integrated whole); or (d) cost more than the applicable Threshold Amount to complete.

     “Revenue Fund” has the meaning assigned to such term in the Indenture.

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by GECC, with the consent of Borrower.

     “State” means the State of Minnesota.

     “Stated Amount” means, with respect to the Letter of Credit, the maximum amount available from time to time to be drawn thereunder in accordance with the terms thereof.

     “Subordination Agreement” means each Subordination, Attornment and Lessee-Lessor Estoppel Agreement dated of even date herewith among Tenant, GECC and Borrower.

     “Supervised Alteration” means any Alteration that is not Remodeling.

     “Tenant” means LTF Club Operations Company, Inc., a Minnesota corporation.

     “Tenant Documents” means, collectively, the Leases, the Subordination Agreements, the Environmental Indemnity Agreements and any other agreements, instruments, certificates, statements or other documents executed by Tenant in connection therewith.

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     “Terrorism Laws” means Executive Order 13224 issued by the President of the United States of America, the Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S. Code of Federal Regulations), the Terrorism List Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations) and the Foreign Terrorist Organizations Sanctions Regulations (Title 31 Part 597 of the U.S. Code of Federal Regulations), and all other present and future federal, state and local laws, ordinances, regulations, policies and any other requirements of any governmental authority (including, without limitation, the United States Department of the Treasury Office of Foreign Assets Control) addressing, relating to, or attempting to eliminate, terrorist acts and acts of war, each as hereafter supplemented, amended or modified from time to time, and the present and future rules, regulations and guidance documents promulgated under any of the foregoing, or under similar laws, ordinances, regulations, policies or requirements of other states or localities.

     “Threshold Amount” means, from the Closing Date through and July 31, 2013, inclusive, the sum of $3,000,000 (in the aggregate for each Property); during the period from August 1, 2013 through July 31, 2018, inclusive, the sum of $4,000,000 (in the aggregate for each Property); during the period from August 1, 2018 through July 31, 2023, inclusive, the sum of $5,000,000 (in the aggregate for each Property); during the period from August 1, 2023 through July 31, 2028, inclusive, the sum of $5,000,000 (in the aggregate for each Property); and, during the period from August 1, 2028 through July 31, 2033, inclusive, the sum of $6,000,000 (in the aggregate for each Property).

     “UCC” means the Uniform Commercial Code of the jurisdiction with respect to which such term is used, as in effect from time to time.

     “Unavoidable Delays” means acts of God, casualties, war, civil commotion, embargo, riots, strikes, unavailability of materials (but not unavailability of funds) and any other events which are not within the reasonable control of the party in question to prevent, control or correct.

     Section 1.02. Rules of Construction. (a) The singular form of any word used herein, including the terms defined in Section 1.01 hereof, shall include the plural, and vice versa. The use herein of a word of any gender shall include correlative words of all genders.

     (b) Unless otherwise specified, references to Articles, Sections and other subdivisions of this Agreement are to the designated Articles, Sections and other subdivision of this Agreement as originally executed. The words “hereof,” “herein,” “hereunder” and words of similar import refer to this Agreement as a whole.

     (c) The headings or titles of the several articles and sections shall be solely for convenience of reference and shall not affect the meaning, construction or effect of the provisions hereof.

     (d) The date of this Agreement and the other Loan Documents is intended as a date for the convenient identification thereof and is not intended to indicate that this Agreement and the other Loan Documents were executed and delivered on such date. This Agreement and the other Loan Documents were executed and delivered on the Closing Date.

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ARTICLE II

APPLICATION, REIMBURSEMENT AND OTHER PAYMENTS

     Section 2.01. Application for Credit Enhancement. Borrower hereby applies to GECC and GEGF and requests and authorizes GECC to issue the Letter of Credit, in the Initial Stated Amount thereof, for the benefit of Trustee and for the account of Borrower.

     Section 2.02. Reimbursement and other Payment Obligations.

     (a) Borrower hereby unconditionally and irrevocably agrees to pay to GECC the following amounts in the manner and at the times set forth below:

     (i) On the day of any Principal Drawing, Borrower shall pay or cause to be paid to Trustee (or, upon notice from GECC, to GECC) in immediately available funds an amount equal to the amount of such Principal Drawing, without any abatement, deduction, deferment, suspension, reduction, set-off, defense or counterclaim in respect of any such amount. If Borrower does not pay or cause to be paid such amount when due, and without in any way affecting, waiving or extending the due date for payment of such amount, Borrower shall pay or cause to be paid on demand interest on such amount at the per annum rate equal to the Post-Default Rate compounded monthly from the date of such Principal Drawing until such amount is paid in full.

     (ii) On the day of any Interest Drawing, Borrower shall pay or cause to be paid to Trustee (or, upon notice from GECC, to GECC) in immediately available funds an amount equal to the amount of such Interest Drawing, without any abatement, deduction, deferment, suspension, reduction, set-off, defense or counterclaim in respect of any such amount. If Borrower does not pay or cause to be paid such amount when due, and without in any way affecting, waiving or extending the due date for payment of such amount, Borrower shall pay or cause to be paid on demand interest on such amount at the per annum rate equal to the Post-Default Rate compounded monthly from the date of such Interest Drawing until such amount is paid in full.

     (iii) Borrower shall pay or cause to be paid to GECC in immediately available funds (A) on the Expiration Date of the Letter of Credit, an amount equal to any portion of the Principal-Purchase Drawing Amount not previously paid by Borrower, and (B) interest on the unpaid principal balance of the Principal-Purchase Drawing Amount at the per annum rate equal to (x) for the first 30 days after the date of the applicable Purchase Drawing, the Reimbursement Rate, such interest to be paid in arrears on the first day of each calendar month and on the date of payment of the amount set forth in (A) above, and (y) from and after 30 days after the date of the applicable Purchase Drawing, on demand, the Post-Default Rate compounded monthly until such amount is paid

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in full, all without any abatement, deduction, deferment, suspension, reduction, set-off, defense or counterclaim in respect of any such amount.

     (iv) Borrower shall pay or cause to be paid to GECC in immediately available funds on the earlier of (A) the Expiration Date of the Letter of Credit or (B) the date of any Purchase Drawing made thereunder, an amount equal to the Interest-Purchase Drawing Amount, without any abatement, deduction, deferment, suspension, reduction, set-off, defense or counterclaim in respect of any such amount. If Borrower does not pay or cause to be paid such amount when due, and without in any way affecting, waiving or extending the due date for payment of such amount, Borrower shall pay or cause to be paid on demand interest on such amount at the per annum rate equal to the Post-Default Rate compounded monthly from the date of the applicable Purchase Drawing until such amount is paid in full.

     (v) With respect to any Purchase Drawing made under the Letter of Credit, Borrower shall pay or cause to be paid to GECC in immediately available funds (A) subject to Borrower’s election to amortize the Principal-Purchase Drawing Amount as provided below, on or before 90 days after such Purchase Drawing, an amount equal to the Principal-Purchase Drawing Amount, and (B) interest on such Principal-Purchase Drawing Amount at the per annum rate equal to (x) for the first 90 days after the date of the applicable Purchase Drawing, the Reimbursement Rate plus 50 basis points compounded monthly, such interest to be paid in arrears on the first day of each calendar month and on the date of payment of the amount set forth in (A) above, and (y) from and after 90 days after the date of the applicable Purchase Drawing, on demand, the Purchase Amortization Rate compounded monthly until such amount is paid in full, together with all other amounts due hereunder, without any abatement, deduction, deferment, suspension, reduction, set-off, defense or counterclaim in respect of any such amount; provided, however, upon receipt of written request by Borrower and if no Default or Event of Default has occurred, Borrower may pay the Principal-Purchase Drawing Amount in installments (collectively, the “Purchase Drawing Balance”) over a term ending on June 1, 2023. On the first Business Day of each month beginning on the month that immediately follows the month in which such Purchase Drawing occurs, Borrower shall make principal and interest payments (the “Installment Payments”) with respect thereto to GECC as follows: (1) principal payments in the amounts and at the times set forth in Exhibit B and, on June 1, 2023, in the amount of the outstanding Purchase Drawing Balance and (2) interest on the Purchase Drawing Balance at the per annum rate set forth above, in arrears. If Borrower makes such election, Borrower shall have the option to prepay at any time the Purchase Drawing Balance by paying GECC an amount equal to the sum of the outstanding Purchase Drawing Balance, any accrued interest thereon, the Make-Whole Amount and all other amounts due hereunder. If Borrower does not pay or cause to be paid any such amount when due, and without in any way affecting, waiving or extending the due date for payment of such amount, Borrower shall pay or cause to be paid on demand interest on any such amount at the per annum rate equal to the Post-Default Rate

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compounded monthly from the date any such amount is due until such amount is paid in full.

     (vi) On the day of any other payment made by GECC under the terms of the Letter of Credit or any of the Loan Documents, Borrower shall immediately upon notice thereof from GECC, pay or cause to be paid to GECC in immediately available funds an amount equal to the amount of such payment, without any abatement, deduction, deferment, suspension, reduction, set-off, defense or counterclaim in respect of any such payment amount. If Borrower does not pay or cause to be paid such amount when due, and without in any way affecting, waiving or extending the due date for payment of such amount, Borrower shall pay or cause to be paid on demand interest on such amount at the per annum rate equal to the Post-Default Rate compounded monthly from the due date of such payment until such amount is paid in full.

     (b) In order to facilitate Borrower’s reimbursement of GECC pursuant to Section 2.02(a)(ii) above, upon written request from GECC, Borrower shall pay and deposit on or before the Business Day immediately preceding each Note Interest Payment Date (time being of the essence and no grace period shall be permitted with respect to any of such payments) during the term of the Letter of Credit into a special non-interest bearing account established with and controlled by GECC (the “Reimbursement Account”), such amount as shall be reasonably estimated by GECC to be equal to the next payment of interest due under the Notes, so that at all times a sufficient amount of moneys shall have been deposited in the Reimbursement Account by no later than one Business Day prior to each Note Interest Payment Date in order to pay to GECC in full on every Note Interest Payment Date the entire amount due to GECC under Section 2.02(a)(ii) above. In any event, upon the demand of GECC, Borrower shall immediately deliver to GECC such additional moneys as are required to make up any deficiencies in the Reimbursement Account. Borrower hereby agrees that, upon written request from GECC, all payments under this Section shall be made pursuant to an electronic payment system satisfactory to GECC. Borrower hereby irrevocably authorizes and directs GECC to debit the Reimbursement Account immediately following any draws on the Letter of Credit for all of the amounts due and payable to GECC pursuant to Section 2.02(a)(ii) hereof, less the amount of any other disbursements received by GECC from Trustee pursuant to the Indenture for such purpose and to pay over such moneys to GECC. Any funds remaining in the Reimbursement Account following the application of such funds to fully reimburse GECC for any draws on the Letter of Credit on any particular Note Interest Payment Date shall be promptly remitted to Borrower. Upon the occurrence of an Event of Default, Borrower hereby authorizes and directs GECC to debit the Reimbursement Account for the full amount of any balance therein and to pay such moneys to GECC to be applied by GECC to the reduction of the Payment Obligations and any other Obligations of Borrower to GECC pursuant to this Agreement or any of the other Loan Documents. Until such time as the funds in the Reimbursement Account are disbursed in accordance with applicable provisions of this Agreement, all of the funds in the Reimbursement Account shall stand as additional collateral in favor of GECC to secure Borrower’s obligations under this Agreement and the other Loan Documents.

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     (c) Borrower hereby agrees to pay to Trustee for deposit in the Redemption Account of the Revenue Fund pursuant to the Indenture the amounts set forth in Exhibit B hereto on the dates set forth in Exhibit B; provided, however, so long as Borrower is making principal payments directly to GECC pursuant to Section 2.02(a)(v), Borrower shall not make such payments to Trustee. All such amounts paid to Trustee shall be used to redeem the Notes pursuant to Section 4.01 of the Indenture on the dates set forth in Exhibit B hereto.

     (d) To the extent that the Indenture requires GECC’s prior written consent to any redemption of the Notes, GECC shall give such consent so long as Borrower has deposited with Trustee or GECC, as the case may be, an amount sufficient to reimburse GECC for any draw on the Letter of Credit in connection with such redemption and all other amounts due hereunder.

     Section 2.03. Credit Enhancement Fees.

     (a) Borrower hereby agrees to pay to GECC a nonrefundable credit enhancement fee for each year or portion thereof that the Letter of Credit remains outstanding (collectively, the “Credit Enhancement Fees”). The first Credit Enhancement Fee shall be in the amount of $514,471.22, due on the Closing Date and cover the period from the Closing Date through June 1, 2009. Thereafter, (i) Borrower shall pay GECC a Credit Enhancement Fee in an amount equal to .70% of the then Stated Amount (without regard to any reductions in the Stated Amount of the Letter of Credit which are subject to reinstatement); and (ii) the Credit Enhancement Fees shall be due and payable by Borrower semi-annually, in advance, on June 1, 2009 and continuing on each December 1 and June 1 of each year during the term of the Letter of Credit. Once payable, all Credit Enhancement Fees shall be nonrefundable to Borrower under all circumstances.

     (b) Borrower hereby agrees to pay to GECC a nonrefundable drawing fee (the “Drawing Fee”) in the amount of $100 for each scheduled draw on the Letter of Credit, which drawing fee shall be payable by Borrower in advance. The first Drawing Fee shall be in the amount of $1,200, due on the Closing Date and cover the period from the Closing Date through June 1, 2009. Thereafter, the Drawing Fee shall be payable semi-annually, in advance, commencing on the June 1, 2009 and continuing on each December 1 and June 1 thereafter.

     (c) Nothing contained in this Agreement shall be deemed to constitute or create a promissory note within the meaning of 12 U.S.C. Section 1813(l). GECC’s issuance and delivery of the Letter of Credit is in consideration of Borrower’s payment of the fees specified in this Section, the agreement of Borrower to reimburse GECC set forth in Section 2.02 hereof and the grant of the security described herein and in the Mortgages.

     Section 2.04. Administration Account and Terms of Escrow Accounts. At GECC’s option and upon written request from GECC after the occurrence of a Default or an Event of Default, Borrower shall pay and deposit into a special non-interest bearing account established with GECC (the “Administration Account”), not later than the Business Day immediately

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preceding each Note Interest Payment Date, 1/12 of the annual amount as shall be reasonably estimated from time to time by GECC to be sufficient to enable GECC to accumulate the funds necessary to pay when due all of the costs, fees, charges and expenses incurred in connection with the Notes, including, but not limited to, any amounts payable to Trustee, Remarketing Agent and Rating Agency under the Loan Documents. All such amounts deposited with GECC shall be paid directly to Trustee, Remarketing Agent, Rating Agency or any other appropriate party, as the case may be.

     The establishment of the Escrow Accounts in accordance with the terms hereof shall in no event relieve Borrower from its obligations to pay the various amounts due under this Agreement or other Loan Documents on their respective due dates. The Escrow Accounts shall be utilized in order to facilitate the disbursement of the payments contemplated hereby. Borrower hereby assigns to GECC as security for all of Borrower’s Obligations and liabilities hereunder all of Borrower’s right, title and interest in the Escrow Accounts. Upon the occurrence of an Event of Default, GECC shall have the right to apply the moneys in the Escrow Accounts towards any of the Obligations of Borrower under this Agreement or any of the other Loan Documents, in such order of priority as GECC shall determine in its sole and absolute discretion. GECC is hereby authorized to comply with all reporting requirements with respect to the Escrow Accounts. Funds in the Escrow Accounts (whether or not such Escrow Accounts are deemed to be interest-bearing or not) shall be invested, at the direction of Borrower in accordance with the requirements of the Indenture, only in Qualified Investments (as defined in the Indenture). Any interest or other income attributable to funds held in the Escrow Accounts shall be disbursed or applied in the same manner and subject to the same terms and conditions and used for the same purposes as may be permitted for the use of any other funds held therein. All funds deposited by Borrower into any of the Escrow Accounts shall be held by GECC in GECC’s name and may be commingled with GECC’s own funds at financial institutions selected by GECC in its sole discretion. GECC shall not be responsible for any losses resulting from the investment of any funds held in the Escrow Accounts or for obtaining any specific level or percentage of earnings on such funds. Borrower shall be liable for any income taxes due on the earnings from the funds on deposit in the Escrow Accounts.

     Section 2.05. Saturday, Sunday or Non-Business Day; Moneys. If the date for the performance of any term, provision or condition (monetary or otherwise) under this Agreement shall happen to fall on a Saturday, Sunday or non-Business Day, the date for the performance of such term, provision or condition shall, at the option of Borrower or GECC, be extended to the next succeeding Business Day immediately thereafter occurring, with interest at the rate provided in this Agreement on the principal balance to such next succeeding Business Day if such term, provision or condition shall result in the extension of any monetary payment due to GECC. All references to moneys in this Agreement or any of the Loan Documents, or the equivalent thereof, shall be deemed to mean lawful moneys of the United States of America.

     Section 2.06. Manner and Time of Payment. All payments to GECC by Borrower under this Agreement shall be made in immediately available same day funds via wire transfer to GECC to such account as shall be designated in writing by GECC by 2:00 P.M., Local Time on the date such payment is due. Funds received after such time shall be deemed received on the next succeeding Business Day.

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     Section 2.07. Application of Funds. Except as otherwise expressly provided herein, all payments received by GECC from or on behalf of Borrower hereunder or pursuant to any of the Loan Documents, including, but not limited to, any amounts disbursed by Trustee to GECC in accordance with the terms of the Indenture, shall be applied by GECC to the payment of amounts then owing by Borrower to GECC, in such order and manner as GECC chooses in its sole discretion.

     Section 2.08. Computation of Interest. All interest payable hereunder shall be computed on the basis of a 360-day year and the actual number of days elapsed in the period during which such interest accrues. In computing the number of days during which interest accrues on any amount outstanding hereunder, the first date from which interest is stated to accrue hereunder shall be included and the date of payment of such amount to GECC shall be excluded provided such payment is received in immediately available same day funds by no later than 2:00 P.M., Local Time.

     Section 2.09. Interest After Default. Except as otherwise provided herein, if any payment due hereunder is not paid when due, whether by acceleration, at maturity or otherwise, then and in such event, Borrower shall pay or shall cause to be paid interest thereon from and after the date on which such payment first becomes due (regardless of whether an Event of Default shall have occurred) at the Post-Default Rate and such interest shall be due and payable, on demand, at such rate until the entire amount due is paid to GECC, whether or not any action shall have been taken or proceeding commenced to recover the same. Nothing contained in this Section shall in any way extend the time for the payment of any amounts payable hereunder.

     Section 2.10. Late Charges. In the event Borrower fails to pay any amounts due and payable hereunder when due, whether by acceleration or otherwise, GECC may, at its option, whether immediately or at the time of final payment of such amounts, impose a late charge on Borrower equal to five percent of the amount of each and every such past due payment notwithstanding the date on which such payment is actually paid to GECC. Any late charge imposed by GECC in accordance with this Section shall be due and payable on demand and shall be in addition to any interest due hereunder at the Post-Default Rate and to the exercise by GECC of its rights and remedies hereunder following an Event of Default.

     Section 2.11. Substitution of Letter of Credit or Replacement of Credit Enhancer. Borrower shall have the right at any time to terminate or replace GECC as the credit enhancer of the Notes under the Indenture by delivering to Trustee one or more substitute letter of credit or any other form of credit facility in replacement of the Letter of Credit, provided that (i) the Letter of Credit is returned to GECC for cancellation or termination, and (ii) all obligations hereunder and under each of the other Loan Documents owed to GECC have been fully paid and/or satisfied. No portion of any Credit Enhancement Fees payable to GECC shall be refundable to Borrower under any circumstances in the event of a cancellation or termination of the Letter of Credit prior to the Expiration Date thereof.

     Section 2.12. The Remarketing Agreement. Borrower covenants to and agrees with GECC that it will timely perform and fulfill all of its obligations under the Remarketing Agreement. Borrower agrees that any default by it under any provision of the Remarketing

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Agreement beyond any applicable grace period, if any, shall constitute an Event of Default under this Agreement.

     Section 2.13. Extension of Expiration Date. Provided that no Default or Event of Default has occurred hereunder, Borrower may request that GECC extend the Expiration Date of the Letter of Credit to the Extended Expiration Date upon the terms and in compliance with the provisions of this Section. In order to exercise such extension right, Borrower shall provide written notice of its request to extend such Expiration Date to GECC and GEGF not less than 180 days prior to the Expiration Date. The Expiration Date may be extended to the Extended Expiration Date in the sole and absolute discretion of GECC provided that GECC receives all items required by GECC in its sole and absolute discretion.

ARTICLE III

CONDITIONS PRECEDENT TO THE EXTENSION OF CREDIT AND
DISBURSEMENTS

     Section 3.01. Execution and Delivery of Closing Documents. GECC’s agreement to issue the Letter of Credit is conditioned upon GECC’s and GEGF’s receipt and approval of all of the following documents on or before the Closing Date, each of which shall be in form and substance satisfactory to GECC and GEGF:

     (a) This Agreement, properly executed on behalf of Borrower.

     (b) The Indenture, properly executed on behalf of Borrower and Trustee.

     (c) The Notes, properly executed on behalf of Borrower.

     (d) The Remarketing Agreement, properly executed on behalf of Borrower and Remarketing Agent.

     (e) The Mortgages, properly executed on behalf of Borrower.

     (f) The Environmental Indemnity Agreements, properly executed on behalf of Borrower, Tenant and Lease Guarantor.

     (g) The Subordination Agreements, properly executed on behalf of Borrower and Tenant.

     (h) The Leases, properly executed on behalf of Borrower and Tenant.

     (i) The Lease Guaranty, properly executed on behalf of Lease Guarantor.

     (j) The Purchase Agreement, properly executed on behalf of Borrower and Remarketing Agent.

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     (k) A certificate of the Secretary of Borrower, certifying as to (i) the resolutions or unanimous written consent of the managers and, if required, the members, of Borrower, authorizing the execution, delivery and performance of the Borrower Documents, (ii) the operating agreement of Borrower, and (iii) the signatures of the officers or agents of Borrower authorized to execute and deliver the Borrower Documents and other instruments, agreements and certificates on behalf of Borrower.

     (l) A certificate of the Secretary of Tenant, certifying as to (i) the resolutions or unanimous written consent of the board of directors and, if required, the shareholders of Tenant, authorizing the execution, delivery and performance of the Tenant Documents, (ii) the bylaws of Tenant, and (iii) the signatures of the officers or agents of Tenant authorized to execute and deliver the Tenant Documents and other instruments, agreements and certificates on behalf of Tenant.

     (m) A certificate of the Secretary of Lease Guarantor, certifying as to (i) the resolutions or unanimous written consent of the board of directors and, if required, the shareholders of Lease Guarantor, authorizing the execution, delivery and performance of the Lease Guarantor Documents, (ii) the bylaws of Lease Guarantor, and (iii) the signatures of the officers or agents of Lease Guarantor authorized to execute and deliver the Lease Guarantor Documents and other instruments, agreements and certificates on behalf of Lease Guarantor.

     (n) Currently certified copies of the Certificate of Formation of Borrower.

     (o) Currently certified copies of the Articles of Incorporation of Tenant.

     (p) Currently certified copies of the Articles of Incorporation of Lease Guarantor.

     (q) A Certificate of Good Standing issued as to Borrower by the Secretary of State of the State not more than 20 days prior to the date hereof.

     (r) A Certificate of Good Standing issued as to Tenant by the Secretary of State of the State not more than 20 days prior to the date hereof.

     (s) A Certificate of Good Standing issued as to Lease Guarantor by the Secretary of State of the State not more than 20 days prior to the date hereof.

     (t) Certificate of qualification to do business in the State of Kansas issued as to Borrower not more than 20 days prior to the date hereof.

     (u) Certificate of qualification to do business in the State of Kansas issued as to Tenant not more than 20 days prior to the date hereof.

     (v) Financing statements authorized by Borrower, as debtor, and naming GECC, as secured party, and/or the original certificate of title or manufacturer’s certificate of origin and title application if any of the Property is subject to certificate of title laws.

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     (w) Current searches of appropriate filing offices showing that (i) no state or federal tax liens have been filed and remain in effect against Borrower, (ii) no financing statements have been filed and remain in effect against Borrower relating to the Collateral except those financing statements filed by GECC, and (iii) GECC has duly filed all financing statements necessary to perfect the security interest created pursuant to this Agreement and the Mortgages.

     (x) Environmental engineering reports for the Property prepared by an engineer engaged by GECC after consultation with Borrower and at Borrower’s expense, and in a manner satisfactory to GECC, based upon an investigation relating to and making appropriate inquiries concerning the Property.

     (y) An opinion of counsel to Borrower, Tenant and Lease Guarantor, addressed to GECC, GEGF and Trustee, in form and substance acceptable to GECC.

     (z) An opinion of local counsel to Borrower, Tenant and Lease Guarantor, addressed to GECC, GEGF and Trustee, in form and substance acceptable to GECC.

     (aa) An opinion of counsel to the underwriter, addressed to GECC, GEGF and Trustee, in form and substance acceptable to GECC.

     (bb) A rating assigned by the Rating Agency of not less than “A-1+/P-1” for the Notes based upon the issuance of the Letter of Credit and such rating shall not have been downgraded, suspended or withdrawn.

     (cc) Evidence that all conditions to the issuance of the Notes (other than issuance of the Letter of Credit) shall have occurred.

     (dd) Payment of GECC’s and GEGF’s fees, commissions and expenses required by Section 11.01 hereof and the Credit Enhancement Fee.

     (ee) Payment of Trustee’s, Remarketing Agent’s and Rating Agency’s fees, commissions and expenses incurred in connection with the Indenture and the transactions contemplated hereby.

     (ff) Any other documents or items required by GECC or GEGF.

     Section 3.02. Disbursements from the Note Fund. Borrower agrees that Borrower shall provide GECC with a copy of all Payment Request Forms (as defined in the Indenture) relating to disbursements from the Note Fund. Prior to any disbursements from the Note Fund, Borrower shall obtain GECC’s written approval to each such disbursement, which approval shall be evidenced by GECC’s execution of each Payment Request Form.

     Section 3.03. Conditions of Disbursement. In addition to the requirements set forth in Section 3.01 hereof, GECC’s agreement to consider the authorization of any disbursement from the Note Fund shall be subject to the additional condition precedent that GECC shall have received all of the following on the date thereof, each in form and substance satisfactory to GECC:

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     (a) Each of the items required for a disbursement pursuant to the Indenture.

     (b) The representations and warranties contained in Articles V hereof are correct on and as of the date of such disbursement as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date.

     (c) No event has occurred and is continuing, or would result that constitutes a Default or an Event of Default.

     (d) Certificates of the insurance required hereunder, containing a lender’s loss payable clause or endorsement in favor of GECC.

     (e) As built ALTA surveys of the Property.

     (f) ALTA (or equivalent) mortgagee policy(ies) of title insurance in the amount of the Initial Stated Amount or as determined by GECC, with reinsurance and endorsements as GECC may require, containing no exceptions to title (printed or otherwise) which are unacceptable to GECC, and insuring that the Mortgages are first-priority liens on the Property and that any financing statements filed by GECC as fixture filings and the Leases are subordinate to the lien of the Mortgages. Without limitation, such policy(ies) shall (i) be in the 2006 ALTA form or, if not available, the 1970 ALTA (as amended in 1984) form or, if not available, the 1992 ALTA form (deleting arbitration clause and creditors’ rights exclusion, if permissible) or, if not available, the form commonly used in the State, insuring “General Electric Capital Corporation, a Delaware corporation, its successors and/or assigns, as their interests may appear,” and (ii) include the following endorsements and/or affirmative coverages: (A) ALTA 9 Comprehensive; (B) Survey; (C) Access; (D) ALTA 8.1 Environmental Protection Lien (modified for commercial property); (E) Subdivision; (F) Contiguity (as applicable); (G) Tax Parcel; (H) Tax Sale (as applicable); (I) Usury; (J) Doing Business; (K) First Loss; (L) Last Dollar (as applicable); (M) Tie-In; (N) Address and Improvement Type, (O) Letter of Credit, (P) ALTA 3.1 Zoning Endorsement (with additional coverage for number and type of parking spaces) and (Q) with respect to any of the Property subject to a Planned Unit Development, ALTA 5.1 Planned Unit Development. GECC may require additional endorsements after reviewing the surveys.

     (g) Zoning compliance letters from the applicable City Planner’s, County Clerk’s or Zoning Department’s offices. Without limitation, such zoning compliance letters shall (i) provide the zoning classification code for the Property, (ii) be addressed to Borrower and GECC, (iii) include the address of the Property, (iv) describe the type(s) of permitted use of the Property, and (v) include an expiration-dated copy of conditions or restrictions of use.

     (h) Copies of the final, permanent and unconditional Certificates of Occupancy for the Property. Such Certificates of Occupancy must include all tenant improvement work, if any, completed with respect to the Property.

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     (i) Engineer’s “walk-through” inspections prepared by an engineer acceptable to GECC at Borrower’s expense, in form and substance acceptable to GECC.

     (j) Final appraisals of the Property addressed to GECC, in form and substance acceptable to GECC and prepared by an MAI certified appraiser acceptable to GECC in conformance with the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP) and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

     (k) Any other documents and items required by GECC.

ARTICLE IV

BORROWER’S OBLIGATIONS UNCONDITIONAL

     The obligations of Borrower under this Agreement shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with this Agreement (subject to any modifications, waivers or consents by GECC or GEGF in accordance with the terms hereof) under any and all circumstances, and shall not be affected by (a) any lack of validity or enforceability of any of the Loan Documents; (b) any amendment of, or any waiver or consent with respect to, all or any of the Loan Documents; (c) the existence of any claim, set-off, defense or other rights that Borrower may have at any time against Trustee, GECC, GEGF or any other person; (d) any statement or document presented under the Letter of Credit proving to be forged, fraudulent, untrue, inaccurate or invalid, in any respect; (e) any payment by GECC under the Letter of Credit against presentation of a sight draft or certificate that does not substantially comply with the terms of such Letter of Credit; (f) any delay, extension of time, renewal, compromise or other indulgence or modification agreed to by GECC, with or without notice to or approval by Borrower in respect of any of Borrower’s indebtedness to GECC or GEGF under this Agreement or any of the other Loan Documents; or (g) any exchange, release or nonperfection of any lien or security interest in any collateral pledged or otherwise provided to secure any of the Obligations contemplated herein or in any of the Loan Documents.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BORROWER

     In order to induce GECC to enter into this Agreement and to issue the Letter of Credit, Borrower represents, warrants and covenants to GECC and GEGF that the following statements are true, correct and complete as of the Closing Date:

     (a) Borrower is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, has power to enter into the Borrower Documents and by proper company action has duly authorized the execution and delivery of the Borrower Documents. Borrower is in good standing and is duly licensed or qualified to transact business in the State, the State of Kansas and in all other jurisdictions where the character of the property owned or leased or the nature of the

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business transacted by it makes such licensing or qualification necessary. Borrower’s exact legal name is as set forth in the preambles of this Agreement. Borrower’s federal tax identification number is 71-1050443.

     (b) Borrower has been fully authorized to execute and deliver the Borrower Documents under the terms and provisions of the resolutions or written consent of its managers, or by other appropriate official approval, and further represents, covenants and warrants that all requirements have been met, and procedures have occurred in order to ensure the enforceability of the Borrower Documents and the Borrower Documents have been duly authorized, executed and delivered.

     (c) The officer of Borrower executing the Borrower Documents has been duly authorized to execute and deliver the Borrower Documents and such related documents under the terms and provisions of the resolutions or written consent of its managers.

     (d) The Borrower Documents constitute valid and legally binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except to the extent limited by bankruptcy, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights.

     (e) The execution and delivery of the Borrower Documents, the consummation of the transactions contemplated hereby and the fulfillment of the terms and conditions hereof do not and will not violate any law, rule, regulation or order, conflict with or result in a breach of any of the terms or conditions of the articles of organization or operating agreement of Borrower or of any restriction or of any agreement or instrument to which Borrower is now a party and do not and will not constitute a default under any of the foregoing or result in the creation or imposition of any liens, charges or encumbrances of any nature upon any of the property or assets of Borrower contrary to the terms of any instrument or agreement.

     (f) The authorization, execution, delivery and performance of the Borrower Documents by Borrower do not require submission to, approval of, or other action by any governmental authority or agency, which action with respect to the Borrower Documents has not been taken and which is final and nonappealable.

     (g) There is no action, suit, proceeding, claim, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body pending or, to the best of Borrower’s knowledge, threatened against or affecting Borrower, challenging Borrower’s authority to enter into the Borrower Documents or any other action wherein an unfavorable ruling or finding would adversely affect the enforceability of the Borrower Documents or any other transaction of Borrower which is similar hereto, or would materially and adversely affect any of the transactions contemplated by the Borrower Documents.

     (h) The Property is properly zoned for its current and anticipated use and the use of the Property will not violate any applicable zoning, land use, environmental or similar law or restriction. Borrower has all licenses and permits to use the Property.

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     (i) Borrower has furnished to the Reports (as defined in the Environmental Indemnity Agreement). Except as disclosed to GECC in the Reports, Borrower has received no notification of any kind suggesting that the Property or any adjacent property is or may be contaminated with any Hazardous Waste or Materials or is or may be required to be cleaned up in accordance with any applicable law or regulation; and Borrower further represents and warrants that, except as previously disclosed to GECC in writing, to the best of its knowledge as of the date hereof after due and diligent inquiry, other than Permitted Substances (as defined in the Environmental Indemnity Agreements) there are no Hazardous Waste or Materials located in, on or under the Property or any adjacent property, or incorporated in any Improvements, nor has the Property or any adjacent property ever been used as a landfill or a waste disposal site, or a manufacturing, handling, storage, distribution or disposal facility for Hazardous Waste or Materials. Borrower has obtained all permits, licenses and other authorizations which are required under any Environmental Laws at Borrower’s facilities or in connection with the operation of its facilities. Except as previously disclosed to GECC in writing, Borrower and all activities of Borrower at its facilities comply with all Environmental Laws and with all terms and conditions of any required permits, licenses and authorizations applicable to Borrower with respect thereto, except to the extent that failure to comply therewith could not reasonably be expected to have a material adverse effect on the financial or operating condition of Borrower, Tenant or Lease Guarantor or could not adversely affect the value or marketability of the Property. Except as previously disclosed to GECC in writing, Borrower is also in compliance with all limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in Environmental Laws or contained in any plan, order, decree, judgment or notice of which Borrower is aware, except to the extent that failure to comply therewith could not reasonably be expected to have a material adverse effect on the financial or operating condition of Borrower, Tenant or Lease Guarantor or could not adversely affect the value or marketability of the Property. Except as previously disclosed to GECC in writing, Borrower is not aware of, nor has Borrower received notice of, any events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent continued compliance with, or which may give rise to any liability under, any Environmental Laws.

     (j) Borrower has heretofore furnished to GECC and GEGF the audited consolidated financial statements of Lease Guarantor for its fiscal year ended December 31, 2002, December 31, 2003, December 31, 2004, December 31, 2005, December 31, 2006 and December 31, 2007, and those statements fairly present the financial condition of Lease Guarantor on the dates thereof and the results of its operations and cash flows for the periods then ended and were prepared in accordance with GAAP. Since the date of the most recent financial statements, there has been no material adverse change in the business, properties or condition (financial or otherwise) of Lease Guarantor.

     (k) Borrower has paid or caused to be paid to the proper authorities when due all federal, state and local taxes required to be withheld by it. Borrower has filed all federal, state and local tax returns which are required to be filed, and Borrower has paid or caused to be paid to the respective taxing authorities all taxes as shown on said returns or on any assessment received by it to the extent such taxes have become due.

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     (l) Borrower has or will have good and absolute title to all Collateral and all proceeds thereof, free and clear of all mortgages, security interests, liens, licenses and encumbrances except for the security interest created pursuant to this Agreement and the Mortgages and the Permitted Exceptions.

     (m) All financial and other information provided to GECC and GEGF by or on behalf of Borrower, Tenant or Lease Guarantor in connection with Borrower’s request for the issuance of the Letter of Credit is true and correct in all material respects and Borrower has not omitted to provide GECC and GEGF with any information which Borrower reasonably believes would be material to GECC’s and GEGF’s decision to enter into this Agreement and, as to projections, valuations or pro forma financial statements, present a good faith opinion as to such projections, valuations and pro forma condition and results.

     (n) Borrower has authorized GECC to file financing statements, and such financing statements when filed will be sufficient to perfect the security interest created pursuant to this Agreement and the Mortgages. When such financing statements are filed in the offices noted therein, GECC will have a valid and perfected security interest in the Collateral, subject to no other security interest, assignment, lien, license or encumbrance other than the liens created by this Agreement and by the Mortgages and the Permitted Exceptions. None of the Collateral constitutes a replacement of, substitution for or accessory to any property of Borrower subject to a lien of any kind. Borrower owns the Property subject to no liens or encumbrances of any kind other than the respective rights of GECC as herein provided, the Mortgages and the Permitted Exceptions.

     (o) No person other than Borrower or Tenant is in occupancy or possession of the Property.

     (p) Neither Borrower nor any individual or entity owing directly or indirectly any interest in Borrower is an individual or entity whose property or interests are subject to being “blocked” under any of the Terrorism Laws or is otherwise in violation of any of the Terrorism Laws.

ARTICLE VI

TITLE TO PROPERTY; SECURITY INTEREST

     Section 6.01. Title to Collateral. Legal title to the Collateral and any and all repairs, replacements, substitutions and modifications to such Collateral shall be in Borrower. Borrower will at all times protect and defend, at its own cost and expense, its title from and against all claims, liens and legal processes of creditors of Borrower, and keep all Collateral free and clear of all such claims, liens and processes, except for the liens created hereunder and under the Mortgages and the Permitted Exceptions.

     Section 6.02. Security Interest in Collateral. This Agreement is intended to constitute a security agreement within the meaning of the UCC. As security for Borrower’s Obligations to GECC, Borrower hereby grants to GECC a security interest constituting a first lien on the

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Collateral. Borrower ratifies its previous authorization for GECC to pre-file UCC financing statements and any amendments thereto describing the Collateral and all other collateral described above and containing any other information required by the applicable UCC. Borrower agrees to execute such additional documents, including financing statements, assignments, affidavits, notices, control agreements and similar instruments, in form satisfactory to GECC, and take such other actions that GECC deems necessary or appropriate to establish and maintain the security interest created by this Section, and Borrower hereby designates and appoints GECC as its agent, and grants to GECC a power of attorney (which is coupled with an interest), to execute on behalf of Borrower, such additional documents and to take such other actions. Borrower authorizes GECC, and hereby grants GECC a power of attorney (which is coupled with an interest), to file financing statements and amendments thereto describing the Collateral and containing any other information required by the applicable UCC and all proper terminations of the filings of other secured parties with respect to the Collateral, in such form and substance as GECC, in its sole discretion, may determine. Borrower hereby waives any right that Borrower may have to file with the applicable filing officer any financing statement, amendment, termination or other record pertaining to the Collateral and/or GECC’s interest therein.

     Section 6.03. Change in Name or Company Structure of Borrower; Change in Location of Borrower’s Chief Executive Office and Chief Principal Office. Borrower’s chief executive office and chief principal office are located at the address set forth above, and all of Borrower’s records relating to its business and the Collateral are kept at such location. Borrower hereby agrees to provide written notice to GECC of any change or proposed change in its name, company structure, chief executive office or chief principal office. Such notice shall be provided 30 days in advance of the date that such change or proposed change is planned to take effect.

     Section 6.04. Liens and Encumbrances to Title. Borrower shall not, directly or indirectly, create, incur, assume or suffer to exist any mortgage, pledge, lien, charge, license, encumbrance or claim on or with respect to the Collateral (together, “Liens”) other than the respective rights of GECC as herein provided, the Mortgages and the Permitted Exceptions. Borrower shall promptly, at its own expense, take such action as may be necessary duly to discharge or remove any such Lien. Borrower shall reimburse GECC for any expenses incurred by GECC to discharge or remove any Lien.

     Section 6.05. Assignment of Insurance. As additional security for the payment and performance of Borrower’s obligations hereunder, Borrower hereby assigns to GECC all of Borrower’s rights and interests in any and all moneys (including, without limitation, proceeds of insurance and refunds of unearned premiums) due or to become due under, and all other rights of Borrower with respect to, any and all policies of insurance now or at any time hereafter covering the Property or any evidence thereof or any business records or valuable papers pertaining thereto, and Borrower hereby directs the issuer of any such policy to pay all such moneys directly to GECC. Borrower hereby assigns to GECC all of Borrower’s rights and interests in any and all moneys due or to become due with respect to any condemnation proceeding affecting the Property. At any time, whether before or after the occurrence of any Event of Default, GECC may (but need not), in GECC’s name or in Borrower’s name, execute and deliver proof of claim, receive all such moneys, endorse checks and other instruments representing payment of

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such moneys, and adjust, litigate, compromise or release any claim against the issuer of any such policy or party in any condemnation proceeding.

ARTICLE VII

AFFIRMATIVE COVENANTS OF BORROWER

     Until the later of (a) the expiration, termination, cancellation and/or return of the Letter of Credit to GECC, and (b) payment in full of all amounts due and owing or payable to GECC under this Agreement and the other Loan Documents:

     Section 7.01. Reporting Requirements. Borrower will deliver, or cause to be delivered, to GECC each of the following, which shall be in form and detail acceptable to GECC:

     (a) as soon as available, and in any event within 120 days after the end of each fiscal year of Lease Guarantor, or if longer, within the period allowed by the Securities and Exchange Commission to file annual financial statements, copies of publicly available reports;

     (b) if the reports set forth in subsection (a) of this Section are no longer publicly available, as soon as available, and in any event within 120 days after the end of each fiscal year of Lease Guarantor, consolidated audited financial statements of Lease Guarantor with the unqualified opinion of independent certified public accountants selected by Lease Guarantor and acceptable to GECC, which annual financial statements shall include the balance sheet of Lease Guarantor as at the end of such fiscal year and the related statements of income, retained earnings and cash flows of Lease Guarantor for the fiscal year then ended, all in reasonable detail and prepared in accordance with GAAP, together with a certificate of the chief financial officer of Lease Guarantor stating that such financial statements have been prepared in accordance with GAAP;

     (c) immediately after the commencement thereof, notice in writing of all litigation and of all proceedings before any governmental or regulatory agency affecting Borrower of the type described in Article V hereof or which will have a Material Adverse Effect;

     (d) promptly upon knowledge thereof, notice of any loss or destruction of or damage to any Property in an amount equal to or greater than $1,000,000, in aggregate, or of any material adverse change in any Property;

     (e) promptly after the amending thereof, copies of any and all amendments to the articles of organization or operating agreement of Borrower; and

     (f) promptly upon knowledge thereof, notice of any Material Adverse Effect.

     Section 7.02. Books and Records; Inspection and Examination. Borrower will keep accurate books of record and account for itself pertaining to the Collateral and pertaining to Borrower’s business and financial condition and such other matters as GECC may from time to

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time request, in its reasonable discretion, in which true and complete entries will be made in accordance with GAAP and, upon request of GECC, will permit any officer, employee, attorney or accountant for GECC to audit, review, make extracts from, or copy any and all corporate and financial books, records and properties of Borrower at all times during ordinary business hours, and to discuss the affairs of Borrower with any of its directors, officers, employees or agents. Upon at least three (3) Business Days’ prior notice (except if a Default or Event of Default has occurred, no prior notice) from GECC, Borrower will permit GECC, or its employees, accountants, attorneys or agents, to examine and copy any or all of its records and to examine and inspect the Collateral upon prior written notice (except in the case of an emergency or following an Event of Default) during Borrower’s business hours.

     Section 7.03. Compliance With Laws. Borrower will (a) comply with the requirements of applicable laws and regulations, the noncompliance with which would materially and adversely affect its business or its financial condition, and (b) use and keep the Property, and will require that others use and keep the Property, only for lawful purposes, without violation of any federal, state or local law, statute or ordinance. Borrower shall secure all permits and licenses, if any, necessary for the installation and operation of the Property. Borrower shall comply in all respects (including, without limitation, with respect to the use, maintenance and operation of each item of the Property) with all laws of the jurisdictions in which its operations involving any component of Property may extend and of any legislative, executive, administrative or judicial body exercising any power or jurisdiction over the items of the Property or its interest or rights under this Agreement.

     Section 7.04. Reserved.

     Section 7.05. Payment of Taxes and Other Claims. Except as provided in the Mortgages, Borrower will pay or discharge or cause to be paid or discharged, when due, (a) all taxes, assessments and governmental charges levied or imposed upon it or upon its income or profits, upon any properties belonging to it (including, without limitation, the Property) or upon or against the creation, perfection or continuance of the security interest created pursuant to this Agreement, prior to the date on which penalties attach thereto, (b) all federal, state and local taxes required to be withheld by it, and (c) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien or charge upon any properties of Borrower; provided, that Borrower shall not be required to pay or cause to be paid any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. Borrower will pay or cause to be paid, as the same respectively come due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Property, as well as all gas, water, steam, electricity, heat, power, telephone, utility and other charges incurred in the operation, maintenance, use, occupancy and upkeep of the Property.

     Section 7.06. Preservation and Maintenance of Property; Leaseholds. Borrower (a) shall, at its own expense, maintain, preserve and keep the Property in good repair, working order and condition, and shall from time to time make all repairs and replacements necessary to keep the Property in such condition, and in compliance with state and federal laws, ordinary wear and tear excepted, (b) shall not commit waste to the Property, (c) shall restore or repair promptly and in a good and workmanlike manner all or any part of the Property in the event of

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any damage, injury or loss thereto, whether or not insurance proceeds are available to cover in whole or in part the costs of such restoration or repair pursuant to Section 9.01 hereof, (d) shall comply with all laws, ordinances, regulations and requirements of any governmental body applicable to the Property, (f) if all or part of the Property is for rent or lease, then GECC, at its option after the occurrence of an Event of Default, may require Borrower to provide for professional management of the Property by a property manager satisfactory to GECC pursuant to a contract approved by GECC in writing, unless such requirement shall be waived by GECC in writing, and (g) shall give notice in writing to GECC of and, unless otherwise directed in writing by GECC, appear in and defend any action or proceeding purporting to affect the Property, the security of this Agreement or the rights or powers of GECC hereunder. In the event that any parts or accessories forming part of any item or items of Property become worn out, lost, destroyed, damaged beyond repair or otherwise rendered unfit for use, Borrower, at its own expense and expeditiously, will replace or cause the replacement of such parts or accessories (x) by replacement parts or accessories free and clear of all liens and encumbrances and with a value and utility at least equal to that of the parts or accessories being replaced (assuming that such replaced parts and accessories were otherwise in good working order and repair) or (y) pursuant to Section 9.01 hereof. All such replacement parts and accessories shall be deemed to be incorporated immediately into and to constitute an integral portion of the Property and, as such, shall be subject to the terms of this Agreement. GECC shall have no responsibility in any of these matters, or for the making of improvements or additions to the Property. Borrower will defend the Property against all claims or demands of all persons (other than GECC) claiming the Property or any interest therein.

     Borrower represents, warrants and covenants that the Property is and shall be in compliance with the Americans with Disabilities Act of 1990 and all of the regulations promulgated thereunder, as the same may be amended from time to time.

     Section 7.07. Insurance; Indemnifications. (a) Borrower shall obtain and maintain the following types of insurance upon and relating to the Property:

     (i) All Risk or Special Causes of Loss Property Form including Business Interruption.

     (A) Comprehensive all risk insurance (including, without limitation, coverage against riot and civil commotion, vandalism, malicious mischief, water, mold (based on a covered peril), fire, burglary, theft and terrorism) on the improvements to and all other insurable portions of the Property and in each case (1) insuring against any peril now or hereafter included within the classification “Special Form Cause of Loss,” (2) in an amount equal to 100% of the “Full Replacement Cost,” (3) containing an agreed amount endorsement with respect to the improvements, equipment and all other insurable portions of the Property waiving all co-insurance provisions, and (4) providing that the deductible shall not exceed the sum of $100,000.00, unless agreed to in writing by GECC. “Full Replacement Cost” means the actual replacement cost of the improvements and equipment (without taking into account any depreciation, and exclusive of excavations, footings and foundations,

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landscaping and paving) determined annually by an insurer, a recognized independent insurance broker or an independent appraiser selected and paid by Borrower and in no event less than the coverage required pursuant to the terms of either Lease.

     (B) Business income interruption insurance (1) with loss payable to GECC, (2) covering losses of income and Revenues derived from the Property resulting from any risk or casualty whatsoever, (3) containing an extended period of indemnity endorsement which provides that after the physical loss to the improvements and all other insurable portions of the Property have been repaired, the continued loss of income will be insured until such income either returns to the same level it was at prior to the loss, or the expiration of one hundred eighty (180) days from the date the Property is repaired or replaced and operations resumed, whichever first occurs, and notwithstanding that the policy may expire prior to the end of such period, and (4) in an amount equal to one hundred percent (100%) of the projected Revenue from the Property for a period of twelve (12) months. The amount of such business income insurance shall be determined by GECC prior to the date hereof and at least once each year thereafter based on Borrower’s reasonable estimate of the gross income from the Property for the succeeding twelve (12) month period. All insurance proceeds payable to GECC pursuant to this Section 7.07(a)(i)(B) shall be immediately deposited with GECC and shall be disbursed to Borrower for payment of the costs and expenses to maintain and operate the affected Property; provided however, that nothing herein contained shall be deemed to relieve Borrower of its obligation to pay the Obligations on the respective dates of payment provided for herein except to the extent such amounts are actually paid out of the proceeds of such business income insurance. The perils covered by this insurance shall be the same as those accepted on the real property, including flood and earthquake, as necessary. This coverage shall be written on the same basis as the property policy stated in Section 7.07(a)(i)(A) above. “Revenues” means all rents, rent equivalents, moneys payable as damages pursuant to a Lease or in lieu of rent or rent equivalents, royalties (including all oil and gas or other mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or benefit of Borrower from any and all sources including any obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of property or rendering of services by Borrower and proceeds, if any, from business interruption or other loss of income insurance.

     (C) The policy of insurance required pursuant to this Section 7.7(a)(i)(A) above shall contain Demolition Costs, Increased Cost of

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Construction and “Ordinance or Law Coverage” or “Enforcement” endorsements in amounts satisfactory to GECC if any of the improvements or the use of the Property shall at any time constitutes legal non-conforming structure or uses or the ability to rebuild the Improvements is restricted or prohibited.

     (D) If windstorm coverage is excluded from the policy required under Section 7.07(a)(i)(A) above, Borrower must provide separate windstorm insurance in an amount equal to the lesser of the Initial Stated Amount and the maximum amount permitted by law, if any of the Property is located in area where GECC requires such insurance. Deductibles for windstorm coverage larger than 5% of the casualty policy limit applicable to the Property are subject to approval by GECC.

     (E) At all times during such structural construction, repairs or alterations are being made with respect to the improvements: (1) owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the commercial general liability insurance policy described in Section 7.07(a)(ii), and (2) the insurance provided in Section 7.07(a)(i)(A) written on a so-called builder’s risk completed value form (a) on a non-reporting basis, (b) against all risks insured against pursuant to Section 7.07(a)(i)(A), (c) including permission to occupy the improvements, and (4) with an agreed amount endorsement waiving co-insurance provisions. The amount of such coverage must be approved by GECC.

     (ii) Commercial General Liability/Umbrella Liability. Commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Property, such insurance (A) to be on the so-called “occurrence” form containing minimum limits per occurrence of $1,000,000.00 and $2,000,000.00 in the aggregate, together with excess and/or umbrella liability in amount of at least $100,000,000; (B) to contain a liquor liability endorsement if any part of the Property is covered by a liquor license; (C) to continue at not less than the aforesaid limit until required to be changed by GECC in writing by reason of changed economic conditions making such protection inadequate; (D) to cover at least the following hazards, (1) premises and operations, (2) products and completed operations on an “if any” basis, (3) independent contractors, (4) blanket contractual liability for all written and oral contracts, and (5) all legal liability imposed upon borrower and all court costs and attorneys’ fees incurred in connection with the ownership, operation and maintenance of the Property; and (E) subject to commercial availability, to have no greater than a $500,000.00 self-insured retention, provided that such self-insured retention may be increased but not more than proportionately to any increase in the total revenues of Life Time Fitness, Inc., as reflected by its most recent 10Q and 10K filing, as the case may be from and after the date hereof. If Borrower has a multi-location policy or loan, the primary general liability coverage must be maintained on a “general aggregate per location basis.”

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     (iii) Flood Insurance. Flood insurance will be required if any portion of the improvements to the Property is situated in a federally designated “special flood hazard area” (for example, Zones A and V) as designated by the Federal Emergency Management Agency, or any successor thereto, as an area having special flood hazards pursuant to the National Flood Insurance Act of 1968, The Flood Disaster Protection Act of 1973, or the National Flood Insurance Reform Act of 1994, as each may be amended, (the “Flood Insurance Acts”). The minimum amount of flood insurance required is the lesser of one hundred percent (100%) of the Full Replacement Cost (plus business interruption coverage) or the maximum limit of coverage available for the improvements under the Flood Insurance Act. The maximum deductible shall be no more than $25,000.

     (iv) Sinkhole, Mine Subsidence and Earthquake. Sinkhole, mine subsidence and earthquake insurance shall be obtained and maintained if in the opinion of a professional engineer with experience in this professional area there is a foreseeable risk of loss due to this hazard. If necessary, as determined by such engineer, Borrower shall maintain coverage in an amount equal to the Stated Amount.

     (v) Boiler and Machinery Coverage. Comprehensive broad form boiler and machinery insurance (without exclusion for explosion) covering all steam boilers, heating and air conditioning equipment, high pressure piping, machinery and equipment, sprinkler systems, pressure vessels, refrigeration equipment and piping, or similar apparatus now or hereafter installed in the improvements (including “system breakdown coverage”) and insuring against loss of occupancy or use arising from any breakdown, in an amount at least equal to the lesser of the then Stated Amount or $2,000,000.00, with a deductible no greater than $100,000.00, unless approved by Borrower.

     (vi) Worker’s Compensation and Employer’s Liability. If Borrower has any employees, workers’ compensation, subject to the statutory limits of the state in which the Property is located, and employer’s liability insurance subject to the statutory limits of the state in which the Property is located.

     (vii) Miscellaneous. Such other insurance as may from time to time be reasonably required by GECC in order to protect its interests, including such insurance as may now be or hereafter becomes available that GECC reasonably deems prudent in light of the then prevailing market or industry practices or applicable law, provided that absent a change of law, a change of prevailing market or industry practices, or a material change of circumstances relating to the Property, no other such coverages shall be required.

     (b) All policies of insurance (the “Policies”) required pursuant to this Section:

     (i) shall be issued by companies licensed to do business in the sate where the Property is located, with a claims paying ability rating of “A” or its

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equivalent by Standard & Poor’s Ratings and Moody’s Investors Services, Inc. and a rating of “A:IX” or better in the current Best’s Insurance Reports;

     (ii) shall name GECC and its successors and/or assigns as their interest may appear as the lender;

     (iii) shall contain a non-contributory standard lender clause and a lender’s loss payable endorsement, or their equivalents, naming GECC as the person to which all payments made by such insurance company shall be paid;

     (iv) shall contain a waiver of subrogation against GECC;

     (v) shall be maintained throughout the term hereof without cost to GECC;

     (vi) shall be assigned to GECC;

     (vii) on or prior to the date hereof, Borrower shall deliver to GECC either certified copies of the Policies in effect on the date hereof (the “Current Policies”) or ACORD Form 25 S, Certificate of Liability Insurance, and ACORD Form 28, Evidence of Commercial Property Insurance (the “ACORD Certificates”) with respect to the Current Policies (and each ACORD Certificate must specify GECC, loss payee and additional insured status and/or waivers of subrogation, state the amounts of all deductibles and self-insured retentions, if any, set forth notice requirements for cancellation, material change, or non-renewal of insurance and be accompanied by copies of all required endorsements, provided that Borrower shall deliver to GECC certified copies of all required endorsements, provided that Borrower shall deliver to GECC certified copies of the Current Policies upon actual issuance;

     (viii) at least fifteen (15) days prior to the expiration of the Policies, Borrower shall deliver to GECC either the original policies (copies of the same certified by the issuers thereof) issued in renewal of each of the expiring Policies or ACORD Certificates with respect thereto, provided that Borrower shall deliver to GECC the original policies (or copies of the same certified by the issuers thereof) issued in renewal of the expired Policies upon actual issuance of the renewal policies;

     (ix) shall contain endorsements providing that GECC shall not be liable for the payment of any of the Insurance Premiums, that neither Borrower, GECC nor any other party shall be a co-insurer under said Policies, that no act or negligence of Borrower, or anyone acting for Borrower, or of any tenant under any Lease or other occupant, or failure to comply with the provisions of any Policy which might otherwise result in a forfeiture of the insurance or any part thereof, shall in any way affect the validity or enforceability of the insurance insofar as GECC is concerned, that GECC shall receive at least thirty (30) days prior written notice of any material modification, reduction or cancellation, and

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such other similar provisions as GECC deems reasonably necessary or desirable to protect its interest; and

     (x) any material changes from the coverages and policies approved by GECC prior to the date hereof shall be acceptable in form and substance to GECC and shall be approved by GECC as to amounts, form, risk coverage, deductibles, loss payees and insureds.

     (b) Borrower shall pay or cause to be paid the premiums for such Policies (the “Insurance Premiums”) as the same become due and payable and shall furnish to GECC evidence of the renewal of each of the Policies with receipts for the payment of the currently due installments of the Insurance Premiums or other evidence of such payment reasonably satisfactory to GECC (provided, however, that Borrower is not required to furnish such receipts for payment of Insurance Premiums in the event that no Event of Default exists). If Borrower does not furnish such evidence and receipts for then currently due installments of Insurance Premiums at least fifteen (15) days prior to the expiration of any such expiring Policy, then GECC may procure, but shall not be obligated to procure, such insurance and pay the Insurance Premiums therefor, and Borrower agrees to reimburse GECC for the cost of such Insurance Premiums promptly on demand. Borrower covenants and agrees to promptly forward to GECC a copy of each written notice received by Borrower of any material modification, reduction or cancellation of any of the Policies or of any of the coverages afforded under any of the Policies. Within thirty (30) days after request by GECC, Borrower shall obtain or cause to be obtained such increases in the amounts of coverage required hereunder as may be reasonably required by GECC, taking into consideration and based upon changes in the value of money over time, changes in liability laws, changes in prudent customs and practices, and the like.

     (c) Borrower hereby indemnifies and holds harmless the Indemnified Parties from and against any and all claims, damages, losses, liabilities, costs or expenses whatsoever (including, without limitation, court costs, and reasonable attorneys’ and paralegals’ fees and expenses through and including any appellate proceedings at all levels, and any special proceedings), which any of the Indemnified Parties may incur (or which may be claimed against any of the Indemnified Parties by any entity or entities whatsoever) by reason of, under, arising out of, related to, or in connection with (a) the Property; (b) the Indenture or any of the other Loan Documents; (c) the Notes, (d) any breach by Borrower of any material representation, warranty, covenant or agreement made in or pursuant to this Agreement or any of the other Loan Documents; (e) any failure of Borrower, Trustee or Remarketing Agent or any other person or entity to comply with any applicable federal or state laws or regulations pertaining to the offer, sale or remarketing of the Notes or to the issuance or maintenance of the Letter of Credit, except for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused solely and directly by the gross negligence or willful misconduct of the party seeking any such indemnity ; or (f) the execution and delivery or transfer to a successor Trustee of, or payment or failure to pay under, the Letter of Credit, except for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the gross negligence or willful misconduct of GECC in

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determining whether a statement or draft presented under a Letter of Credit complied with the terms thereof or whether any statement or any other document presented under a Letter of Credit was forged, fraudulent or invalid, or any statement therein was untrue or inaccurate; or (g) the Letter of Credit or any certificate, document, instrument, or agreement executed in connection therewith. Further, Borrower hereby agrees to pay, and to protect, indemnify and save harmless the Indemnified Parties from and against, any and all losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, damages, costs or expenses (including, without limitation, attorneys’ fees and expenses at trial, or appeal, or in other indirect or administrative proceedings) of any nature whatsoever, arising from or relating in any way to the offering, issuance, sale, remarketing or delivery of the Notes (or any interest in any fund into which the Notes are placed) or the entering into by GECC or GEGF of any of the Loan Documents or providing the Letter of Credit, except for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused solely and directly by the gross negligence or willful misconduct of the party seeking any such indemnity.

     (d) As to GECC and GEGF, Borrower assumes all risks of the acts or omissions of Trustee with respect to the use of the Letter of Credit. The Indemnified Parties shall not be liable or responsible for: (a) the use made of the Letter of Credit or for any acts or omissions of Trustee; (b) the validity, sufficiency or genuineness of any documents, or endorsements presented in connection with the Letter of Credit or the Notes, even if such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by GECC against presentation of documents which do not comply with the terms of the Letter of Credit, including failure of any documents to bear adequate reference to the Letter of Credit; or (d) any other circumstances in making or failing to make payment under the Letter of Credit. By way of amplification, GECC may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. The determination of whether a draft has been presented under a Letter of Credit prior to its Expiration Date or whether a draft drawn under a Letter of Credit or an accompanying document or instrument is in proper and sufficient form shall be made by GECC in its sole discretion, which determination shall be conclusive and binding upon Borrower. Borrower hereby waives any right to object to any payment under the Letter of Credit against a draft with accompanying documents in the forms provided for in the Letter of Credit but varying in punctuation, capitalization, spelling or similar matters of form.

     (e) Notwithstanding anything in Section 7.07(c) or (d) to the contrary, Borrower does not waive any claims it may have against GECC to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower that Borrower proves were caused by GECC’s willful misconduct or gross negligence in connection with a failure to pay under the Letter of Credit after presentation to GECC by the beneficiary of a sight draft and certificate strictly complying with all terms and conditions of the Letter of Credit.

     Section 7.08. Preservation of Existence. Borrower will preserve and maintain its existence and all of its rights, privileges and franchises necessary or desirable in the normal conduct of its business and shall conduct its business in an orderly, efficient and regular manner.

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     Section 7.09. Performance by GECC. If Borrower at any time fails to perform or observe any of the covenants or agreements contained in this Agreement or in any of the other Loan Documents, and if such failure shall continue for a period of 10 calendar days after GECC gives Borrower written notice thereof (or in the case of the agreements contained in Sections 7.06, 7.07 and 7.12 hereof, immediately upon the occurrence of such failure, without notice or lapse of time), GECC may, but need not, perform or observe such covenant on behalf and in the name, place and stead of Borrower (or, at GECC’s option, in GECC’s name) and may, but need not, take any and all other actions which GECC may reasonably deem necessary to cure or correct such failure (including, without limitation, the payment of taxes, the satisfaction of security interests, liens or encumbrances, the performance of obligations owed to account debtors or other obligors, the procurement and maintenance of insurance, the execution of assignments, security agreements and financing statements, and the endorsement of instruments); and Borrower shall thereupon pay to GECC on demand the amount of all moneys expended and all costs and expenses (including reasonable attorneys’ fees and legal expenses) incurred by GECC in connection with or as a result of the performance or observance of such agreements or the taking of such action by GECC, together with interest thereon from the date expended or incurred at the lesser of the Post-Default Rate or the highest rate permitted by law. To facilitate the performance or observance by GECC of such covenants of Borrower, Borrower hereby irrevocably appoints GECC, or the delegate of GECC, acting alone, as the attorney in fact of Borrower with the right (but not the duty) from time to time to create, prepare, complete, execute, deliver, endorse or file in the name and on behalf of Borrower any and all instruments, documents, assignments, security agreements, financing statements, applications for insurance and other agreements and writings required to be obtained, executed, delivered or endorsed by Borrower under this Agreement.

     Section 7.10. Limitations of Liability. In no event, whether as a result of breach of contract, warranty, tort (including negligence or strict liability), indemnity or otherwise, shall GECC, GEGF, their assignees, if any, be liable for any special, consequential, incidental, punitive or penal damages, including, but not limited to, loss of profit or revenue, loss of use of the Premises or any associated equipment, service materials or software, damage to associated equipment, service materials or software, cost of capital, cost of substitute property, service materials or software, facilities, services or replacement power or downtime costs.

     Section 7.11. Alterations.

     (a) Borrower, at its sole cost and expense, shall have the right from time to time to perform Alterations, subject in all cases to the further provisions of this Section and to all other applicable provisions of this Agreement.

     (b) Borrower may not make, or allow to be made, any Supervised Alteration to the Property without obtaining GECC’s prior written consent.

     (c) All Supervised Alterations shall be made (i) under the supervision of an architect or engineer selected by Borrower and approved by GECC; (ii) in accordance with detailed plans and specifications prepared by such architect or engineer; and (iii) pursuant to a contract therefor approved by GECC between Tenant and a general contractor engaged by Tenant which incorporates such plans and specifications. Copies

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of all such plans and specifications shall be delivered by Borrower to GECC and shall be subject to GECC’s prior approval.

     (d) No Alteration shall be made except in compliance with, and Borrower hereby covenants that it will comply with or cause compliance with, each of the following provisions:

     (i) All Alterations shall be made with reasonable diligence and dispatch (subject to Unavoidable Delays) in a first class manner and with first class materials and workmanship.

     (ii) Before any Alteration has begun, Borrower shall procure, at its expense, or cause to be procured, all necessary licenses, permits, approvals and authorizations from all Governmental Authorities for such Alteration and shall, on demand, deliver photocopies thereof to GECC.

     (iii) All Alterations shall be made and completed in accordance with all governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of governmental authorities (including Environmental Laws) affecting either Borrower or the Property or any portion of or the construction, ownership, use, alteration or operation of, or any portion of any Property (whether now or hereafter enacted and in force), and all permits, licenses and authorizations and regulations relating thereto and insurance requirements under this Agreement.

     (iv) No Alteration shall create any encroachment upon any street, easement, setback line or open yard requirement or upon any adjacent premises.

     (v) To the extent that any Alteration materially alters the footprint of any of the Improvements, Borrower shall deliver to GECC a copy of a final survey of the Property, certified to GECC, showing the completed Alteration.

     (vi) No Alteration shall be made which would in the opinion of GECC render title to the Property or any part thereof unmarketable.

     (vii) No Alteration shall be performed which would tie in or connect any building or structure on the Property with any other building or structure located outside the boundary lines of the Property without the prior written consent of GECC.

     (viii) All Alterations shall be performed in compliance with any and all restrictive or protective covenants affecting the Property.

     (ix) All expenses of GECC incurred by reason of the Alteration in question shall be reimbursed by Borrower, upon demand.

     (e) Nothing contained in this Agreement shall constitute any consent or request by GECC, express or implied, for the performance of any labor or services or the

35

furnishing of any materials or other property in respect of the Property or any part thereof, nor as giving Borrower any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against GECC in respect thereof.

     (f) Before any Alteration has begun, GECC shall have the right to post and maintain on the Property and to record in the County Recorder’s office in the County in which the Property is located any notices of non-responsibility provided for under applicable law.

     Section 7.12. Rating Agency Fees. Borrower shall pay the fees of any Rating Agency required to maintain the rating on the Notes.

ARTICLE VIII

NEGATIVE COVENANTS

     Until the later of (a) the expiration, termination, cancellation or return of the Letter of Credit to GECC, and (b) payment in full of all amounts due and owing or payable to GECC under this Agreement and the other Loan Documents (any prohibited transaction under this Article shall be null and void and GECC shall be under no obligation to allege or show any impairment of its security and GECC may pursue any legal or equitable remedies for default without such allegation or showing):

     Section 8.01. Lien. Borrower will not create, incur or suffer to exist any mortgage, deed of trust, pledge, lien, security interest, assignment, license or transfer upon or of any of the Collateral except for the security interest created pursuant to this Agreement, the liens created pursuant to the Mortgages and the Permitted Exceptions.

     Section 8.02. Sale of Assets. Borrower will not sell, lease, assign, transfer or otherwise dispose of all or a substantial part of its assets or of any of the Collateral or any interest therein (whether in one transaction or in a series of transactions).

     Section 8.03. Consolidation and Merger. Borrower will not consolidate with or merge into any person, or permit any other person to merge into it or acquire (in a transaction analogous in purpose or effect to a consolidation or merger) all or substantially all of the assets of any other person.

     Section 8.04. Accounting. Borrower will not adopt, permit or consent to any material change in accounting principles other than as required by GAAP. Borrower will not adopt, permit or consent to any change in its fiscal year.

     Section 8.05. Transfers. Borrower will not in any manner transfer any property without prior or present receipt of full and adequate consideration.

36

     Section 8.06. Reserved.

     Section 8.07. Use of Property. Unless required by applicable law or unless GECC has otherwise agreed in writing, Borrower shall not allow changes in the use for which all or any part of the Property was intended at the time this Agreement was executed. Borrower shall not, without GECC’s prior written consent, (a) initiate or acquiesce in a change in the zoning classification (including any variance under any existing zoning ordinance applicable to the Property), (b) permit the use of the Property to become a non-conforming use under applicable zoning ordinances, (c) file any subdivision or parcel map affecting the Property, or (d) amend, modify or consent to any easement or covenants, conditions and restrictions pertaining to the Property.

     Section 8.08. Interest Rate Mode. Borrower shall not, without the prior written consent of GECC, which consent may be arbitrarily withheld, take any action to change the interest rate mode on the Notes.

ARTICLE IX

DAMAGE AND DESTRUCTION; CONDEMNATION

     Section 9.01. Damage and Destruction. Borrower shall provide a complete written report to GECC immediately upon any loss, theft, damage or destruction of any Property and of any accident involving any Property. If all or any part of the Property is lost, stolen, destroyed or damaged beyond repair (“Damaged Property”), Borrower shall as soon as practicable after such event replace the same at Borrower’s sole cost and expense together with any Net Proceeds with property having substantially similar specifications and of equal or greater value to the Damaged Property immediately prior to the time of the loss occurrence. Any replacement property with a cost exceeding $500,000 shall be subject to GECC’s approval. Such replacement property shall be substituted in this Agreement and the other related documents by appropriate endorsement or amendment. Alternately, Borrower may, instead of using the Net Proceeds to replace the Damaged Property, use the Net Proceeds to redeem the Notes (or reimburse GECC for a draw on the Letter of Credit in connection therewith) in the amount of the Damaged Property Amount and pay GECC for any other amounts due hereunder. Borrower shall notify GECC of which course of action it will take within 15 calendar days after the loss occurrence. If, within 45 calendar days of the loss occurrence, (x) Borrower fails to notify GECC; (y) Borrower and GECC fail to execute an amendment to this Agreement to delete the Damaged Property and add the replacement property or (z) Borrower fails to comply with subparagraph (b) above, then GECC may, at its sole discretion, use the Net Proceeds to redeem the Notes and then to reimburse GECC for all of Borrower’s obligations hereunder. The Net Proceeds of insurance with respect to the Damaged Property shall be made available by GECC to be applied to discharge Borrower’s obligation under this Section. For purposes of this Section, the term “Net Proceeds” shall mean the amount remaining from the gross proceeds of any insurance claim after deducting all expenses (including reasonable attorneys’ fees) incurred in the collection of such claim.

     Section 9.02. Condemnation. If either Property, or any part thereof, shall be condemned for any reason, including without limitation fire or earthquake damage, or otherwise

37

taken for public or quasi-public use under the power of eminent domain, or be transferred in lieu thereof, all damages or other amounts awarded for the taking of, or injury to, such Property shall be paid to GECC who shall have the right, in its sole and absolute discretion, to apply the amounts so received against (a) first, all amounts owing to GECC hereunder, including (without limitation) the costs and expenses of GECC, including attorneys’ fees incurred in connection with collection of such amounts, and (b) next, the principal amount of the Notes outstanding by depositing such amount in the Revenue Fund for application in accordance with the terms of the Indenture; provided, however, that if (i) no Event of Default shall have occurred and be continuing hereunder, (ii) Borrower provides evidence satisfactory to GECC of its ability to pay all amounts becoming due hereunder during the pendency of any restoration or repairs to or replacement of such Property, (iii) GECC determines, in its sole discretion, that the proceeds of such award are sufficient to restore, repair, replace and rebuild such Property as nearly as possible to its value, condition and character immediately prior to such taking (or, if the proceeds of such award are insufficient for such purpose, if Borrower provides additional sums to GECC’s satisfaction so that the aggregate of such sums and the proceeds of such award will be sufficient for such purpose), and (iv) Borrower provides evidence satisfactory to GECC that none of the tenants of such Property will terminate their lease agreements as a result of either the condemnation or taking or the repairs to or replacement of such Property, the proceeds of such award, together with additional sums provided by Borrower, shall be placed in a separate account for the benefit of GECC and Borrower to be used to restore, repair, replace and rebuild such Property as nearly as possible to its value, condition and character immediately prior to such taking. All work to be performed in connection therewith shall be pursuant to a written contract therefor, which contract shall be subject to the prior approval of GECC. To the extent that any funds remain after the Property has been so restored and repaired, the same shall be applied in the manner set forth above in this Section. To enforce its rights hereunder, GECC shall be entitled to participate in and control any condemnation proceedings and to be represented therein by counsel of its own choice, and Borrower will deliver, or cause to be delivered to GECC such instruments as may be requested by it from time to time to permit such participation.

ARTICLE X

EVENTS OF DEFAULT; REMEDIES

     Section 10.01. Events of Default. The following constitute “Events of Default” under this Agreement:

     (a) failure by Borrower to make when due any payment to Trustee or any deposit in the Administration Account, Reimbursement Account, the Cash Collateral Account or any other Escrow Account required under the terms of this Agreement;

     (b) failure by Borrower to pay to GECC or GEGF when due any amount due to GECC under the provisions of Article II hereof (other than payments covered by Section 10.01(a)) and such failure shall continue for a period of five Business Days from the due date thereof;

     (c) failure by Borrower to pay to GECC, GEGF or any other party when due any other amount due to GECC, GEGF or any other party under the terms of this

38

Agreement or under any of the other Loan Documents and such default shall continue for a period of five Business Days from the due date thereof;

     (d) failure by Borrower to maintain insurance on the Property in accordance with Section 7.07 hereof;

     (e) failure by Borrower to comply with the provisions of Sections 8.01, 8.02 or 8.03 hereof;

     (f) [Reserved];

     (g) failure by Lease Guarantor to comply with the provisions of Sections 12 and 13 of the Lease Guaranty;

     (h) failure by Borrower, Tenant or Lease Guarantor to observe and perform any other covenant, condition or agreement contained herein or in any other Loan Document, in any Tenant Document, in any Lease Guarantor Document or in any other document or agreement executed in connection herewith on its part to be observed or performed for a period of 30 days after written notice is given to Borrower, Tenant or Lease Guarantor, as the case may be, specifying such failure and directing that it be remedied; provided, however, that, if the failure stated in such notice cannot be corrected within such 30-day period, GECC will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by Borrower, Tenant or Lease Guarantor, as the case may be, within the applicable period and diligently pursued until the default is corrected;

     (i) Borrower, Tenant or Lease Guarantor shall be or become insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of creditors; or Borrower, Tenant or Lease Guarantor shall apply for or consent to the appointment of any receiver, trustee or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of Borrower, Tenant or Lease Guarantor; or Borrower, Tenant or Lease Guarantor shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against Borrower, Tenant or Lease Guarantor; or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of Borrower, Tenant or Lease Guarantor;

     (j) determination by GECC that any representation or warranty made by Borrower herein, in any of the other Loan Documents or in any other document executed in connection herewith was untrue in any material respect when made;

     (k) determination by GECC that any representation or warranty made by Tenant in any of the Tenant Documents or in any other document executed in connection therewith was untrue in any material respect when made;

39

     (l) determination by GECC that any representation or warranty made by Lease Guarantor in any of the Lease Guarantor Documents or in any other document executed in connection therewith was untrue in any material respect when made;

     (m) an amendment or termination relating to a filed financing statement describing any of the Collateral is improperly filed, or authorized to be filed, by Borrower, Tenant or Lease Guarantor;

     (n) Lease Guarantor shall repudiate, purport to revoke or fail to perform Lease Guarantor’s obligations under the Lease Guaranty;

     (o) the occurrence of an “Event of Default” as defined in either Lease or the termination of either Lease in violation of Paragraph 5 of the related Subordination Agreement;

     (p) a Change of Control occurs; provided, however, notwithstanding anything to the contrary contained in this Agreement, the following are permitted: (i) any Change of Control resulting directly or indirectly from a pledge of the economic benefits, including the right to distributions from, but excluding the direct ownership interests themselves, in Borrower to U.S. Bank National Association or any replacement lender to Lease Guarantor or (ii) any Change of Control resulting directly or indirectly from a pledge of the ownership interests in Tenant to U.S. Bank National Association or any replacement lender to Lease Guarantor; or

     (q) the occurrence of a default or an event of default under the Indenture, either Mortgage (after giving effect to any notice or cure periods provided therein).

     Section 10.02. Remedies. Upon the occurrence of an Event of Default described in subsection (i) of Section 10.01, Borrower will immediately pay to GECC without presentment, notice of dishonor, protest or further notice of any kind, all of which are hereby expressly waived by Borrower, in immediately available funds for deposit in a special collateral account maintained by GECC or any financial institution designated by GECC (the “Cash Collateral Account”) the maximum amount then available to be drawn under the Letter of Credit, and GECC may apply such funds to the payment of any amounts due and payable or to become due and payable by Borrower to GECC under this Agreement or any Loan Document in such order as GECC elects. Following the occurrence of an Event of Default and subject to the immediately preceding sentence, GECC shall, at its option, have the right to notify Trustee of the occurrence of such Event of Default and to direct Trustee to (i) call all Notes for redemption in accordance with the Indenture and (ii) submit a draft under the Letter of Credit pursuant to the terms of the Indenture. Upon the occurrence of any Event of Default, whether or not GECC notifies Trustee of such Event of Default and whether or not Trustee draws upon the Letter of Credit to redeem the Notes as a result thereof, GECC shall have the right, at its sole option without any further demand or notice, to take any one or any combination of the following remedial steps which are accorded to GECC by applicable law:

     (a) GECC shall have the option to declare (i) all sums owing to GECC hereunder or under any of the other Loan Documents, plus (ii) a sum equal to the Stated

40

Amount of the Letter of Credit, to be immediately due and payable by Borrower to GECC, without presentment, demand, protest, or notice of any kind (all of which are hereby expressly waived by Borrower), whereupon the same shall become immediately due and payable;

     (b) GECC shall have the option to make demand upon Borrower and, upon such demand, Borrower will pay to GECC in immediately available funds for deposit in the Cash Collateral Account the maximum amount then available to be drawn under the Letter of Credit. GECC may apply funds then held in the Cash Collateral Account to the payment of any amounts as shall have become or shall become due and payable by Borrower to GECC under this Agreement in such order as GECC elects;

     (c) GECC shall have the option to offset any deposits of Borrower held by GECC (including those held by GECC in the Cash Collateral Account and any other Escrow Accounts) against sums due hereunder or against any other indebtedness then owed by Borrower to GECC, whether or not then due;

     (d) GECC shall have the option to take possession of the Property wherever situated, without any court order or other process of law and without liability for entering the premises, and lease, sublease or make other disposition of the Property for use over a term in a commercially reasonable manner, all for the account of GECC, provided that Borrower shall remain directly liable for the deficiency, if any, between the rent or other amounts paid by a lessee or sublessee of the Property pursuant to such lease or sublease during the same period of time, after deducting all costs and expenses, including reasonable attorneys’ fees and expenses, incurred with respect to the recovery, repair and storage of the Property during such period of time;

     (e) GECC shall have the option to take possession of the Property wherever situated, without any court order or other process of law and without liability for entering the Premises, and sell the Property in a commercially reasonable manner. All proceeds from such sale shall be applied in the following manner:

     FIRST, to pay all proper and reasonable costs and expenses associated with the recovery, repair, storage and sale of the Property, including reasonable attorneys’ fees and expenses;

     SECOND, to pay (i) GECC the amount of all unpaid Obligations (whether direct or indirect owed by Borrower to GECC), if any, which are then due and owing, together with interest and late charges thereon, and (ii) any other amounts due hereunder, including indemnity payments, taxes, charges, reimbursement of any advances and other amounts payable to GECC hereunder; and

     THIRD, to pay the remainder of the sale proceeds, purchase moneys or other amounts paid by a buyer of the Property to Borrower;

     (f) GECC shall have the option to proceed by appropriate court action to enforce specific performance by Borrower of the applicable covenants of this Agreement or to recover for the breach thereof, including the payment of all amounts due from

41

Borrower. Borrower shall pay or repay to GECC all costs of such action or court action, including, without limitation, reasonable attorneys’ fees;

     (g) GECC shall have the option to exercise all rights and remedies under the Mortgages and under any other Loan Document; and

     (h) GECC shall have the option to take whatever action at law or in equity that may appear necessary or desirable to enforce its rights with respect to the Collateral. Borrower shall pay or repay to GECC all costs of such action or court action, including, without limitation, reasonable attorneys’ fees.

     Section 10.03. No Remedy Exclusive. No remedy herein conferred upon or reserved to GECC is intended to be exclusive and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle GECC to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice other than such notice as may be required by this Article. All remedies herein conferred upon or reserved to GECC shall survive the termination of this Agreement.

     Section 10.04. Right to Advance or Post Funds. In the event of any default under any of the Loan Documents, or if GECC at any time reasonably determines that an event or condition exists that could impede the fulfillment or satisfaction of any condition or term of this Agreement or any of the Loan Documents, GECC may cure such default, or with five days prior notice to Borrower and failure of Borrower to cure such default, advance funds for the account of Borrower to correct such event or condition, in such manner as GECC deems proper, without prejudice to Borrower’s rights, if any, to recover such funds from the party to whom paid. Such advances may be pursuant to such agreements as GECC deems proper. All sums so advanced by GECC to cure any such default or to correct any such event or condition, or which are agreed to be paid pursuant to any such agreement, shall be for the account of Borrower, shall be reimbursed to GECC by Borrower upon demand (with interest at the Post-Default Rate until date of reimbursement), and shall be secured (along with such accrued interest) by this Agreement and the Mortgages. Nothing in this Agreement shall be construed as imposing under any circumstances any obligation upon GECC to cure any default of Borrower under this Agreement or under any of the Loan Documents, or otherwise to perform any of Borrower’s obligations hereunder or thereunder.

ARTICLE XI

MISCELLANEOUS

     Section 11.01. Costs and Expenses of GECC and GEGF. Borrower shall pay to GECC and GEGF such amounts in each year as shall be required by GECC or GEGF in payment of any reasonable costs and expenses incurred by GECC or GEGF in connection with the execution, performance or enforcement of this Agreement, including but not limited to payment

42

of all reasonable fees, costs and expenses and all out-of-pocket administrative costs of GECC and GEGF in connection with the Collateral, expenses (including, without limitation, attorneys’ fees and disbursements), fees of auditors or attorneys, insurance premiums not otherwise paid hereunder and all other direct and necessary out-of-pocket administrative costs of GECC and GEGF or charges required to be paid by it in order to comply with the terms of, or to enforce its rights under, this Agreement. Such costs and expenses shall be billed to Borrower by GECC or GEGF from time to time, together with a statement certifying that the amount so billed has been paid by GECC or GEGF for one or more of the items above described, or that such amount is then payable by GECC or GEGF for such items. Amounts so billed shall be due and payable by Borrower within 30 days after receipt of the bill by Borrower.

     Section 11.02. Disclaimer of Warranties. NEITHER GECC NOR GEGF MAKE ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR USE OF THE PROPERTY, OR ANY OTHER WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT THERETO. In no event shall GECC or GEGF be liable for any loss or damage in connection with or arising out of this Agreement, the Collateral or the existence, furnishing, functioning or Borrower’s use of any item or products or services provided for in this Agreement.

     Section 11.03. Notices. All notices, certificates, requests, demands and other communications provided for hereunder shall be in writing and shall be (a) personally delivered, (b) sent by first class United States mail, (c) sent by overnight courier of national reputation, or (d) transmitted by telecopy, in each case addressed to the party to whom notice is being given at its address as set forth above and, if telecopied, transmitted to that party at its telecopier number set forth above or, as to each party, at such other address or telecopier number as may hereafter be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section. All such notices, requests, demands and other communications shall be deemed to have been given on (a) the date received if personally delivered, (b) when deposited in the mail if delivered by mail, (c) the date sent if sent by overnight courier, or (d) the date of transmission if delivered by telecopy. If notice to Borrower of any intended disposition of the Collateral or any other intended action is required by law in a particular instance, such notice shall be deemed commercially reasonable if given (in the manner specified in this Section) at least 10 calendar days prior to the date of intended disposition or other action.

     Section 11.04. Further Assurance and Corrective Instruments. Borrower hereby agrees that it will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such further acts, instruments, conveyances, transfers and assurances, as GECC reasonably deems necessary or advisable for the implementation, correction, confirmation or perfection of this Agreement, the Mortgages, the Environmental Indemnity Agreements or the Subordination Agreements, and any rights of GECC hereunder or thereunder.

     Section 11.05. Binding Effect; Time of the Essence. This Agreement is a continuing obligation and shall be binding upon GECC, GEGF and Borrower, and their respective heirs, successors, transferees and assigns, and shall inure to the benefit of and be enforceable by GECC, GEGF and Borrower and their respective heirs, successors, transferees and assigns;

43

provided, however, that Borrower may not assign all or any part of this Agreement. GECC, without the consent of Borrower or any other person, may assign its interests in this Agreement and the other Loan Documents to any successor entity, and may grant participations in this Agreement or in any of its rights and security under this Agreement and the other Loan Documents, so long as such action (a) does not adversely affect any rating then borne by the Notes, or subject them to redemption, (b) permits Borrower to continue dealing solely with GECC or a single person in connection with this Agreement, and (c) the Letter of Credit is not replaced but remain in effect in favor of Trustee. Borrower shall accord full recognition to any such assignment or participation, and all rights and remedies of GECC or GEGF in connection with the interest so assigned or participated shall be as fully enforceable by such assignee or participant as they were by GECC or GEGF before such assignment or participation. Time is of the essence.

     Section 11.06. Severability. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

     Section 11.07. Amendments. To the extent permitted by law, the terms of this Agreement and any Loan Document shall not be waived, altered, modified, supplemented or amended in any manner whatsoever except by written instrument signed by the parties hereto, and then such waiver, consent, modification or change shall be effective only in the specific instance and for the specific purpose given; provided, however, any waiver of the Obligations owed to GECC or GEGF shall only be made by written instrument signed by GECC or GEGF, as applicable.

     Section 11.08. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart, provided that only the original marked “Original: 1 of 4” on the execution page thereof shall constitute chattel paper under the UCC.

     Section 11.09. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State.

     Section 11.10. No Further Credits. Neither GECC nor GEGF shall be obligated to issue any further credits to cure any defaults under the Loan Documents or otherwise, or in any other manner to extend any financial consideration to Borrower except as expressly provided in this Agreement.

     Section 11.11. Substitution of Letter of Credit. Notwithstanding anything to the contrary contained herein, without implying any right to deliver substitute letters of credit, Borrower may not deliver to Trustee substitute letters of credit until Borrower has discharged in full its Obligations to GECC and GEGF.

     Section 11.12. Conflict with Other Documents.

     (a) In the event of any conflict between the terms of the Loan Documents and this Agreement, the terms of the document which shall enlarge the rights or remedies of

44

GECC, grant to GECC greater financial security, or better insure the payment and performance in full of all Obligations of Borrower to GECC hereunder or under any of the other Loan Documents, shall control and govern. Whenever possible, the provisions of this Agreement shall be deemed supplemental to and not in derogation of the Loan Documents.

     (b) In the event of any conflict between the terms of the Indenture, on the one hand, and the terms of this Agreement, on the other hand, the terms of this Agreement shall control and govern in all respects as between the parties to this Agreement. Whenever possible, the provisions of this Agreement shall be deemed supplemental to and not in derogation of the Indenture.

     Section 11.13. Captions. The captions or headings in this Agreement are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Agreement.

     Section 11.14. Entire Agreement. This Agreement and the exhibits hereto and thereto constitute the entire agreement among GECC, GEGF and Borrower. There are no understandings, agreements, representations or warranties, express or implied, not specified herein or in such documents regarding this Agreement or the Collateral.

     Section 11.15. Usury. It is the intention of the parties hereto to comply with any applicable usury laws; accordingly, it is agreed that, notwithstanding any provisions to the contrary in this Agreement, in no event shall this Agreement require the payment or permit the collection of interest or any amount in the nature of interest or fees in excess of the maximum permitted by applicable law.

     Section 11.16. Bound Transcripts. Within 45 days of the day of the Closing Date, Borrower shall prepare and furnish or cause to be prepared and furnished, at Borrower’s expense, to GECC, GEGF and their counsel, bound transcripts containing the Loan Documents and all other documents related thereto.

     Section 11.17. Waiver of Jury Trial. GECC, GEGF AND BORROWER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, THE INDENTURE, ANY OF THE LOAN DOCUMENTS, ANY DEALINGS AMONG GECC, GEGF AND BORROWER RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED AMONG GECC, GEGF AND BORROWER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY RELATED DOCUMENTS, OR TO ANY

45

OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY RELATED TRANSACTIONS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
EXECUTION PAGE FOLLOWS]

46

     IN WITNESS WHEREOF, Borrower, GECC and GEGF have caused this Agreement to be duly executed under seal and delivered by their duly authorized officers and representatives as of the date first above written.

BORROWER:
LTF REAL ESTATE VRDN I, LLC
By:
Name: Eric J. Buss
Title: Secretary
GECC:
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
Title:	Risk Analyst
GEGF:
GE GOVERNMENT FINANCE, INC.
By:
Title:	Vice President

Original: ___ of 4

[EXECUTION PAGE OF REIMBURSEMENT AGREEMENT]

Exhibit A to Reimbursement Agreement

FORM OF LETTER OF CREDIT

[SEE ATTACHED]

Exhibit B to Reimbursement Agreement

REDEMPTION DEPOSITS

Closing Date: June 13, 2008

Payment
Dates/Redemption	Payment	Redemption		Total		Note
Dates	Number	Amounts		Payments		Balance
6/13/2008							34,235,000.00
7/1/2008	1			$	33,666.67
8/1/2008	2			$	33,666.67
9/1/2008	3			$	33,666.67
10/1/2008	4			$	33,666.67
11/1/2008	5			$	33,666.67
12/1/2008	6			$	33,666.67
1/1/2009	7			$	33,666.67
2/1/2009	8			$	33,666.67
3/1/2009	9			$	33,666.67
4/1/2009	10			$	33,666.67
5/1/2009	11			$	33,666.67
6/1/2009	12		404,000.00	$	33,666.67		33,831,000.00
7/1/2009	13			$	36,666.67
8/1/2009	14			$	36,666.67
9/1/2009	15			$	36,666.67
10/1/2009	16			$	36,666.67
11/1/2009	17			$	36,666.67
12/1/2009	18			$	36,666.67
1/1/2010	19			$	36,666.67
2/1/2010	20			$	36,666.67
3/1/2010	21			$	36,666.67
4/1/2010	22			$	36,666.67
5/1/2010	23			$	36,666.67
6/1/2010	24		440,000.00	$	36,666.67		33,391,000.00
7/1/2010	25			$	40,000.00
8/1/2010	26			$	40,000.00
9/1/2010	27			$	40,000.00
10/1/2010	28			$	40,000.00
11/1/2010	29			$	40,000.00
12/1/2010	30			$	40,000.00
1/1/2011	31			$	40,000.00
2/1/2011	32			$	40,000.00
3/1/2011	33			$	40,000.00
4/1/2011	34			$	40,000.00
5/1/2011	35			$	40,000.00
6/1/2011	36		480,000.00	$	40,000.00		32,911,000.00
7/1/2011	37			$	43,583.33
8/1/2011	38			$	43,583.33

Payment
Dates/Redemption	Payment	Redemption		Total		Note
Dates	Number	Amounts		Payments		Balance
9/1/2011	39			$	43,583.33
10/1/2011	40			$	43,583.33
11/1/2011	41			$	43,583.33
12/1/2011	42			$	43,583.33
1/1/2012	43			$	43,583.33
2/1/2012	44			$	43,583.33
3/1/2012	45			$	43,583.33
4/1/2012	46			$	43,583.33
5/1/2012	47			$	43,583.33
6/1/2012	48		523,000.00	$	43,583.33		32,388,000.00
7/1/2012	49			$	47,500.00
8/1/2012	50			$	47,500.00
9/1/2012	51			$	47,500.00
10/1/2012	52			$	47,500.00
11/1/2012	53			$	47,500.00
12/1/2012	54			$	47,500.00
1/1/2013	55			$	47,500.00
2/1/2013	56			$	47,500.00
3/1/2013	57			$	47,500.00
4/1/2013	58			$	47,500.00
5/1/2013	59			$	47,500.00
6/1/2013	60		570,000.00	$	47,500.00		31,818,000.00
7/1/2013	61			$	51,750.00
8/1/2013	62			$	51,750.00
9/1/2013	63			$	51,750.00
10/1/2013	64			$	51,750.00
11/1/2013	65			$	51,750.00
12/1/2013	66			$	51,750.00
1/1/2014	67			$	51,750.00
2/1/2014	68			$	51,750.00
3/1/2014	69			$	51,750.00
4/1/2014	70			$	51,750.00
5/1/2014	71			$	51,750.00
6/1/2014	72		621,000.00	$	51,750.00		31,197,000.00
7/1/2014	73			$	56,416.67
8/1/2014	74			$	56,416.67
9/1/2014	75			$	56,416.67
10/1/2014	76			$	56,416.67
11/1/2014	77			$	56,416.67
12/1/2014	78			$	56,416.67
1/1/2015	79			$	56,416.67
2/1/2015	80			$	56,416.67
3/1/2015	81			$	56,416.67
4/1/2015	82			$	56,416.67
5/1/2015	83			$	56,416.67
6/1/2015	84		677,000.00	$	56,416.67		30,520,000.00
7/1/2015	85			$	61,500.00
8/1/2015	86			$	61,500.00
9/1/2015	87			$	61,500.00
10/1/2015	88			$	61,500.00

B-2

Payment
Dates/Redemption	Payment	Redemption		Total		Note
Dates	Number	Amounts		Payments		Balance
11/1/2015	89			$	61,500.00
12/1/2015	90			$	61,500.00
1/1/2016	91			$	61,500.00
2/1/2016	92			$	61,500.00
3/1/2016	93			$	61,500.00
4/1/2016	94			$	61,500.00
5/1/2016	95			$	61,500.00
6/1/2016	96		738,000.00	$	61,500.00		29,782,000.00
7/1/2016	97			$	67,083.33
8/1/2016	98			$	67,083.33
9/1/2016	99			$	67,083.33
10/1/2016	100			$	67,083.33
11/1/2016	101			$	67,083.33
12/1/2016	102			$	67,083.33
1/1/2017	103			$	67,083.33
2/1/2017	104			$	67,083.33
3/1/2017	105			$	67,083.33
4/1/2017	106			$	67,083.33
5/1/2017	107			$	67,083.33
6/1/2017	108		805,000.00	$	67,083.33		28,977,000.00
7/1/2017	109			$	73,083.33
8/1/2017	110			$	73,083.33
9/1/2017	111			$	73,083.33
10/1/2017	112			$	73,083.33
11/1/2017	113			$	73,083.33
12/1/2017	114			$	73,083.33
1/1/2018	115			$	73,083.33
2/1/2018	116			$	73,083.33
3/1/2018	117			$	73,083.33
4/1/2018	118			$	73,083.33
5/1/2018	119			$	73,083.33
6/1/2018	120		877,000.00	$	73,083.33		28,100,000.00
7/1/2018	121			$	79,666.67
8/1/2018	122			$	79,666.67
9/1/2018	123			$	79,666.67
10/1/2018	124			$	79,666.67
11/1/2018	125			$	79,666.67
12/1/2018	126			$	79,666.67
1/1/2019	127			$	79,666.67
2/1/2019	128			$	79,666.67
3/1/2019	129			$	79,666.67
4/1/2019	130			$	79,666.67
5/1/2019	131			$	79,666.67
6/1/2019	132		956,000.00	$	79,666.67		27,144,000.00
7/1/2019	133			$	86,833.33
8/1/2019	134			$	86,833.33
9/1/2019	135			$	86,833.33
10/1/2019	136			$	86,833.33
11/1/2019	137			$	86,833.33
12/1/2019	138			$	86,833.33

B-3

Payment
Dates/Redemption	Payment	Redemption		Total		Note
Dates	Number	Amounts		Payments		Balance
1/1/2020	139			$	86,833.33
2/1/2020	140			$	86,833.33
3/1/2020	141			$	86,833.33
4/1/2020	142			$	86,833.33
5/1/2020	143			$	86,833.33
6/1/2020	144		1,042,000.00	$	86,833.33		26,102,000.00
7/1/2020	145			$	94,666.67
8/1/2020	146			$	94,666.67
9/1/2020	147			$	94,666.67
10/1/2020	148			$	94,666.67
11/1/2020	149			$	94,666.67
12/1/2020	150			$	94,666.67
1/1/2021	151			$	94,666.67
2/1/2021	152			$	94,666.67
3/1/2021	153			$	94,666.67
4/1/2021	154			$	94,666.67
5/1/2021	155			$	94,666.67
6/1/2021	156		1,136,000.00	$	94,666.67		24,966,000.00
7/1/2021	157			$	103,250.00
8/1/2021	158			$	103,250.00
9/1/2021	159			$	103,250.00
10/1/2021	160			$	103,250.00
11/1/2021	161			$	103,250.00
12/1/2021	162			$	103,250.00
1/1/2022	163			$	103,250.00
2/1/2022	164			$	103,250.00
3/1/2022	165			$	103,250.00
4/1/2022	166			$	103,250.00
5/1/2022	167			$	103,250.00
6/1/2022	168		1,239,000.00	$	103,250.00		23,727,000.00
7/1/2022	169			$	112,500.00
8/1/2022	170			$	112,500.00
9/1/2022	171			$	112,500.00
10/1/2022	172			$	112,500.00
11/1/2022	173			$	112,500.00
12/1/2022	174			$	112,500.00
1/1/2023	175			$	112,500.00
2/1/2023	176			$	112,500.00
3/1/2023	177			$	112,500.00
4/1/2023	178			$	112,500.00
5/1/2023	179			$	112,500.00
6/1/2023	180		1,350,000.00	$	112,500.00		22,377,000.00
			11,858,000.00		11,858,000.00

B-4

EX-10.6

Exhibit 10.6

EXECUTION VERSION

LTF REAL ESTATE VRDN I, LLC

Landlord

TO

LTF CLUB OPERATIONS COMPANY, INC.

Tenant

LEASE AGREEMENT

DATED AS OF JUNE ___, 2008

Chanhassen, MN — Headquarters

TABLE OF CONTENTS

ARTICLE 1. REFERENCE DATA; DEFINITIONS	1
ARTICLE 2. DEMISE OF PROPERTY; TERM; EXTENSIONS OF TERM	6
ARTICLE 3. RENT	6
ARTICLE 4. TAXES	8
ARTICLE 5. REPAIRS AND MAINTENANCE	8
ARTICLE 6. INSURANCE	9
ARTICLE 7. UTILITIES	11
ARTICLE 8. ALTERATIONS	11
ARTICLE 9. DAMAGE TO OR DESTRUCTION OF THE IMPROVEMENTS	12
ARTICLE 10. CONDEMNATION	13
ARTICLE 11. DISCHARGE OF LIENS	15
ARTICLE 12. USE OF PROPERTY	15
ARTICLE 13. ENTRY ON PROPERTY BY LANDLORD	16
ARTICLE 14. WAIVER AND INDEMNIFICATION	16
ARTICLE 15. ASSIGNMENT	17
ARTICLE 16. ESTOPPEL CERTIFICATES	19
ARTICLE 17. EVENTS OF DEFAULT; TERMINATION	19
ARTICLE 18. SURRENDER OF THE PROPERTY	22
ARTICLE 19. NO MERGER OF TITLE	22

i

ARTICLE 20. QUIET ENJOYMENT	22
ARTICLE 21. PERFORMANCE FOR TENANT	23
ARTICLE 22. NOTICES	23
ARTICLE 23. CONTESTS	23
ARTICLE 24. NO WARRANTIES/“AS IS”	24
ARTICLE 25. TENANT’S RIGHT TO CURE LANDLORD’S DEFAULT UNDER FIRST MORTGAGE	25
ARTICLE 26. SUBORDINATION AND NON-DISTURBANCE	25
ARTICLE 27. FIRST OFFER RIGHT	25
ARTICLE 28. APPRAISAL	28
ARTICLE 29. TENANT’S PROPERTY	29
ARTICLE 30. MISCELLANEOUS	30

EXHIBIT A — Legal Description of Land
EXHIBIT B — Permitted Exceptions

 ii

LEASE AGREEMENT

DATED AS OF JUNE ___, 2008

from

LTF REAL ESTATE VRDN I, LLC

to

LTF CLUB OPERATIONS COMPANY, INC.

Article 1. REFERENCE DATA; DEFINITIONS

1.1	LANDLORD:	LTF REAL ESTATE VRDN I, LLC
	ADDRESS	2902 Corporate Place
	OF LANDLORD:	Chanhassen, Minnesota 55317
	TENANT:	LTF CLUB OPERATIONS COMPANY, INC.
	ADDRESS	2902 Corporate Place
	OF TENANT:	Chanhassen, Minnesota 55317

     1.2 Each reference in this Lease to any of the titles contained in Section 1.1 shall be construed to incorporate the data stated under that title.

     1.3 The following terms shall have the meanings set forth in this Section:

     Adjusted Basic Rent. A monthly rental amount equal to the amount necessary to amortize the outstanding principal amount of the Loan Obligations as of the Adjustment Date over the remaining term of the Notes at a finance rate factor based on an interest rate per annum equal to the sum of: (a) the “10-Year Interest Swap Rate” as published on the Federal Reserve Statistical Release H.15(519) on the day that is two business days prior to the Adjustment Date, and (b) 2.75%; provided, however, that if the First Mortgage has not been foreclosed by the First Mortgagee, Adjusted Basic Rent due on June 1, 2023 shall equal the outstanding Loan Obligations, including the interest thereon, and all other amounts payable under the Reimbursement Agreement and the other Loan Documents.

     Adjustment Date. As defined in Section 3.2.

     Alteration. Any demolition, alteration, installation, removal, improvement or expansion of or to the Property or any portion thereof, including, without limitation, any Remodeling.

1

     Basic Rent. The Basic Rent provided for in Section 3.2 of this Lease.

     Commencement Date. The date of this Lease.

     Contests. As defined in Section 23.1.

     Credit Issuer. General Electric Capital Corporation, and its successors and assigns.

     Environmental Activity. Any actual, suspected or threatened abatement, cleanup, disposal, generation, handling, manufacture, possession, release, remediation, removal, storage, transportation, treatment or use of any Hazardous Material, or the actual, suspected or threatened presence of any Hazardous Material, or the actual, suspected or threatened noncompliance with any Environmental Laws.

     Environmental Laws. All Legal Requirements pertaining to health, safety, protection of the environment, natural resources, conservation, wildlife, waste management, Environmental Activities and pollution.

     Event of Default. As defined in Section 17.1.

     Fair Market Value. The cash price which would be obtained for the Property in an arm’s length transaction between a willing buyer and a willing seller under no compulsion to buy or sell.

     Fair Rental Value. The annual base rent which would be obtained for the Property in an arm’s length transaction between a willing landlord and a willing tenant under no compulsion to lease.

     First Mortgage. Any first mortgage or deed of trust (together with the notes secured thereby and security instruments collateral thereto) of record now or hereafter placed against the Property by Landlord, any increase, amendment, extension, refinancing or recasting of a First Mortgage, and any provision of any other loan document which is secured by a First Mortgage. For the purposes hereof, a First Mortgage shall be deemed to continue in effect after foreclosure thereof and during any period of redemption therefrom.

     First Mortgagee. The holder from time to time of the First Mortgage, if any.

     First Offer Right. Tenant’s first offer right with respect to the Property granted pursuant to Article 27.

     Governmental Authorities. All federal, state, county, municipal and local governments, and all departments, commissions, boards, bureaus and officers thereof, having or claiming jurisdiction over the Property or Tenant’s use thereof.

     Guarantor. Life Time Fitness, Inc., and its successors and assigns.

2

     Guaranty. That certain Lease Guaranty and Negative Pledge Agreement dated as of June 1, 2008 executed by Guarantor for the benefit of Landlord.

     Hazardous Materials. Any by-product, chemical, compound, contaminant, pollutant, product, substance, waste or other material (a) that is hazardous or toxic, or (b) the abatement, cleanup, discharge, disposal, emission, exposure to, generation, handling, manufacture, possession, presence, release, removal, remediation, storage, transportation, treatment or use of which is controlled, prohibited or regulated by any Environmental Laws, including asbestos, petroleum and petroleum products and polychlorinated biphenyls.

     Improvements. All buildings, structures, improvements, parking areas, landscaping and fixtures erected or located on or attached to the Land (excluding any trade fixtures and fixtures used in the operation of the businesses from time to time conducted on the Property); all heating, air conditioning, manufacturing and incinerating apparatus and equipment; all boilers, engines, motors, dynamos, generating equipment, piping and plumbing fixtures, water heaters, walk-in refrigerators and freezers, cooling (other than freestanding fans and supplemental cooling equipment), ventilating, sprinkling and vacuum cleaning systems, fire extinguishing apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding, elevators, escalators, mantels, built-in mirrors, window shades, blinds, draperies, screens, storm sash, awnings, and outdoor shrubbery and plants located on the Land; and all alterations and additions thereto and replacement thereof, including by reason of Restoration. The Improvements shall be and remain the property of Landlord, subject to this Lease.

     Indenture. The Indenture of Trust dated as of the date hereof between Landlord and Trustee, as amended from time to time.

     Land. The land, but not any Improvements thereto, legally described on Exhibit A.

     Lease. This Lease Agreement, including the following exhibits attached hereto and hereby made a part hereof:

Exhibit A — Legal Description of the Land
Exhibit B — Permitted Exceptions

     Legal Requirements. All laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, directions and requirements of all Governmental Authorities which now or at any time hereafter may be applicable to or required in connection with the Property or any part thereof, or any use or condition of the Property or any part thereof.

     Life Time. Life Time Fitness, Inc.

     Life Time Affiliate. Life Time and all Life Time Subsidiaries which are consolidated with Life Time for financial reporting purposes under generally accepted accounting principles.

     Life Time Subsidiary. With respect to Life Time, any corporation, partnership, joint venture, limited liability company, association or other entity, the management of which is,

3

directly or indirectly, controlled by, or of which an aggregate of more than 50% of the outstanding voting stock or other equity interests is, at the time, owned or controlled directly or indirectly by, Life Time or one or more Life Time Subsidiaries.

     Loan. That certain financing consisting of the loans evidenced by the Notes, together with Landlord’s obligations to reimburse Credit Issuer for any and all payments made by Credit Issuer under the Letter of Credit (as defined and described in the Indenture) as set forth and described in the Reimbursement Agreement.

     Loan Obligations. Collectively, but without duplication, the following: (a) “Obligations” as defined in the Reimbursement Agreement; (b) all Credit Enhancement Fees (as defined in the Reimbursement Agreement) and drawing fees due and owing to Credit Issuer under the Reimbursement Agreement; (c) all remarketing fees due and owing to Remarketing Agent; (d) all fees due and owing to Trustee; (e) all fees due and owing to any Rating Agency (as defined in the Indenture) required to maintain the rating on the Notes; and (f) all other fees, expenses, costs and reimbursement obligations payable by Landlord in connection with the Loan.

     Notes. Landlord’s $34,235,000 Variable Rate Demand Notes Series 2008, issued under the Indenture.

     Other Lease. That certain Lease Agreement of even date between Landlord, as landlord, and Tenant, as tenant, relating to the lease of certain improved real property owned by Landlord and commonly known as 6800 West 138^th Street, Overland Park, Kansas.

     Permitted Exceptions. The liens, documents and other matters listed on Exhibit B.

     Post-Default Rate. The sum of (a) 3.00% and (b) the annual prime rate of interest announced from time to time in The Wall Street Journal, Eastern Edition.

     Property. The Land and the Improvements, collectively.

     Reimbursement Agreement. The Reimbursement Agreement dated as of June 1, 2008 among Landlord, GE Government Finance, Inc., and Credit Issuer, as amended from time to time.

     Remarketing Agent. Dougherty & Company LLC, or any other successor remarketing agent under the Remarketing Agreement.

     Remarketing Agreement. The Remarketing Agreement dated as of the date hereof between Landlord and Remarketing Agent.

     Remodeling. Remodeling, refurbishing, expansion, demolition and other improvement work performed by or on behalf of Tenant to the interior or exterior of the Property including without limitation the replacement of floor coverings or wall coverings, constructing, renovating or reconfiguring office, retail or other spaces of the Property,

4

upgrading mechanical systems including but not limited to electrical, plumbing and HVAC systems, and constructing, modifying or otherwise installing improvements customarily found in other properties owned or leased by any affiliate of Life Time Fitness, Inc. that does not: (a) reduce the interior square footage of the Improvements by more than 5% in the aggregate; (b) affect the structural elements of any of the Improvements; (c) demonstrably lessen the Fair Market Value or the Fair Rental Value of the Property (taken together as an integrated whole); or (d) cost more than the applicable Threshold Amount to complete.

     Rent. Collectively, Basic Rent and all other sums owing from Tenant to Landlord pursuant to this Lease.

     Restore or Restoration. The repair, restoration or rebuilding of the Property or any part thereof following any Taking, damage to or destruction of the same by fire or other casualty or cause as nearly as possible to its size, type and character immediately prior to such Taking, damage or destruction, in accordance with all Legal Requirements, with such Alterations as may be determined by Tenant, together with any temporary repairs and property protection pending completion of the work.

     Set-Off. As defined in Section 3.4.

     Supervised Alteration. Any Alteration that is not Remodeling.

     Taking. A taking of all or any part of the Property, or any interest therein or right accruing thereto, including, without limitation, any right of access thereto existing on the date of this Lease, as the result of or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain. The Taking shall be deemed to occur on the date on which the condemning authority takes possession.

     Taxes. All real estate taxes and special assessments levied against or imposed on the Property.

     Tenant’s Property. As defined in Section 29.1.

     Term. The term of this Lease as provided in Article 2, including without limitation extensions of the initial term pursuant to Section 2.2.

     Threshold Amount. During the period from the Commencement Date through and July 31, 2013, inclusive, the sum of $3,000,000 (in the aggregate for the Property); during the period from August 1, 2013 through July 31, 2018, inclusive, the sum of $4,000,000 (in the aggregate for the Property); and, during the period from August 1, 2018 through July 31, 2023, inclusive, the sum of $5,000,000 (in the aggregate for the Property). During the first Extended Term, the Threshold Amount is $6,000,000 (in the aggregate for the Property), increasing by $1,000,000 on the first day of each subsequent Extended Term.

     Trustee. Manufacturers and Traders Trust Company, or any successor trustee under the Indenture.

5

     Unavoidable Delays. Acts of God, casualties, war, civil commotion, embargo, riots, strikes, unavailability of materials (but not unavailability of funds) and any other events which are not within the reasonable control of the party in question to prevent, control or correct.

Article 2. DEMISE OF PROPERTY; TERM; EXTENSIONS OF TERM

     2.1 Landlord, for and in consideration of the rents hereinafter reserved and the covenants and agreements hereinafter contained on the part of Tenant to be paid, kept and performed, does hereby demise and lease to Tenant, and Tenant does hereby take and lease from Landlord, upon and subject to the terms and conditions of this Lease, the Property for an initial term commencing on the Commencement Date and ending on July 31, 2023.

     2.2 Tenant shall have the right, subject to the provisions hereinafter provided, to renew the Term for five (5) periods of five (5) years each (each, an “Extended Term”), such periods to commence at the expiration of the initial Term or the first Extended Term, as applicable. The Extended Terms shall be upon the same terms, covenants and conditions as provided in this Lease; provided, however, the annual Basic Rent for such Extended Terms shall be ninety-five percent (95%) of the Fair Rental Value anticipated to be in effect on the commencement of the applicable Extended Term.

     2.3 Tenant may exercise each of its options to extend the Term by giving written notice thereof to Landlord on or before the date occurring twelve (12) months prior to the expiration of the initial Term or preceding Extended Term, as the case may be. If Tenant fails to give such notice within the time permitted, Tenant shall have waived its right to extend the Term.

     2.4 The exercise of an extension option as herein provided shall operate as an extension of the Term, so that this Lease and each and every covenant, agreement and provision thereof shall be and remain in full force and effect during the Term as extended and with the same force and effect as if the Term were originally for such extended period.

Article 3. RENT

     3.1 Tenant covenants and agrees to pay to Landlord, without demand, setoff or abatement except as provided in this Lease, the Basic Rent set forth in Section 3.2.

     3.2 For as long as the Loan or any Loan Obligation is outstanding, Basic Rent for each month in the Term is an amount equal to forty-nine percent (49%) of the Loan Obligations (which amount shall increase to 100% if the Other Lease expires or terminates for any reason, whether voluntarily or involuntarily, or to the extent Tenant fails to pay any Basic Rent (as defined in the Other Lease) thereunder) which becomes due and payable since the last date on which Basic Rent was due hereunder; provided, however, on the date the entire outstanding principal balance of the Loan becomes due and payable in full by Landlord as a result of the occurrence of an “Event of Default” (as such term is defined in the Reimbursement Agreement) (the “Adjustment Date”), Basic Rent will automatically adjust to an amount equal to the greater

6

of (a) 100% of the Fair Rental Value (determined as of the date of the adjustment) or (b) the product of (i) 49% (or if the Other Lease expires or is terminated for any reason, or to the extent Tenant fails to pay any Basic Rent (as defined in the Other Lease) thereunder, 100%) and (ii) the Adjusted Basic Rent. Upon the indefeasible payment of the Loan and all Loan Obligations in full, Basic Rent will automatically adjust to an amount equal to 95% of the Fair Rental Value (determined as of the date of the adjustment) and remain at that amount for the remainder of the Term.

     3.3 Tenant shall pay installments of Basic Rent to Landlord on the dates and at the times that the Loan Obligations are due and owing, at the address of Landlord, or to such other address as Landlord may direct by notice to Tenant. Upon the indefeasible payment of the Loan and Loan Obligations in full, and the adjustment of Basic Rent as set forth in Section 3.2, Landlord may elect by delivering written notice thereof to Tenant at any time thereafter, to require Tenant to pay installments of Basic Rent in advance on the first day of each month during the remainder of the Term. Additionally, if Basic Rent is ever adjusted to Adjusted Basic Rent as provided in Section 3.2 above, then such Basic Rent shall be due and payable on the first day of each calendar month commencing with the first full calendar month after the Adjustment Date and continuing on the first day of each calendar month thereafter.

     3.4 This is a net lease and all monetary obligations shall be paid without notice or demand and without set-off, counterclaim, recoupment, abatement, suspension, deferment, diminution, deduction, reduction or defense (collectively, a “Set-Off”). This Lease and the rights of Landlord and the obligations of Tenant under this Lease shall not be affected by any event or for any reason or cause whatsoever foreseen or unforeseen. The obligations of Tenant under this Lease shall be separate and independent covenants and agreements, all monetary obligations shall continue to be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and the obligations of Tenant under this Lease shall continue unaffected. All Rent payable by Tenant hereunder shall constitute “rent” for all purposes (including Section 502(b)(6) of the Federal Bankruptcy Code).

     3.5 If any Rent or other amount due hereunder is not paid when due, whether at the end of the Term or otherwise, then and in such event, Tenant shall pay or shall cause to be paid interest thereon from and after the date on which such payment first becomes due (regardless of whether an Event of Default has occurred) at the Post-Default Rate, and such interest shall be due and payable, on demand, at such rate until the entire amount due is paid, whether or not any action shall have been taken or proceeding commenced to recover the same. Nothing contained in this Section 3.5 shall in any way extend the time for the payment of any amounts payable hereunder.

     3.6 In the event Tenant fails to pay any amounts due and payable under this Lease when due, Landlord may, at its option, whether immediately or at the time of final payment of such amounts, impose a late charge on Tenant equal to five percent of the amount of each and every such past due payment notwithstanding the date on which such payment is actually paid to Landlord. Any late charge imposed by Landlord in accordance with this Section 3.6 shall be due and payable on demand and shall be in addition to any interest due hereunder at the Post-Default

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Rate, and to the exercise by Landlord of its rights and remedies hereunder following an Event of Default.

Article 4. TAXES

     4.1 Subject to Section 4.2, Tenant shall pay, or cause to be paid, all Taxes on the Property before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof; provided, however, that:

     4.1.1 If, by law, any Tax may, at the option of the taxpayer or party obligated, be paid in installments, Tenant may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Tax) in installments and, in such event, subject to the provisions of subsection 4.1.2 hereof, shall pay only such installments as may become due during the Term as the same respectively become due in the ordinary course and before any fine, penalty, further interest or cost may be added thereto; and

     4.1.2 Any Tax due and payable, including any installments thereof, in the year of commencement or in the final year of the Term shall be prorated between Landlord and Tenant as of the commencement or the expiration of the Term, as the case may be.

     4.2 Upon termination of any Contest brought by Tenant pursuant to Article 23 with respect to the amount or validity of any Tax, or if Tenant shall so elect, at any time prior thereto, Tenant shall pay the amount of such Tax or part thereof as finally determined in such proceeding.

     4.3 If, pursuant to the terms of any First Mortgage, Landlord is obligated to make deposits with First Mortgagee of amounts to pay Taxes and any other impositions, then upon notice delivered to Tenant by Landlord or First Mortgagee, Tenant shall commence to deposit such amounts with First Mortgagee, and such deposits, when and to the extent made, will be in satisfaction of Tenant’s obligations pursuant to this Article 4 to provide for payment of Taxes to the extent of the amount of deposits available therefor.

Article 5. REPAIRS AND MAINTENANCE

     5.1 Throughout the Term, Tenant, at its sole cost and expense, shall take good care of the Property, all appurtenances of the Property, all alleyways and passageways and all sidewalks, curbs and vaults adjoining the Property, and shall at all times keep the same in a good order and condition, ordinary wear excepted, and make all necessary repairs thereto, interior and exterior, structural and non-structural, ordinary and extraordinary and foreseen and unforeseen.

     5.2 The term “repairs” as used in this Lease shall include, but not be limited to, all necessary or appropriate replacements. The necessity for and adequacy of the repairs to the Property made or required to be made pursuant to Section 5.1 shall be measured by the requirements of buildings of similar construction and age containing similar facilities which are

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prudently managed and operated with due regard for both short term and long term considerations.

     5.3 All repairs by Tenant shall be effected with all due diligence and in a workmanlike manner in compliance with all Legal Requirements and shall be promptly and fully paid for by Tenant.

Article 6. INSURANCE

     6.1 Tenant, at its expense, shall procure and maintain or cause to be procured and maintained during the Term:

     6.1.1 Insurance with respect to the Property against loss or damage by fire, lightning, windstorm, tornado, hail and such other casualty as is customarily covered by extended coverage and “all risk” endorsements and such other risks as Landlord may from time to time reasonably require, in each case in the full replacement value of the Property. The term “full replacement value” as used in this Section and in other Sections of this Article 6 shall mean 100% of the actual replacement cost including the cost of all debris removal, exclusive, however, of costs of excavations, foundations and footings below the lowest floor. Whenever appropriate, while any Alterations are in the course of being made, the aforesaid fire and extended coverage insurance shall be carried by Tenant in builder’s risk form written on a completed value basis. Such insurance shall name Landlord, Tenant and, if required by the First Mortgagee or Landlord, the First Mortgagee, as insureds, as their interest may appear;

     6.1.2 Commercial general public liability insurance against claims for bodily injury, death or property damage, occurring on, in or about the Property in a combined single limit of not less than Two Million Dollars ($2,000,000), naming Landlord and the First Mortgagee as additional insureds;

     6.1.3 If requested by Landlord at any time, boiler and pressure vessel and miscellaneous equipment insurance, including pressure pipes, air conditioning systems, electric motors, air tanks, compressors and pumps, in such amounts as Landlord may reasonably require;

     6.1.4 If the Property is at any time determined to be in a flood hazard area, flood insurance;

     6.1.5 During the entire period of making of any Alterations, (a) owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above-mentioned comprehensive general public liability insurance policy, and (b) adequate Worker’s Compensation Insurance covering all persons employed on or in connection with such Alterations; and

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     6.2 All insurance policies provided for in this Article 6 shall:

     6.2.1 be valid and enforceable policies, in such forms and, where not expressly provided for above, in such amounts, as may from time to time be reasonably satisfactory to Landlord and the First Mortgagee, issued by financially sound and responsible insurance companies authorized to do business in the jurisdiction where the Property is located, reasonably satisfactory to Landlord;

     6.2.2 except for worker’s compensation insurance, name Landlord, Tenant and, if required by the First Mortgage, the First Mortgagee as loss payee and as an additional insured as their respective interests may appear;

     6.2.3 provide that such policies shall not be changed or cancelled without at least thirty (30) days’ prior written notice to Landlord;

     6.2.4 provide that losses shall be adjusted with the insurers and/or underwriters by the Landlord and Tenant; and

     6.2.5 provide that, except in the case of public liability and worker’s compensation insurance, all insurance proceeds shall be payable to Landlord and Tenant, as their respective interests may appear.

     6.3 On or before the Commencement Date, and thereafter prior to the expiration dates of the expiring policies theretofore furnished pursuant to this Article 6, copies of the policies (or, in the case of liability insurance, certificates of the insurers) shall be delivered by Tenant to Landlord.

     6.4 If Tenant is delayed in receiving any insurance proceeds as a result of Landlord’s unreasonable failure or refusal to approve an insurance adjustment, such delay shall be taken into account in determining whether Tenant has fulfilled its obligations under Article 9 hereof with reasonable diligence. All costs and expenses of collecting or recovering any insurance proceeds under such policies shall be paid by Tenant.

     6.6 Notwithstanding anything to the contrary in this Article 6, proceeds of any insurance carried by Tenant on Tenant’s Property or any other property of Tenant shall be payable directly to Tenant, and Tenant shall have the exclusive right to adjust and settle losses with respect thereto.

     6.7 Notwithstanding anything to the contrary in this Article 6, Tenant shall maintain all insurance required by any First Mortgage and shall otherwise comply with the insurance requirements of any First Mortgage for so long as any such First Mortgage is outstanding.

Article 7. UTILITIES

     During the Term, Tenant shall pay all charges for water, sewer, electricity, heating, air conditioning and all other utilities with respect to the Property.

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Article 8. ALTERATIONS

     8.1 General. Tenant, at its sole cost and expense, shall have the right from time to time during the Term to perform Alterations, subject in all cases to the further provisions of this Article 8 and to all other applicable provisions of this Lease.

     8.2 Consent Required. Tenant may not make any Supervised Alteration to the Property without obtaining Landlord’s prior written consent, which consent may not be unreasonably withheld or delayed.

     8.3 Plans and Specifications, etc. All Supervised Alterations shall be made (a) under the supervision of an architect or engineer selected by Tenant and approved by Landlord (which approval may not be unreasonably withheld); (b) in accordance with detailed plans and specifications prepared by such architect or engineer; and (c) pursuant to a contract therefor approved by Landlord between Tenant and a general contractor engaged by Tenant which incorporates such plans and specifications. Copies of all such plans and specifications shall be delivered by Tenant to Landlord, and shall be subject to Landlord’s prior approval.

     8.4 Other Requirements. No Alteration shall be made except in compliance with, and Tenant hereby covenants that it will comply with, each of the following provisions:

     8.4.1 All Alterations shall be made with reasonable diligence and dispatch (subject to Unavoidable Delays) in a first class manner and with first class materials and workmanship.

     8.4.2 Before any Alteration has begun, Tenant shall procure, at its expense, all necessary licenses, permits, approvals and authorizations from all Governmental Authorities for such Alteration and shall, on demand, deliver photocopies thereof to Landlord. Upon Tenant’s request, Landlord shall join in the application for such licenses, permits, approvals and authorizations whenever such action is necessary, and Tenant covenants that Landlord will not suffer, sustain or incur any cost, expense or liability by reason thereof.

     8.4.3 All Alterations shall be made and completed in accordance with all governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of governmental authorities (including Environmental Laws) affecting either Tenant or the Property or any portion of or the construction, ownership, use, alteration or operation of, or any portion of any Property (whether now or hereafter enacted and in force), and all permits, licenses and authorizations and regulations relating thereto and insurance requirements under this Lease.

     8.4.4 No Alteration shall create any encroachment upon any street, easement, setback line or open yard requirement or upon any adjacent premises.

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     8.4.5 To the extent that any Alteration materially alters the footprint of any of the Improvements, Tenant shall, on written demand, promptly deliver to Landlord and the First Mortgagee a copy of a final survey of the Property, certified to Landlord and the First Mortgagee, showing the completed Alteration.

     8.4.6 No Alteration shall be made which would in the opinion of the Landlord render title to the Property or any part thereof unmarketable.

     8.4.7 No Alteration shall be performed which would tie in or connect any building or structure on the Property with any other building or structure located outside the boundary lines of the Property without the prior written consent of Landlord.

     8.4.8 All Alterations shall be performed in compliance with any and all restrictive or protective covenants affecting the Property.

     8.4.9 All expenses of Landlord in respect of the First Mortgage incurred by reason of the Alteration in question shall be reimbursed by Tenant, as additional Rent, upon demand.

     8.5 No Request or Consent by Landlord. Nothing contained in this Lease shall constitute any consent or request by Landlord, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Landlord in respect thereof.

     8.6 Notice of Non-Responsibility. Before any Alteration has begun, Landlord shall have the right to post and maintain on the Property and to record in the County Recorder’s office in the County in which the Property is located any notices of non-responsibility provided for under applicable law.

Article 9. DAMAGE TO OR DESTRUCTION OF THE IMPROVEMENTS

     9.1 In case of any damage to or destruction of the Property or any part thereof, Tenant shall give prompt notice thereof to Landlord, and, unless this Lease is amended pursuant to Section 9.4, Tenant shall promptly and with reasonable diligence (subject to Unavoidable Delays), commence and complete Restoration within six months after such damage or destruction, all in accordance with plans and specifications therefor first approved by Landlord, which approval shall not be unreasonably withheld. The replacement building(s) to be constructed shall have an area which is not less than the area of the Improvements being replaced, and shall be of a quality not less than the quality of the Improvements, as the same existed immediately prior to such damage or destruction, and assuming compliance with the maintenance requirements in this Lease.

     9.2 Unless an Event of Default has occurred and is continuing, insurance proceeds received by Landlord in accordance with Section 6.2.5 on account of any damage to or

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destruction of the Property or any part thereof (less the costs, fees and expenses incurred by Tenant in the collection thereof, which shall be paid out of such proceeds) shall be paid to Tenant as Restoration progresses, to pay for the cost of Restoration, upon written request of Tenant accompanied by evidence satisfactory to Landlord that an amount equal to the amount requested is then due and payable or has been paid and is properly a part of such cost and that the net insurance proceeds not yet advanced will be sufficient for the completion of the Restoration. Upon receipt by Landlord of evidence satisfactory to them that Restoration has been completed and the cost thereof paid in full, and that there are no mechanic’s or similar liens for labor or materials supplied in connection therewith, the balance, if any, of such insurance proceeds (and any amount so made available by Landlord) shall be paid to Landlord, without reduction in the Basic Rent. Upon the expiration or sooner termination of this Lease, any insurance proceeds not theretofore applied to the cost of Restoration shall be paid to Landlord.

     9.3 Except as provided in Section 9.4, no destruction of or damage to the Property, or any part thereof, whether such damage or destruction be partial or total or otherwise, shall entitle or permit Tenant to surrender or terminate this Lease or shall relieve Tenant from its liability to pay in full the Basic Rent and other sums and charges payable by Tenant hereunder, or from any of its other obligations under this Lease, and Tenant hereby waives any rights now or hereafter conferred upon it by statute or otherwise to surrender this Lease or quit or surrender the Property or any part thereof, or to receive any suspension, diminution, abatement or reduction of the Basic Rent or other sums and charges payable by Tenant hereunder on account of any such destruction or damage.

     9.4 In case of any damage to or destruction of the Property which occurs during the last two (2) years of the Term in respect of which the cost of Restoration is reasonably estimated to exceed forty percent (40%) of the replacement cost of the Property and/or for which substantial completion of Restoration cannot occur until more than six (6) months following such damage or destruction, as such cost of Restoration and/or date of substantial completion is estimated in good faith by a reputable general contractor promptly selected by Tenant and approved by Landlord, which approval may not be unreasonably withheld or delayed, Tenant may terminate this Lease by giving written notice thereof to Landlord within forty-five (45) days after the date of such damage or destruction. Such termination shall be effective on the date such notice is given. In case of any such termination, Tenant shall not have any obligation to repair or restore the Property, provided however Landlord shall receive insurance proceeds attributable to the Improvements at the Property, including any Alterations.

Article 10. CONDEMNATION

     10.1 In the event of a Taking of the whole or substantially all of the Property, either Tenant or Landlord may terminate this Lease, and if either party elects to terminate the Lease due to such Taking, the Basic Rent and all other sums and charges required to be paid by Tenant hereunder shall be paid to the date of such Taking. In the event of any such Taking and notwithstanding the termination of this Lease, Landlord and Tenant shall together make one claim for an award for their combined interests in the Property and, subject to the requirements of the First Mortgage, the net award received (after deduction of reasonable fees and expenses of

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collection, including, but not limited to, reasonable attorneys’ and experts’ fees) shall be paid as follows and in the following order:

     10.1.1 Tenant shall be entitled to the portion of the award made for the value of its leasehold estate computed as though this Lease had not been terminated, for Tenant’s Property, and for moving expenses; and

     10.1.2 Landlord shall receive the balance of the award.

     10.2 In the event of a Taking of less than substantially all of the Property, this Lease shall continue in full force and effect, and Tenant shall give prompt notice thereof to Landlord and Tenant shall proceed promptly and with reasonable diligence (subject to Unavoidable Delays) to commence and complete Restoration, except to the extent made impossible by any reduction in area caused by such Taking. All awards payable as a result of any Taking shall be distributed as follows and in the following order, provided that there shall first be deducted therefrom all reasonable fees and expenses of collection, including, but not limited to, reasonable attorneys’ and experts’ fees:

     10.2.1 Provided no Event of Default has occurred and is continuing, Landlord shall distribute the proceeds of such award to Tenant for the purpose of Restoration in the manner provided in Section 9.2, and subject to the terms and conditions of such Section; and

     10.2.2 The balance of the award, if any, shall be paid to Landlord.

If the Loan is no longer outstanding and all Loan Obligations have been indefeasibly paid in full, at the time such Taking occurs, Basic Rent shall be reduced by a fair and equitable amount taking into account the proportion by which the Fair Rental Value of the Property has been reduced by the Taking (if at all).

     10.3 As used herein, a Taking of “substantially all of the Property” shall mean a Taking of such portion of the Property that results in the remaining portion of the Property being insufficient to permit the continued operation of Tenant’s business thereon even if restored to an architectural unit under this Lease. Following the indefeasible payment in full of the Loan and all Loan Obligations, any dispute between the parties as to whether any particular Taking constitutes a Taking of all or substantially all, or a Taking of less than substantially all, of the Property shall be determined by arbitration in accordance with the rules of the American Arbitration Association as then in effect and any determination therein shall be final and binding on Landlord and Tenant.

Article 11. DISCHARGE OF LIENS

     Neither Landlord nor Tenant shall create any charge, lien, security interest or encumbrance on the Property, which arises for any reason, including, without limitation, liens or notices of claims of liens of mechanics and materialmen for work or materials contracted to be supplied to the Property by Landlord or Tenant, respectively, subject to Tenant’s rights as set

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forth in Sections 15.4 to create a leasehold mortgage; provided, however, nothing contained in this Lease shall prohibit (a) Landlord from granting any lien pursuant to or permitted under a First Mortgage, or (b) any First Mortgagee from granting or assigning any security interest or other interest in, or any lien or other encumbrance on, the Property. Subject to Tenant’s right to contest set forth in Article 23, Tenant shall remove and discharge any charge, lien, security interest or encumbrance on the Property which arises for any reason, other than pursuant to or permitted under a First Mortgage or by or through a First Mortgagee.

Article 12. USE OF PROPERTY

     12.1 Tenant may occupy and use the Property for any commercial purpose (except for any noxious or manufacturing use) and for any ancillary uses incidental thereto and for no other purpose without the prior written consent of Landlord. Tenant shall not use or occupy or permit any of the Property to be used or occupied, nor do or permit anything to be done in or on any of the Property, in a manner which would or might (a) violate any law or Permitted Exception, (b) make void or voidable or cause any insurer to cancel any insurance required by this Lease, or make it impossible to obtain any such insurance at commercially reasonable rates, (c) cause structural injury to any of the Improvements, (d) reduce the Fair Market Value or the Fair Rental Value of the Property, or (e) constitute a public or private nuisance or waste.

     12.2 Tenant shall not suffer any act to be done or any condition to exist on the Property or any part thereof which may, in law, constitute a nuisance, public or private.

     12.3 Tenant shall not permit any Environmental Activity on, about or under the Property other than the use, storage and disposal of the minimum quantities of Hazardous Materials in the ordinary course of business at the Property and in compliance with all Environmental Laws. Tenant shall promptly, properly and completely remediate the effect of any Environmental Activity in violation of this Section 12.3. Tenant will notify Landlord immediately upon Tenant becoming aware of (a) any actual, suspected or threatened violation of Environmental Laws with respect to the Property or with respect to any property in the vicinity of the Property, and (b) any Environmental Activity with respect to the Property or with respect to any property in the vicinity of the Property. Tenant promptly will deliver to Landlord copies of all documents delivered to or received by Tenant regarding the matters set forth in this Section 12.3, including notices of any legal proceedings or investigations concerning any Environmental Activity or concerning Landlord’s or Tenant’s status as potentially responsible party (as defined in the Environmental Laws). Tenant’s notification to Landlord in accordance with the provisions of this Section 12.3 will not be deemed to excuse any default under this Lease resulting from the Environmental Activity or the violation of Environmental Laws that is the subject of the notice.

Article 13. ENTRY ON PROPERTY BY LANDLORD

     Upon reasonable prior written notice (except in the case of an emergency, or following the occurrence of an Event of Default), Tenant shall permit each of Landlord and First Mortgagee, and their respective contractors, consultants, representatives and designees to enter the Property at all reasonable times for the purpose of (a) inspecting and testing the same and assuring compliance with all provisions of this Lease, (b) exercising its rights pursuant and

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subject to this Lease, and (c) showing the same to prospective purchasers, mortgagees and tenants (during the last six (6) months of the Term only with respect to prospective tenants, unless an Event of Default exists).

Article 14. WAIVER AND INDEMNIFICATION

     14.1 Notwithstanding anything to the contrary in this Lease, Landlord and Tenant hereby release one another and their respective partners, officers and employees from any and all liability (to the other or anyone claiming through or under them by way of subrogation or other otherwise) for any loss or damage to the extent of the amount of proceeds that have been received under the insurance described in Subsections 6.1.1 with respect to such loss or damage, even if such loss or damage shall have been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible.

     14.2 Landlord shall not be responsible or liable to Tenant for any loss or damage to Tenant’s Property arising from (a) the acts or omissions of persons other than Landlord occupying premises adjacent to the Property, or transacting any business in the area of the Property, or (b) burst, stopped or leaking water, gas or sewer pipes or any failure of, or defect in, any electric line, circuit or facility, or (c) any condition of the Property.

     14.3 Each party hereto shall defend, indemnify and hold the other harmless from and against all liabilities, obligations, claims, demands, costs, charges, judgments and expenses, including, but not limited to, reasonable attorneys’ fees, which may be imposed upon or incurred or paid by or asserted against such other party to the extent arising by reason of or in connection with any negligence or willful misconduct on the part of such party or any of its agents, contractors, servants, employees, licensees or invitees and accruing or occurring during the Term.

     14.4 Without limitation to Tenant’s obligations under Section 14.3, Tenant shall defend with counsel approved by Landlord, indemnify and save Landlord harmless from and against all liabilities, obligations, damages, fines, penalties, claims, demands, costs, charges, judgments and expenses, including, but not limited to, reasonable architects’ and attorneys’ fees, which may be imposed upon or incurred or paid by or asserted against Landlord, the Property or any interest therein by reason of or in connection with any of the following accruing or occurring during the Term, or arising from events occurring during the Term:

     14.4.1 Any Alterations and anything done in, on or about the Property or any part thereof in connection therewith;

     14.4.2 The use, non-use, possession, occupation, condition, operation, maintenance or management of the Property;

     14.4.3 Any acts, omissions or negligence on the part of Tenant or any of its agents, sublessee, customers, contractors, servants, employees, licensees or invitees;

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     14.4.4 Any accident, injury, death or damage to any person or property occurring in or on the Property;

     14.4.5 Any Environmental Activity occurring during the Term on, about, to or from the Property or any part thereof; and

     14.4.6 Any failure of Tenant to perform its obligations under, or to comply with any term of, this Lease.

Nothing contained in this Section 14.4 shall be deemed to require Tenant to indemnify Landlord with respect to the gross negligence or willful misconduct of Landlord or its officers, employees, agents or contractors, or to any extent prohibited by law.

     14.5. In addition to the indemnity obligations set forth in Sections 14.3 and 14.4, Tenant shall defend with counsel approved by First Mortgagee, indemnify and save First Mortgagee harmless from and against all liabilities, obligations, damages, fines, penalties, claims, demands, costs, charges, judgments and expenses, including, but not limited to reasonable architects’ and attorneys’ fees, which may be imposed upon or incurred or paid by or asserted against First Mortgagee by reason of or in connection with any of the matters described in subsections 14.4.1 through 14.4.6 above. However, nothing contained in this Section 14.5 shall be deemed to require Tenant to indemnify First Mortgagee with respect to the gross negligence or willful misconduct of First Mortgagee or its officers, employees, agents or contractors, or to any extent prohibited by law.

     14.6 The provisions of this Article 14 shall survive the expiration or sooner termination of this Lease and the purchase of the Property pursuant to the First Offer Right.

Article 15. ASSIGNMENT

     15.1 Tenant’s interest in this Lease, the Property or any part thereof, may not be assigned or otherwise transferred without Landlord’s prior written consent, which consent shall not be unreasonably withheld. Notwithstanding anything contained herein to the contrary, Tenant may, without the necessity of the consent of Landlord, at any time assign or otherwise transfer this Lease or any portion thereof to any Life Time Affiliate.

     15.2 No consent by Landlord pursuant to this Article 15 shall waive the requirement to obtain consent in any subsequent instance. If Tenant assigns all its rights and interest under this Lease, the assignee under such assignment shall expressly assume all the obligations of Tenant hereunder which may arise on or after the date of such assignment, by a written instrument delivered to Landlord at the time of such assignment. No assignment or sublease shall affect or reduce any of the obligations of Tenant hereunder, and all such obligations shall continue in full force and effect as obligations of a principal and not as obligations of a guarantor, as if no assignment or sublease had been made. No assignment or sublease shall impose any additional obligations on Landlord under this Lease.

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     15.3 Tenant may enter into, amend, terminate or modify from time to time subleases or licenses demising up to 34% of the rentable area of the Improvements on terms acceptable to Tenant in its sole discretion. Each such sublease or license shall be subject and subordinate to the provisions of this Lease. As security for performance of its obligations under this Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title and interest of Tenant in and to all subleases and licenses hereafter entered into for any or all of the Property, any and all extensions, modifications and renewals thereof and all rents, issues and profits therefrom. Landlord hereby grants to Tenant a license to collect and enjoy all rents and other sums of money payable under any sublease of any of the Property, provided, however, that Landlord shall have the absolute right at any time while an uncured Event of Default exists upon notice to Tenant and any subtenants to revoke said license and to collect such rents and sums of money and to retain the same.

     15.4 Tenant is hereby given the right by Landlord to mortgage its leasehold estate created under this Lease, under one or more leasehold mortgage(s) upon the conditions that (a) all rights acquired under such leasehold mortgage(s) shall be subject and subordinate to each and all of the covenants, conditions and restrictions set forth in this Lease and to all rights and interests of the Landlord in and to the Property and this Lease, none of which covenants, conditions, restrictions, rights or interests is or shall be waived by Landlord by reason of the right given to Tenant in this Section 15.4 to mortgage Tenant’s leasehold estate created under this Lease, and (b) such leasehold mortgagees execute and deliver to Landlord and any First Mortgagee a subordination, non-disturbance and attornment agreement, and any other documents, instruments or agreements reasonably requested by Landlord to evidence such subordination and such other matters as Landlord may reasonably request in connection therewith. Tenant’s rights under this Section 15.4 are subject to the terms and conditions of the First Mortgage.

     15.5 Landlord agrees to accept timely performance by a leasehold mortgagee of Tenant’s obligations under this Lease. In the event of any act or omission by Tenant which would give Landlord the right to damages from Tenant or the right to terminate this Lease pursuant to Article 17, Landlord will not sue for such damages nor exercise any such right to terminate until (a) it shall have given written notice of the act or omission to Tenant and to the leasehold mortgagee, if the name and address of such leasehold mortgagee has been furnished to Landlord, and (b) leasehold mortgagee shall have the right to cure any default by Tenant for the same period after receiving notice of such default from Landlord as Tenant has, plus thirty (30) additional days. In order to exercise this right to cure any default by Tenant, the leasehold mortgagee, its agents or employees, will be entitled to enter upon the Property and take whatever action may be necessary to remedy the act or omission. Landlord shall accept a cure performed within such period by any leasehold mortgagee as though the cure had been done or performed within a timely fashion by Tenant.

Article 16. ESTOPPEL CERTIFICATES

     Each party hereto agrees from time to time, upon not less than ten (10) days’ prior notice from the other, to execute, acknowledge and deliver, without charge, to the other or its designee, a statement in writing, certifying that this Lease is unmodified and in full force and effect (or if

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there have been modifications, identifying the same by the date thereof and specifying the nature thereof), the dates to which the Basic Rent and other sums and charges payable hereunder have been paid, the amount of the Basic Rent, that to its actual knowledge there are no claims against the other hereunder (or if there are any such claims, specifying the same), that to its actual knowledge the other party is not in default and there exists no circumstance which with the giving of notice or lapse of time, or both, would constitute a default (or if such party is aware of any such default or circumstance specifying the same), and such other matters as Landlord, Tenant or the First Mortgagee shall reasonably request.

Article 17. EVENTS OF DEFAULT; TERMINATION

     17.1 If any one or more of the following events (“Events of Default”) shall happen, then and in any such event, Landlord may exercise all rights and remedies permitted by law, including giving notice to Tenant specifying such Event or Events of Default and stating that this Lease and the Term shall expire and terminate on the date specified in such notice, and on such date this Lease shall terminate and Tenant shall remain liable as hereinafter provided:

     17.1.1 Tenant defaults in the payment of any Basic Rent payable under this Lease and Tenant does not cure such default within ten (10) days after such Basic Rent is due;

     17.1.2 Tenant defaults in the payment of any Rent (other than Basic Rent) payable under this Lease, and Tenant does not cure such default within ten (10) days after written notice thereof by First Mortgagee or Landlord to Tenant;

     17.1.3 Tenant shall fail duly to observe or perform any of the other terms, conditions, covenants or agreements required to be observed or performed by it under this Lease and such failure shall continue for a period of thirty (30) calendar days following written notice of such failure by Landlord or First Mortgagee to Tenant, or, if the default is of a nature which cannot with due diligence be cured within such period of thirty (30) days and (a) if the Loan and all Loan Obligations have not been indefeasibly paid in full, Tenant fails to correct the default within the period of any extension granted by GECC; or (b) where the Loan and all Loan Obligations have been indefeasibly paid in full, Tenant fails to proceed with due diligence within such period of thirty (30) days to commence to cure the same and thereafter to prosecute the curing of such default with due diligence, or fails to complete such cure within one hundred eighty (180) days after such notice from Landlord or First Mortgagee;

     17.1.4 Guarantor repudiates, refuses, purports to revoke, or fails to perform its obligations under the Guaranty, and fails to cure the same within 10 business days after written demand by Landlord or First Mortgagee, it being agreed that Guarantor’s performance under protest or with a reservation of rights may not be construed as a repudiation or refusal to perform;

     17.1.5 either Tenant or Guarantor becomes insolvent, or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors; or Tenant or Guarantor applies for or consents to the appointment of any

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receiver, trustee or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer is appointed without the application or consent of Tenant or Guarantor; or Tenant or Guarantor institutes (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding is instituted (by petition, application or otherwise) against Tenant or Guarantor, or any judgment, writ, warrant of attachment or execution or similar process is issued or levied against a substantial party of the property of either Tenant or Guarantor;

     17.1.6 Tenant vacates or abandons the Property (temporary closures for environmental remediation or for Remodeling or repair in accordance with this Lease for a period not to exceed six months will not be deemed to be a vacation or abandonment of the Property);

     17.1.7 any representation or warranty made by Guarantor in the Guaranty or in any other document executed in connection therewith was untrue in any material respect when made;

     17.1.8 until the Loan and all Loan Obligations are indefeasibly paid in full, ownership of Tenant changes other than transfers in ownership to (a) a Life Time Affiliate, or (b) any Qualified Equityholder (as such term is defined in and made applicable to Tenant in the Reimbursement Agreement);

     17.1.9 an “Event of Default” (as defined in the Other Lease) occurs; or

     17.1.10 Tenant subleases the Property or assigns this Lease in violation of Article 15 of this Lease, and such failure is not cured within 10 business days after Landlord’s written notice thereof.

     17.2 If this Lease shall have been terminated pursuant to Section 17.1, Landlord may enter upon and repossess the Property (said repossession being hereinafter referred to as “Repossession”) by summary proceedings or ejectment, and may remove Tenant and all other persons therefrom.

     17.3 From time to time after the Repossession of the Property, Landlord may relet the Property for the account of Tenant (unless Landlord has elected to collect liquidated damages pursuant to Section 17.5 below) in the name of Landlord or otherwise, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the Term) and on such terms and for such uses as Landlord may in its reasonable business judgment determine, and may collect and receive the rent therefor. Landlord shall not be responsible or liable for any failure to collect any rent due upon any such reletting. Landlord shall act reasonably to mitigate damages.

     17.4 No termination of this Lease pursuant to Section 17.1 and no Repossession of the Property pursuant to Section 17.2 or otherwise shall relieve Tenant of its obligation to pay Basic

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Rent or any of its other obligations under this Lease, all of which shall survive any such termination or Repossession.

     17.5 In the event of any such termination or Repossession, whether or not the property shall have been relet, Tenant shall pay to Landlord the Basic Rent and other sums and charges to be paid by Tenant up to the time of such termination or Repossession, and thereafter Tenant, until the end of what would have been the Term in the absence of such termination or Repossession, shall pay to Landlord, as and for liquidated and agreed current damages for Tenant’s default, the equivalent of the amount of the Basic Rent and such other sums and charges which would be payable under this Lease by Tenant if this Lease were still in effect, less the net proceeds if any, of any reletting effected pursuant to the provisions of Section 17.3, after deducting all of Landlord’s expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage and management commissions, operating expenses legal expenses, attorneys’ fees, and reasonable, market expenses of preparation for such reletting. Tenant shall pay such current damages to Landlord monthly on the days on which the Basic Rent would have been payable under this Lease if this Lease were still in effect, and Landlord shall be entitled to recover the same from Tenant on each such day. At any time after such termination or Repossession, whether or not Landlord shall have collected any current damages as aforesaid, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord on demand, as and for liquidated and agreed final damages for Tenant’s default, an amount equal to the then present value of the excess of the Basic Rent reserved under this Lease from the day of such termination or Repossession for what would be the then unexpired Term if the same had remained in effect, over the then Fair Rental Value for the same period, discounted at a rate equal to one percent (1.0%) plus the discount rate at the time of liquidation of the Federal Reserve Bank for the district in which the Property is located.

     17.6 No failure by Landlord to insist upon the strict performance of any term hereof or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach, shall constitute a waiver of any such breach or of any such term.

     17.7 Tenant may exercise and continue to exercise all of its rights under this Lease upon the occurrence and during the continuance of any default or Event of Default under this Lease up to the point of termination of this Lease and actual Repossession, as defined in Section 17.2, including, but not limited to, the First Offer Right.

Article 18. SURRENDER OF THE PROPERTY

     18.1 In the event Tenant does not exercise and fulfill the requirements of the First Offer Right, upon the expiration or sooner termination of this Lease, Tenant shall quit and surrender the Property, in the condition required to be maintained in accordance with this Lease, to Landlord without any payment therefor by Landlord without delay, free and clear of all lettings and occupancies. Upon such expiration or termination of this Lease, any Tenant’s Property which shall remain on the Property after the expiration or termination of this Lease may, at the option of Landlord, be deemed to have been abandoned, and may either be retained by Landlord as its property or be disposed at Tenant’s expense or without accountability, as Landlord may see

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fit, provided that if Landlord shall store or warehouse any such property for any period of time Tenant shall reimburse Landlord for all expenses incurred in connection therewith, which obligation shall survive any such expiration or termination of this Lease.

     18.2 In connection with the surrender of the Property pursuant to Section 18.1, Tenant shall be entitled to remove on or before the expiration or sooner termination of this Lease, Tenant’s Property and shall leave in place all Alterations. Tenant shall promptly repair, at its sole cost and expense, any damage to the Property caused by the removal of any of Tenant’s Property.

     18.3 The provisions of this Article 18 shall survive the expiration or sooner termination of this Lease.

Article 19. NO MERGER OF TITLE

     There shall be no merger of Tenant’s interest in this Lease nor of the leasehold estate created by this Lease with the fee estate in the Property or any part thereof by reason of the fact that the same person may acquire or own or hold, directly or indirectly, (a) Tenant’s interest in this Lease or the leasehold estate created by this Lease or any interest therein, and (b) the fee estate in the Property or any part thereof or any interest therein, and no such merger shall occur unless and until all persons, if any, then having an interest in, which interest shall have been voluntarily created by the holders of, the ownership interests described in (a) and (b) above, shall join in a written instrument effecting such merger and shall duly record the same.

Article 20. QUIET ENJOYMENT

     Landlord covenants that Tenant, upon paying the Basic Rent and all other sums and charges herein provided for and observing and keeping all covenants, agreements and conditions of this Lease on its part to be observed and kept, shall quietly have and enjoy the Property during the Term without disturbance by anyone claiming by, through or under Landlord subject, however, to the exceptions, reservations, and conditions of this Lease.

Article 21. PERFORMANCE FOR TENANT

     21.1 If Tenant shall at any time fail to make any payment or perform any act on its part to be made or performed hereunder, then Landlord, after thirty (30) days’ (or such longer period as may be reasonably necessary to cure the same) notice to Tenant, except when other notice is expressly provided for in this Lease, and without waiving or releasing Tenant from any obligation of Tenant contained in this Lease, may (but shall be under no obligation to) make such payment or perform such act, and may enter upon the Property for any such purpose, and take all such action thereon as may be necessary therefor. Notwithstanding anything to the contrary contained in this Lease, in the event Tenant fails to maintain insurance required pursuant to Article 6 of this Lease, Landlord shall have the right to obtain such insurance on behalf of Tenant and Tenant shall reimburse Landlord, as additional Rent, within five (5) days of receipt of notice of the procurement of such insurance.

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     21.2 All sums so paid by Landlord and all reasonable out of pocket costs and expenses incurred by Landlord in connection with the performance of any such act, together with interest thereon at a rate equal to the lesser of (a) ten percent (10%) per annum and (b) the maximum rate permitted by law, from the respective dates of Landlord’s making of each such payment or incurring of each such cost and expense, and reasonable attorney fees incurred by Landlord in connection therewith or in enforcing its rights hereunder, shall be paid by Tenant to Landlord on demand as additional Rent hereunder.

     21.3 The provisions of this Article 21 shall survive the expiration or sooner termination of this Lease.

Article 22. NOTICES

     All notices, requests, demands, consents, approvals, and other communications which may or are required to be served or given hereunder (for the purposes of this Article collectively called “Notices”) shall be in writing and shall be delivered personally, or sent by nationally recognized overnight delivery service, or sent by registered or certified mail, return receipt requested, postage prepaid, addressed to the party to receive such Notice at its address first above set forth. Either party may, by Notice given as aforesaid, change its address for all subsequent Notices, except that neither party may require Notices to it to be sent to more than two addresses. Mailed Notices shall be deemed given when mailed in the manner aforesaid, provided that in the case of a notice of default to Tenant the same shall be deemed given only upon actual receipt by Tenant. So long as a First Mortgagee exists, both parties shall provide First Mortgagee with copies of any notices delivered to the other with respect to requests for consent or approval or notices alleging default under this Lease.

Article 23. CONTESTS

     23.1 After written notice to Landlord and First Mortgagee, if any, Tenant may at its expense contest, by appropriate proceedings conducted in good faith and with due diligence (all such proceedings together with appeals therefrom being hereinafter referred to as “Contests”) the amount, validity or application, in whole or in part, of any Tax, mechanics’ lien, encumbrance, charge or any other adverse claim for which Tenant is responsible under this Lease (hereinafter collectively “claims”) provided that:

     23.1.1 In the case of an unpaid claim, such Contest shall operate to suspend the collection of the same from Landlord and Tenant therein; and

     23.1.2 Neither the Property nor any part thereof nor any interest therein shall be, in the reasonable opinion of Landlord, in imminent danger of being forfeited or lost.

     23.2 During the period Tenant carries forward any such Contest in good faith, Tenant shall be relieved from its obligations herein contained to pay the claims, or to clear the liens with respect to which such contest is conducted. If and to the extent Tenant shall not prevail in any such Contest, Tenant shall immediately pay and discharge the claim in question to such extent.

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     23.3 All such Contests may be brought by Tenant in the name of Tenant or, if reasonably necessary, in the name of Landlord or Tenant and Landlord, as may be appropriate. Each party agrees to cooperate with the other in such Contests, short of the payment of money with respect thereto, except where this Lease otherwise requires payment. Each party will endorse such pleadings, checks and other documents as will be appropriate to carry out the purposes of this Section 23.3.

Article 24. NO WARRANTIES/“AS IS”

     LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE PROPERTY “AS IS”, AND TENANT ACKNOWLEDGES THAT LANDLORD HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE PROPERTY, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO ITS FITNESS FOR USE OR PURPOSE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, OR AS TO VALUE, LOCATION, USE, CONDITION, QUALITY, DESCRIPTION, OR DURABILITY OF OPERATION. THE PROVISIONS OF THIS ARTICLE 24 HAVE BEEN NEGOTIATED, AND THE FOREGOING PROVISIONS ARE INTENDED TO BE A COMPLETE PRECLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE PROPERTY, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.

Article 25. TENANT’S RIGHT TO CURE LANDLORD’S DEFAULT UNDER FIRST MORTGAGE

     If Landlord shall default in the payment of any monies required to be paid under any First Mortgage or shall fail to perform any other term or provision thereof (provided that the performance of the same is not the obligation of Tenant under this Lease), then, upon twenty (20) days prior written notice to Landlord (except in the case of emergency, when no notice shall be required), Tenant may, but shall not be obligated to, make such payment directly to the First Mortgagee or perform such term or provision and in any such event Tenant shall be entitled to credit the amount of such payment and the cost of such performance against Basic Rent hereunder, and the installments thereof, next coming due hereunder.

Article 26. SUBORDINATION AND NON-DISTURBANCE

     Tenant agrees that, upon the request of Landlord made in writing, Tenant will subordinate this Lease to any First Mortgage and to all renewals, modifications, consolidations, replacements and extensions thereof; provided, however, that the First Mortgagee shall enter into a binding agreement (the “Non-Disturbance Agreement”) with Tenant providing that for so long as Tenant is not in default hereunder beyond any applicable notice and cure period, Tenant shall

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not be disturbed in its possession of the Property or its rights hereunder terminated or impaired by the First Mortgagee, purchaser at foreclosure or other such party and that this Lease shall continue in full force and effect following any foreclosure thereof or any deed given in lieu thereof, except that this Lease may nonetheless be terminated pursuant to the provisions of this Lease providing for such termination, including without limitation pursuant to Article 17. In the event the First Mortgagee or other purchaser at foreclosure sale succeeds to the interest of Landlord under this Lease, Tenant will automatically become the tenant of and shall be deemed to have attorned to such successor in interest as Landlord under this Lease without change in the terms or provisions of this Lease, provided, however, that such successor in interest shall not be bound by any amendment or modification of this Lease made after Tenant enters into the Non-Disturbance Agreement without the written consent of such First Mortgagee or such successor in interest. Upon written request by such successor in interest, Tenant and such successor shall execute and deliver an instrument or instruments whereby Tenant confirms the attornment herein provided for and in which such successor shall acknowledge its obligations and responsibilities to Tenant under the Lease and, with respect thereto, shall recognize this Lease and the tenancy hereunder of Tenant.

Article 27. FIRST OFFER RIGHT

     27.1 Landlord shall not (a) sell, transfer, assign or otherwise dispose of any partial interest in the Property or any part thereof to an unrelated third party, or (b) sell, transfer, assign or otherwise dispose of its interest in the Property to an unrelated third party until at least fifteen (15) days after it has given Tenant written notice (the “Landlord’s Notice”) as herein provided of its intention to dispose of the Property. The Landlord’s Notice shall describe in reasonable detail Landlord’s determination of the Fair Market Value of the Property at which Landlord intends to sell the Property (including, if the proposed consideration for such disposition is property other than cash, the Fair Market Value of such property, in Landlord’s opinion, as of the date of the notice), and the other terms of such proposed disposition. Tenant shall have and is hereby granted the first right and option (“First Offer Right”) to purchase the Property in the manner, at the price and on the terms provided in the Landlord’s Notice. During the Term and except as required by the terms of the First Mortgage, Landlord shall not transfer, sell or convey all or any portion of the Property.

     27.2 The First Offer Right may be exercised by Tenant by giving notice to Landlord at any time within ten (10) days after receipt of the Landlord’s Notice.

     27.3 The purchase price for the Property pursuant to exercise of the First Offer Right shall be the price stated in the Landlord’s Notice as the price at which Landlord proposes to sell, transfer or assign the Property; provided that (a) if all or any part of the proposed consideration for said sale, transfer or assignment is property other than cash, such portion of the purchase price to be paid by Tenant shall be based on the Fair Market Value of the Property as of the date of Landlord’s Notice to be determined by appraisal in accordance with Article 28 below, and (b) if the Property is being disposed of together with other land or property, then Tenant may elect to have the consideration payable by it for the Property equal the Fair Market Value of such interest as of the date of Landlord’s Notice to be determined by appraisal in accordance with the procedure provided in Article 28 below.

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     27.4 Contemporaneously with giving the Landlord’s Notice, Landlord shall provide a title insurance commitment for the Property with a then-current effective date. If such commitment reflects any matter materially and adversely affecting title to the Property in addition to the Permitted Exceptions (other than this Lease, a First Mortgage, and any encumbrances created on or after the date hereof by Tenant or those claiming by, through or under Tenant or with Tenant’s consent), then Tenant may give Landlord written notice of such matter. If Tenant gives Landlord such notice, Landlord use reasonable efforts to cause such matter to be removed and corrected of record within said ten (10) days of receipt of Tenant’s notice. If Landlord fails to do so within said thirty (30) days, Tenant may at its option (a) attempt to cause such encumbrances to be removed, (b) proceed to close, or (c) terminate the agreement formed by exercise of the First Offer Right by giving written notice thereof to Landlord, without such termination releasing Landlord from liability for damages hereunder. If Tenant elects alternative (a) above, closing shall be postponed until the encumbrances in question are removed and, if Tenant is unable within a further period of ten (10) days to cause such encumbrances to be removed, Tenant may then elect either alternative (b) or (c) above. All costs and expenses incurred by Tenant in causing or attempting to cause such encumbrances to be removed, including reasonable attorneys fees, shall be payable by Landlord.

     27.5 Subject to postponement pursuant to Section 27.4, Landlord shall convey the Property to Tenant on the first business day occurring thirty (30) days after the date Tenant exercises the First Offer Right at Landlord’s main offices. The deed shall be in the usual, proper limited warranty form for recording and registration, subject only to Permitted Exceptions and the other matters permitted pursuant to Section 27.4, and shall be accompanied by all documents necessary to allow the deed to be recorded. Landlord shall pay any state deed tax or revenue stamps or other transfer tax. Landlord shall pay any prepayment penalty or provision payable under the First Mortgage if the First Mortgage is satisfied in connection with the closing. Tenant shall pay any assumption fee payable under the First Mortgage in connection with such closing if Tenant assumes the First Mortgage. The purchase price (less the unpaid principal balance of the First Mortgage if assumed (subject to the terms thereof) by Tenant at the closing) shall be payable by wire transfer or other readily available funds. This Lease and all of the terms and provisions hereof shall remain in full force and effect until the purchase has closed, except as otherwise provided herein. Notwithstanding anything to the contrary in this Article 27, to the extent Tenant (subject to the terms of the First Mortgage) does not assume the First Mortgage, Landlord shall discharge the First Mortgage and all documents and agreements associated therewith at the closing.

     27.6 If Tenant fails to exercise the First Offer Right within the ten (10) day period provided in Section 27.2, Landlord shall be free to sell the Property free from the First Offer Right but subject to this Lease on the same price and terms provided in the Landlord’s Notice for a period of one hundred eighty (180) days following the expiration of such ten (10) day period. If Landlord does not close upon the transfer of the Property within such one hundred eighty (180) day period on substantially the same terms as those provided in the Landlord’s Notice, then the First Offer Right shall revive and Landlord shall be obligated to re-offer the Property to Tenant in accordance with Section 27.1 prior to any sale, transfer or disposition of the same. As used in this Section 27.6, “substantially the same” terms shall mean that the purchase price

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pursuant to which Landlord proposes to sell the Property is not less than ninety-five percent (95%) of that provided in the Landlord’s Notice, adjusted for any difference in treatment of closing costs, and the terms are otherwise the same terms as provided in the Landlord’s Notice, provided that the provision of representations, warranties or other comfort to a third party purchaser, to the extent they relate to matters which such third party purchaser, not like Tenant having been in possession of and having knowledge of the Property, may require, shall not cause such transaction not to be on the same terms. Tenant shall, within five (5) days after Landlord’s request therefore, deliver an instrument in form reasonably satisfactory to Landlord confirming the provisions of this Section 27.6, but no such instrument shall be necessary to make the provisions hereof effective.

     27.7 If Tenant does not timely exercise its First Offer Right and the Property is transferred to a third party, Tenant will attorn to such third party as Landlord so long as such third party and Landlord notify Tenant in writing of such transfer.

     27.8 Notwithstanding anything to the contrary contained herein, the provisions of this Article 27 shall not apply to or prohibit the following:

     27.8.1 The giving or granting of the First Mortgage;

     27.8.2 Any sale of the Property pursuant to a private power of sale under or judicial foreclosure of the First Mortgage;

     27.8.3 Any transfer of Landlord’s interest in the Property to First Mortgagee in lieu of foreclosure of the First Mortgage; or

     27.8.4 Any Taking.

     27.9 Any prepaid obligations paid to Landlord shall be prorated as of the closing date, and the prorated unapplied balance shall be deducted from the purchase price due to Landlord.

     27.10 The First Offer Right herein granted to Tenant is a continuing right of first offer and shall apply as often as any then holder of any part of the Landlord’s interest hereunder (including, but not limited to, any such holder who or which shall have acquired its interest in a disposition to which the First Offer Right applied but was not exercised) shall make or propose to make a sale, transfer, conveyance or other disposition of all or any part of the Property or any interest therein during the Term.

     27.11 The provisions of this Article 27 shall apply to any sale, transfer, assignment or other disposition of any membership or other interest in Landlord which result in a change of control of Landlord in the same manner as to a transfer of title to the Property.

Article 28. APPRAISAL

     28.1 Whenever Fair Market Value or Fair Rental Value is to be determined by appraisal in accordance with this Lease, the parties shall proceed as follows:

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     28.1.1 Landlord and Tenant shall make good faith efforts to reach agreement as to the Fair Market Value or Fair Rental Value, as the case may be, within the thirty (30) days following the date of the event which gave rise to the need for such determination. Authorized representatives of Landlord and Tenant shall meet at least once during that period. If they reach agreement as to the Fair Market Value or Fair Rental Value, as the case may be, they shall put the same in writing and it shall then be binding on both parties for the purposes for which determined.

     28.1.2 If Landlord and Tenant do not reach agreement as to the Fair Rental Value or Fair Market Value, as the case may be, within the time permitted in Section 28.1.1 above, each party will choose a person with at least ten (10) years experience as a real estate appraiser appraising similar properties who shall be a member in good standing of the American Institute of Real Estate Appraisers (or successor organization or, if no such organization exists, then persons of similar professional qualifications) and given notice of the name and address of such person to the other within thirty (30) days after the period for reaching agreement in Section 28.1.1 has expired. Those two persons shall within fifteen (15) days select a third appraiser who has the minimum qualifications set forth above for the first two appraisers. If either party does not designate an appraiser within the prescribed thirty (30) day period, or if the two appraisers do not select a third appraiser within the prescribed fifteen (15) day period, the second or third appraiser, or both, as the case may be, shall be appointed by the president of the chapter of the American Institute of Real Estate Appraiser in a county where the Property is located (or successor organization, or, if no such organization exists, any judge of a court of general jurisdiction in such county). The three persons (the “Experts”) shall, after initially consulting each other, make a determination of the Fair Rental Value or Fair Market Value, as the case may be, as expeditiously as possible thereafter and in any event within thirty (30) days after the selection of the third Expert. The determination of the experts shall be made as follows:

28.1.2.1 Each Expert will independently determine the Fair Rental Value or Fair Market Value, as the case may be, and then all will meet and simultaneously disclose to the others their respective determinations.

28.1.2.2 If neither the highest nor the lowest determination differs from the middle determination by more than ten percent (10%) of such middle determination, then the Fair Rental Value or Fair Market Value, as the case may be, shall be the average of all three determinations.

28.1.2.3 The Experts shall promptly notify Landlord and Tenant of each of their separate determinations and the resulting Fair Rental Value or Fair Market Value, as the case may be. Judgment upon any appraisal decision rendered in accordance with the procedure may be entered by any Court having jurisdiction thereof. The determination of the Fair Rental Value pursuant to this procedure shall be final, binding and conclusive upon Landlord and Tenant.

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Article 29. TENANT’S PROPERTY

     29.1 The following property whether or not located in or on the Property or Improvements is collectively referred to as “Tenant’s Property;” provided, however, Tenant’s Property shall exclude the Improvements:

     29.1.1 All items of personal property, equipment and fixtures located on the Property, and whether or however attached to the Building, at any time that are necessary, incidental or convenient to the businesses from time to time conducted at the Property, including, without limitation, kitchen equipment and furnishings, work stations, portable or movable partitions, receptionist desks, millwork, credenzas, computer installations (including computers, computer hardware, raised flooring, freestanding supplemental air conditioning or cooling systems therefor), communications systems and equipment, financial services equipment (such as ATM’s), safes, safe doors, bulletin boards, book shelves and file cabinets, but excluding the Improvements;

     29.1.2 All furniture, inventory, machinery, racking, shelving, and other personal property, excluding the Improvements;

     29.1.3 Any personal property, equipment or fixtures which is either not owned by Landlord or Tenant or is on consignment to Tenant, including any personal property owned by Tenant’s subtenants, employees or invitees;

     29.1.4 All signs and other forms of business identification;

     29.1.5 Any other items of personal property whatsoever located on the Property, excluding the Improvements; and

     29.1.6 All proceeds of the foregoing.

          29.2 Tenant’s Property does not constitute a portion of the Property, and, as between Landlord and Tenant, shall at all times during and after the Term be deemed to be the property of Tenant.

     29.3 Tenant shall have the right in its sole and absolute discretion from time to time to install, alter, remove and/or replace such of Tenant’s Property as it shall deem to be useful or desirable in connection with its business in the Property; provided, however, Tenant shall promptly repair, at its sole cost and expense, any damage to the Property caused by any installation, alteration, removal or replacement of any of Tenant’s Property. Tenant further shall have the right to enter into such agreements and assignments with respect to the Tenant’s Property as Tenant in its sole discretion shall deem advisable, including financing and similar arrangements.

     29.4 Landlord shall execute such landlord consents and other agreements as shall be reasonably requested by Tenant in connection with any such agreements and arrangements. Landlord hereby waives each and every right which Landlord now has or may hereafter have

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under Legal Requirements or by the terms of any agreement now in effect or hereafter exercised by Landlord or First Mortgagee to levy or distrain upon any of Tenant’s Property for rent or to claim or assert title to any of Tenant’s Property.

Article 30. MISCELLANEOUS

     30.1 In any case under this Lease which requires that a consent or approval may not be unreasonably withheld, such consent or approval shall be acted on promptly and without unreasonable delay.

     30.2 If any term of this Lease or any application thereof shall be invalid or unenforceable, the remainder of this Lease and any other application of such term shall not be affected thereby. This Lease may be amended, changed, waived, discharged or terminated only by an instrument in writing signed by the then owners of the Landlord and Tenant interests herein and, until the Loan and the Loan Obligations are indefeasibly paid in full, First Mortgagee. This Lease shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto and, until the Loan and the Loan Obligations are indefeasibly paid in full, First Mortgagee. The headings of this Lease are for purposes of reference only and shall not limit or define the meaning hereof. This Lease may be executed in any number of counterparts, each of which is an original, but all of which shall constitute one instrument.

     30.3 This is governed by and shall be construed according to the laws of the state in which the Property is located.

[remainder of page intentionally left blank]

30

SIGNATURE PAGE
TO
LEASE AGREEMENT

     IN WITNESS WHEREOF, the parties hereto have executed this Lease Agreement as of the day and year first above written.

LANDLORD:
LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company
By:
	Eric J. Buss
Its:	Secretary
TENANT:
LTF CLUB OPERATIONS COMPANY, INC., a Minnesota corporation
By:
	Eric J. Buss
Its:	Secretary

Chandassen, MN

EXHIBIT A

Legal Description of Land

Lot 2, Block 1, LIFE TIME FITNESS 2ND ADDITION, according to the recorded plat thereof, Carver County, Minnesota.

Torrens Property-Certificate of Title No. 33647.0

Parcel 2: Non-exclusive easements as contained in the Declaration of Cross Access, Parking, Sanitary Sewer, Storm Water and Water Easements dated February 18, 2008, recorded March 19, 2008, as Document No. 166225.

A-1

EXHIBIT B

Permitted Exceptions

     1. Real estate taxes payable in the year of the closing under the First Offer Right.

     2. Notice of Lis Pendens in Condemnation for Trunk Highway Purposes memorialized on Certificate of Title for purposes of showing existing access control only, dated February 1, 1977, recorded February 9, 1977 as Document No. T24128.

     3. Final Certificate memorialized on the Certificate of Title for purposes of showing existing access control only, dated March 24, 1980, recorded April 21, 1980 as Document No. T31518.

     4. Right of Way in favor of the Public for purposes of showing existing access control only, dated January 14, 2000, recorded January 20, 2000 as Document No. T112494.

     5. Terms and conditions of Arboretum Business Park Development Contract/PUD Agreement dated August 25, 1997, recorded September 12, 1997 as Document No. T98262, as amended by the following:

Addendum “A” to Development Contract/PUD Agreement dated September 22, 1997, recorded February 18, 1998 as Document No. T100332.

Addendum “B” to Development Contract/PUD Agreement dated May 11, 1998, recorded July 8, 1998 as Document No. T102658.

First Amendment to Arboretum Business Park Development Contract/PUD Agreement dated August 20, 2001, recorded December 4, 2001 as Document No. T123316.

Second Amendment to Arboretum Business Park Development Contract/PUD Agreement dated December 10, 2001, recorded September 12, 2003 as Document No. T140561.

Third Amendment to Arboretum Business Park Development Contract/PUD Agreement dated April 14, 2003, recorded December 3, 2003 as Document No. T142928.

Certificate of Compliance granted September 13, 2004 from the City of Chanhassen, a municipal corporation to Chaska Gateway Partners Limited Partnership and recorded November 17, 2004 as Document No. T149708.

     6. Conveyance of the right of access, being the right of ingress to and egress from the land to State Highway No. 5 as contained in Warranty Deed dated July 21, 2000, recorded July 31, 2000 as Document No. T115101.

B-1

     7. Terms and conditions of Arboretum Business Park 4th Addition Development Contract/PUD Agreement dated June 24, 2002, recorded July 22, 2002 as Document No. T128490.

     8. Terms, conditions, covenants, restrictions and easements created pursuant to Declaration of Covenants, Conditions, Restrictions and Easements dated July 8, 2002, recorded July 22, 2002 as Document No. T128493.

     9. Easement for lane dividers and landscaping purposes, together with any incidental rights, in favor of the City of Chanhassen, as contained in the Declaration of Easements, dated November 6, 2004, recorded November 17, 2004 as Document No. 149707.

     10. Easements as shown on the recorded plat of LIFE TIME FITNESS and on the recorded plat of LIFE TIME FITNESS 2ND ADDITION.

     11. Terms and conditions of Life Time Fitness Development Contract/PUD Agreement dated August 9, 2004, recorded December 8, 2004 as Document No. T150097.

     12. Terms and conditions of Site Plan Permit # 04-22 by and between the City of Chanhassen and Life Time Fitness dated August 9, 2004, recorded December 8, 2004 as Document No. T150099.

     13. Terms, conditions, easements, restrictions, covenants and provisions as contained in the Declaration of Cross Access, Parking, Sanitary Sewer, Storm Water and Water Easements dated February 18, 2008, recorded March 19, 2008, as Document No. T166225.

B-2

EX-10.7

Exhibit 10.7

EXECUTION VERSION

LTF REAL ESTATE VRDN I, LLC

Landlord

TO

LTF CLUB OPERATIONS COMPANY, INC.

Tenant

LEASE AGREEMENT

DATED AS OF JUNE      , 2008

Overland Park, Kansas

TABLE OF CONTENTS

ARTICLE 1. REFERENCE DATA; DEFINITIONS	1
ARTICLE 2. DEMISE OF PROPERTY; TERM; EXTENSIONS OF TERM	6
ARTICLE 3. RENT	6
ARTICLE 4. TAXES	8
ARTICLE 5. REPAIRS AND MAINTENANCE	8
ARTICLE 6. INSURANCE	9
ARTICLE 7. UTILITIES	11
ARTICLE 8. ALTERATIONS	11
ARTICLE 9. DAMAGE TO OR DESTRUCTION OF THE IMPROVEMENTS	12
ARTICLE 10. CONDEMNATION	14
ARTICLE 11. DISCHARGE OF LIENS	15
ARTICLE 12. USE OF PROPERTY	15
ARTICLE 13. ENTRY ON PROPERTY BY LANDLORD	16
ARTICLE 14. WAIVER AND INDEMNIFICATION	16
ARTICLE 15. ASSIGNMENT	17
ARTICLE 16. ESTOPPEL CERTIFICATES	19
ARTICLE 17. EVENTS OF DEFAULT; TERMINATION	19
ARTICLE 18. SURRENDER OF THE PROPERTY	22
ARTICLE 19. NO MERGER OF TITLE	22

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ARTICLE 20. QUIET ENJOYMENT	22
ARTICLE 21. PERFORMANCE FOR TENANT	23
ARTICLE 22. NOTICES	23
ARTICLE 23. CONTESTS	24
ARTICLE 24. NO WARRANTIES/“AS IS”	24
ARTICLE 25. TENANT’S RIGHT TO CURE LANDLORD’S DEFAULT UNDER FIRST MORTGAGE	25
ARTICLE 26. SUBORDINATION AND NON-DISTURBANCE	25
ARTICLE 27. FIRST OFFER RIGHT	25
ARTICLE 28. APPRAISAL	28
ARTICLE 29. TENANT’S PROPERTY	29
ARTICLE 30. MISCELLANEOUS	30

EXHIBIT A — Legal Description of Land
EXHIBIT B — Permitted Exceptions

ii

LEASE AGREEMENT

DATED AS OF JUNE      , 2008

from

LTF REAL ESTATE VRDN I, LLC

to

LTF CLUB OPERATIONS COMPANY, INC.

Article 1. REFERENCE DATA; DEFINITIONS

1.1	LANDLORD:	LTF REAL ESTATE VRDN I, LLC
	ADDRESS	2902 Corporate Place
	OF LANDLORD:	Chanhassen, Minnesota 55317
	TENANT:	LTF CLUB OPERATIONS COMPANY, INC.
	ADDRESS	2902 Corporate Place
	OF TENANT:	Chanhassen, Minnesota 55317

     1.2 Each reference in this Lease to any of the titles contained in Section 1.1 shall be construed to incorporate the data stated under that title.

     1.3 The following terms shall have the meanings set forth in this Section:

     Adjusted Basic Rent. A monthly rental amount equal to the amount necessary to amortize the outstanding principal amount of the Loan Obligations as of the Adjustment Date over the remaining term of the Notes at a finance rate factor based on an interest rate per annum equal to the sum of: (a) the “10-Year Interest Swap Rate” as published on the Federal Reserve Statistical Release H.15(519) on the day that is two business days prior to the Adjustment Date, and (b) 2.75%; provided, however, that if the First Mortgage has not been foreclosed by the First Mortgagee, Adjusted Basic Rent due on June 1, 2023 shall equal the outstanding Loan Obligations, including the interest thereon, and all other amounts payable under the Reimbursement Agreement and the other Loan Documents.

     Adjustment Date. As defined in Section 3.2.

     Alteration. Any demolition, alteration, installation, removal, improvement or expansion of or to the Property or any portion thereof, including, without limitation, any Remodeling.

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     Basic Rent. The Basic Rent provided for in Section 3.2 of this Lease.

     Commencement Date. The date of this Lease.

     Contests. As defined in Section 23.1.

     Credit Issuer. General Electric Capital Corporation, and its successors and assigns.

     Environmental Activity. Any actual, suspected or threatened abatement, cleanup, disposal, generation, handling, manufacture, possession, release, remediation, removal, storage, transportation, treatment or use of any Hazardous Material, or the actual, suspected or threatened presence of any Hazardous Material, or the actual, suspected or threatened noncompliance with any Environmental Laws.

     Environmental Laws. All Legal Requirements pertaining to health, safety, protection of the environment, natural resources, conservation, wildlife, waste management, Environmental Activities and pollution.

     Event of Default. As defined in Section 17.1.

     Fair Market Value. The cash price which would be obtained for the Property in an arm’s length transaction between a willing buyer and a willing seller under no compulsion to buy or sell.

     Fair Rental Value. The annual base rent which would be obtained for the Property in an arm’s length transaction between a willing landlord and a willing tenant under no compulsion to lease.

     First Mortgage. Any first mortgage or deed of trust (together with the notes secured thereby and security instruments collateral thereto) of record now or hereafter placed against the Property by Landlord, any increase, amendment, extension, refinancing or recasting of a First Mortgage, and any provision of any other loan document which is secured by a First Mortgage. For the purposes hereof, a First Mortgage shall be deemed to continue in effect after foreclosure thereof and during any period of redemption therefrom.

     First Mortgagee. The holder from time to time of the First Mortgage, if any.

     First Offer Right. Tenant’s first offer right with respect to the Property granted pursuant to Article 27.

     Governmental Authorities. All federal, state, county, municipal and local governments, and all departments, commissions, boards, bureaus and officers thereof, having or claiming jurisdiction over the Property or Tenant’s use thereof.

     Guarantor. Life Time Fitness, Inc., and its successors and assigns.

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     Guaranty. That certain Lease Guaranty and Negative Pledge Agreement dated as of June 1, 2008 executed by Guarantor for the benefit of Landlord.

     Hazardous Materials. Any by-product, chemical, compound, contaminant, pollutant, product, substance, waste or other material (a) that is hazardous or toxic, or (b) the abatement, cleanup, discharge, disposal, emission, exposure to, generation, handling, manufacture, possession, presence, release, removal, remediation, storage, transportation, treatment or use of which is controlled, prohibited or regulated by any Environmental Laws, including asbestos, petroleum and petroleum products and polychlorinated biphenyls.

     Improvements. All buildings, structures, improvements, parking areas, landscaping and fixtures erected or located on or attached to the Land (excluding any trade fixtures and fixtures used in the operation of the businesses from time to time conducted on the Property); all heating, air conditioning, manufacturing and incinerating apparatus and equipment; all boilers, engines, motors, dynamos, generating equipment, piping and plumbing fixtures, water heaters, walk-in refrigerators and freezers, cooling (other than freestanding fans and supplemental cooling equipment), ventilating, sprinkling and vacuum cleaning systems, fire extinguishing apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding, elevators, escalators, mantels, built-in mirrors, window shades, blinds, draperies, screens, storm sash, awnings, and outdoor shrubbery and plants located on the Land; and all alterations and additions thereto and replacement thereof, including by reason of Restoration. The Improvements shall be and remain the property of Landlord, subject to this Lease.

     Indenture. The Indenture of Trust dated as of the date hereof between Landlord and Trustee, as amended from time to time.

     Land. The land, but not any Improvements thereto, legally described on Exhibit A.

     Lease. This Lease Agreement, including the following exhibits attached hereto and hereby made a part hereof:

Exhibit A — Legal Description of the Land
Exhibit B — Permitted Exceptions

     Legal Requirements. All laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, directions and requirements of all Governmental Authorities which now or at any time hereafter may be applicable to or required in connection with the Property or any part thereof, or any use or condition of the Property or any part thereof.

     Life Time. Life Time Fitness, Inc.

     Life Time Affiliate. Life Time and all Life Time Subsidiaries which are consolidated with Life Time for financial reporting purposes under generally accepted accounting principles.

     Life Time Subsidiary. With respect to Life Time, any corporation, partnership, joint venture, limited liability company, association or other entity, the management of which is,

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directly or indirectly, controlled by, or of which an aggregate of more than 50% of the outstanding voting stock or other equity interests is, at the time, owned or controlled directly or indirectly by, Life Time or one or more Life Time Subsidiaries.

     Loan. That certain financing consisting of the loans evidenced by the Notes, together with Landlord’s obligations to reimburse Credit Issuer for any and all payments made by Credit Issuer under the Letter of Credit (as defined and described in the Indenture) as set forth and described in the Reimbursement Agreement.

     Loan Obligations. Collectively, but without duplication, the following: (a) “Obligations” as defined in the Reimbursement Agreement; (b) all Credit Enhancement Fees (as defined in the Reimbursement Agreement) and drawing fees due and owing to Credit Issuer under the Reimbursement Agreement; (c) all remarketing fees due and owing to Remarketing Agent; (d) all fees due and owing to Trustee; (e) all fees due and owing to any Rating Agency (as defined in the Indenture) required to maintain the rating on the Notes; and (f) all other fees, expenses, costs and reimbursement obligations payable by Landlord in connection with the Loan.

     Notes. Landlord’s $34,235,000 Variable Rate Demand Notes Series 2008, issued under the Indenture.

     Other Lease. That certain Lease Agreement of even date between Landlord, as landlord, and Tenant, as tenant, relating to the lease of certain improved real property owned by Landlord and commonly known as 6800 West 138^th Street, Overland Park, Kansas.

     Permitted Exceptions. The liens, documents and other matters listed on Exhibit B.

     Post-Default Rate. The sum of (a) 3.00% and (b) the annual prime rate of interest announced from time to time in The Wall Street Journal, Eastern Edition.

     Property. The Land and the Improvements, collectively.

     Reimbursement Agreement. The Reimbursement Agreement dated as of June 1, 2008 among Landlord, GE Government Finance, Inc., and Credit Issuer, as amended from time to time.

     Remarketing Agent. Dougherty & Company LLC, or any other successor remarketing agent under the Remarketing Agreement.

     Remarketing Agreement. The Remarketing Agreement dated as of the date hereof between Landlord and Remarketing Agent.

     Remodeling. Remodeling, refurbishing, expansion, demolition and other improvement work performed by or on behalf of Tenant to the interior or exterior of the Property including without limitation the replacement of floor coverings or wall coverings, constructing, renovating or reconfiguring locker rooms, workout areas, and office, retail or

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other spaces of the Property, upgrading mechanical systems including but not limited to electrical, plumbing and HVAC systems, and constructing, modifying or otherwise installing improvements customarily found in other properties owned or leased by any affiliate of Life Time Fitness, Inc. that does not: (a) reduce the interior square footage of the Improvements by more than 5% in the aggregate; (b) affect the structural elements of any of the Improvements; (c) demonstrably lessen the Fair Market Value or the Fair Rental Value of the Property (taken together as an integrated whole); or (d) cost more than the applicable Threshold Amount to complete.

     Rent. Collectively, Basic Rent and all other sums owing from Tenant to Landlord pursuant to this Lease.

     Restore or Restoration. The repair, restoration or rebuilding of the Property or any part thereof following any Taking, damage to or destruction of the same by fire or other casualty or cause as nearly as possible to its size, type and character immediately prior to such Taking, damage or destruction, in accordance with all Legal Requirements, with such Alterations as may be determined by Tenant, together with any temporary repairs and property protection pending completion of the work.

     Set-Off. As defined in Section 3.4.

     Supervised Alteration. Any Alteration that is not Remodeling.

     Taking. A taking of all or any part of the Property, or any interest therein or right accruing thereto, including, without limitation, any right of access thereto existing on the date of this Lease, as the result of or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain. The Taking shall be deemed to occur on the date on which the condemning authority takes possession.

     Taxes. All real estate taxes and special assessments levied against or imposed on the Property.

     Tenant’s Property. As defined in Section 29.1.

     Term. The term of this Lease as provided in Article 2, including without limitation extensions of the initial term pursuant to Section 2.2.

     Threshold Amount. During the period from the Commencement Date through and July 31, 2013, inclusive, the sum of $3,000,000 (in the aggregate for the Property); during the period from August 1, 2013 through July 31, 2018, inclusive, the sum of $4,000,000 (in the aggregate for the Property); and, during the period from August 1, 2018 through July 31, 2023, inclusive, the sum of $5,000,000 (in the aggregate for the Property). During the first Extended Term, the Threshold Amount is $6,000,000 (in the aggregate for the Property), increasing by $1,000,000 on the first day of each subsequent Extended Term.

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     Trustee. Manufacturers and Traders Trust Company, or any successor trustee under the Indenture.

     Unavoidable Delays. Acts of God, casualties, war, civil commotion, embargo, riots, strikes, unavailability of materials (but not unavailability of funds) and any other events which are not within the reasonable control of the party in question to prevent, control or correct.

Article 2. DEMISE OF PROPERTY; TERM; EXTENSIONS OF TERM

     2.1 Landlord, for and in consideration of the rents hereinafter reserved and the covenants and agreements hereinafter contained on the part of Tenant to be paid, kept and performed, does hereby demise and lease to Tenant, and Tenant does hereby take and lease from Landlord, upon and subject to the terms and conditions of this Lease, the Property for an initial term commencing on the Commencement Date and ending on July 31, 2023.

     2.2 Tenant shall have the right, subject to the provisions hereinafter provided, to renew the Term for two (2) periods of five (5) years each (each, an “Extended Term”), such periods to commence at the expiration of the initial Term or the first Extended Term, as applicable. The Extended Terms shall be upon the same terms, covenants and conditions as provided in this Lease; provided, however, the annual Basic Rent for such Extended Terms shall be ninety-five percent (95%) of the Fair Rental Value anticipated to be in effect on the commencement of the applicable Extended Term.

     2.3 Tenant may exercise each of its options to extend the Term by giving written notice thereof to Landlord on or before the date occurring twelve (12) months prior to the expiration of the initial Term or preceding Extended Term, as the case may be. If Tenant fails to give such notice within the time permitted, Tenant shall have waived its right to extend the Term.

     2.4 The exercise of an extension option as herein provided shall operate as an extension of the Term, so that this Lease and each and every covenant, agreement and provision thereof shall be and remain in full force and effect during the Term as extended and with the same force and effect as if the Term were originally for such extended period.

Article 3. RENT

     3.1 Tenant covenants and agrees to pay to Landlord, without demand, setoff or abatement except as provided in this Lease, the Basic Rent set forth in Section 3.2.

     3.2 For as long as the Loan or any Loan Obligation is outstanding, Basic Rent for each month in the Term is an amount equal to fifty-one percent (51%) of the Loan Obligations (which amount shall increase to 100% if the Other Lease expires or terminates for any reason, whether voluntarily or involuntarily, or to the extent Tenant fails to pay any Basic Rent (as defined in the Other Lease) thereunder) which becomes due and payable since the last date on which Basic Rent was due hereunder; provided, however, on the date the entire outstanding principal balance of the Loan becomes due and payable in full by Landlord as a result of the

6

occurrence of an “Event of Default” (as such term is defined in the Reimbursement Agreement) (the “Adjustment Date”), Basic Rent will automatically adjust to an amount equal to the greater of (a) 100% of the Fair Rental Value (determined as of the date of the adjustment) or (b) the product of (i) 51% (or if the Other Lease expires or is terminated for any reason, or to the extent Tenant fails to pay any Basic Rent (as defined in the Other Lease) thereunder, 100%) and (ii) the Adjusted Basic Rent. Upon the indefeasible payment of the Loan and all Loan Obligations in full, Basic Rent will automatically adjust to an amount equal to 95% of the Fair Rental Value (determined as of the date of the adjustment) and remain at that amount for the remainder of the Term.

     3.3 Tenant shall pay installments of Basic Rent to Landlord on the dates and at the times that the Loan Obligations are due and owing, at the address of Landlord, or to such other address as Landlord may direct by notice to Tenant. Upon the indefeasible payment of the Loan and Loan Obligations in full, and the adjustment of Basic Rent as set forth in Section 3.2, Landlord may elect by delivering written notice thereof to Tenant at any time thereafter, to require Tenant to pay installments of Basic Rent in advance on the first day of each month during the remainder of the Term. Additionally, if Basic Rent is ever adjusted to Adjusted Basic Rent as provided in Section 3.2 above, then such Basic Rent shall be due and payable on the first day of each calendar month commencing with the first full calendar month after the Adjustment Date and continuing on the first day of each calendar month thereafter.

     3.4 This is a net lease and all monetary obligations shall be paid without notice or demand and without set-off, counterclaim, recoupment, abatement, suspension, deferment, diminution, deduction, reduction or defense (collectively, a “Set-Off”). This Lease and the rights of Landlord and the obligations of Tenant under this Lease shall not be affected by any event or for any reason or cause whatsoever foreseen or unforeseen. The obligations of Tenant under this Lease shall be separate and independent covenants and agreements, all monetary obligations shall continue to be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and the obligations of Tenant under this Lease shall continue unaffected. All Rent payable by Tenant hereunder shall constitute “rent” for all purposes (including Section 502(b)(6) of the Federal Bankruptcy Code).

     3.5 If any Rent or other amount due hereunder is not paid when due, whether at the end of the Term or otherwise, then and in such event, Tenant shall pay or shall cause to be paid interest thereon from and after the date on which such payment first becomes due (regardless of whether an Event of Default has occurred) at the Post-Default Rate, and such interest shall be due and payable, on demand, at such rate until the entire amount due is paid, whether or not any action shall have been taken or proceeding commenced to recover the same. Nothing contained in this Section 3.5 shall in any way extend the time for the payment of any amounts payable hereunder.

     3.6 In the event Tenant fails to pay any amounts due and payable under this Lease when due, Landlord may, at its option, whether immediately or at the time of final payment of such amounts, impose a late charge on Tenant equal to five percent of the amount of each and every such past due payment notwithstanding the date on which such payment is actually paid to Landlord. Any late charge imposed by Landlord in accordance with this Section 3.6 shall be due

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and payable on demand and shall be in addition to any interest due hereunder at the Post-Default Rate, and to the exercise by Landlord of its rights and remedies hereunder following an Event of Default.

Article 4. TAXES

     4.1 Subject to Section 4.2, Tenant shall pay, or cause to be paid, all Taxes on the Property before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof; provided, however, that:

     4.1.1 If, by law, any Tax may, at the option of the taxpayer or party obligated, be paid in installments, Tenant may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Tax) in installments and, in such event, subject to the provisions of subsection 4.1.2 hereof, shall pay only such installments as may become due during the Term as the same respectively become due in the ordinary course and before any fine, penalty, further interest or cost may be added thereto; and

     4.1.2 Any Tax due and payable, including any installments thereof, in the year of commencement or in the final year of the Term shall be prorated between Landlord and Tenant as of the commencement or the expiration of the Term, as the case may be.

     4.2 Upon termination of any Contest brought by Tenant pursuant to Article 23 with respect to the amount or validity of any Tax, or if Tenant shall so elect, at any time prior thereto, Tenant shall pay the amount of such Tax or part thereof as finally determined in such proceeding.

     4.3 If, pursuant to the terms of any First Mortgage, Landlord is obligated to make deposits with First Mortgagee of amounts to pay Taxes and any other impositions, then upon notice delivered to Tenant by Landlord or First Mortgagee, Tenant shall commence to deposit such amounts with First Mortgagee, and such deposits, when and to the extent made, will be in satisfaction of Tenant’s obligations pursuant to this Article 4 to provide for payment of Taxes to the extent of the amount of deposits available therefor.

Article 5. REPAIRS AND MAINTENANCE

     5.1 Throughout the Term, Tenant, at its sole cost and expense, shall take good care of the Property, all appurtenances of the Property, all alleyways and passageways and all sidewalks, curbs and vaults adjoining the Property, and shall at all times keep the same in a good order and condition, ordinary wear excepted, and make all necessary repairs thereto, interior and exterior, structural and non-structural, ordinary and extraordinary and foreseen and unforeseen.

     5.2 The term “repairs” as used in this Lease shall include, but not be limited to, all necessary or appropriate replacements. The necessity for and adequacy of the repairs to the Property made or required to be made pursuant to Section 5.1 shall be measured by the requirements of buildings of similar construction and age containing similar facilities which are

8

prudently managed and operated with due regard for both short term and long term considerations.

     5.3 All repairs by Tenant shall be effected with all due diligence and in a workmanlike manner in compliance with all Legal Requirements and shall be promptly and fully paid for by Tenant.

Article 6. INSURANCE

     6.1 Tenant, at its expense, shall procure and maintain or cause to be procured and maintained during the Term:

     6.1.1 Insurance with respect to the Property against loss or damage by fire, lightning, windstorm, tornado, hail and such other casualty as is customarily covered by extended coverage and “all risk” endorsements and such other risks as Landlord may from time to time reasonably require, in each case in the full replacement value of the Property. The term “full replacement value” as used in this Section and in other Sections of this Article 6 shall mean 100% of the actual replacement cost including the cost of all debris removal, exclusive, however, of costs of excavations, foundations and footings below the lowest floor. Whenever appropriate, while any Alterations are in the course of being made, the aforesaid fire and extended coverage insurance shall be carried by Tenant in builder’s risk form written on a completed value basis. Such insurance shall name Landlord, Tenant and, if required by the First Mortgagee or Landlord, the First Mortgagee, as insureds, as their interest may appear;

     6.1.2 Commercial general public liability insurance against claims for bodily injury, death or property damage, occurring on, in or about the Property in a combined single limit of not less than Two Million Dollars ($2,000,000), naming Landlord and the First Mortgagee as additional insureds;

     6.1.3 If requested by Landlord at any time, boiler and pressure vessel and miscellaneous equipment insurance, including pressure pipes, air conditioning systems, electric motors, air tanks, compressors and pumps, in such amounts as Landlord may reasonably require;

     6.1.4 If the Property is at any time determined to be in a flood hazard area, flood insurance;

     6.1.5 During the entire period of making of any Alterations, (a) owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above-mentioned comprehensive general public liability insurance policy, and (b) adequate Worker’s Compensation Insurance covering all persons employed on or in connection with such Alterations; and

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     6.2 All insurance policies provided for in this Article 6 shall:

     6.2.1 be valid and enforceable policies, in such forms and, where not expressly provided for above, in such amounts, as may from time to time be reasonably satisfactory to Landlord and the First Mortgagee, issued by financially sound and responsible insurance companies authorized to do business in the jurisdiction where the Property is located, reasonably satisfactory to Landlord;

     6.2.2 except for worker’s compensation insurance, name Landlord, Tenant and, if required by the First Mortgage, the First Mortgagee as loss payee and as an additional insured as their respective interests may appear;

     6.2.3 provide that such policies shall not be changed or cancelled without at least thirty (30) days’ prior written notice to Landlord;

     6.2.4 provide that losses shall be adjusted with the insurers and/or underwriters by the Landlord and Tenant; and

     6.2.5 provide that, except in the case of public liability and worker’s compensation insurance, all insurance proceeds shall be payable to Landlord and Tenant, as their respective interests may appear.

     6.3 On or before the Commencement Date, and thereafter prior to the expiration dates of the expiring policies theretofore furnished pursuant to this Article 6, copies of the policies (or, in the case of liability insurance, certificates of the insurers) shall be delivered by Tenant to Landlord.

     6.4 If Tenant is delayed in receiving any insurance proceeds as a result of Landlord’s unreasonable failure or refusal to approve an insurance adjustment, such delay shall be taken into account in determining whether Tenant has fulfilled its obligations under Article 9 hereof with reasonable diligence. All costs and expenses of collecting or recovering any insurance proceeds under such policies shall be paid by Tenant.

     6.6 Notwithstanding anything to the contrary in this Article 6, proceeds of any insurance carried by Tenant on Tenant’s Property or any other property of Tenant shall be payable directly to Tenant, and Tenant shall have the exclusive right to adjust and settle losses with respect thereto.

     6.7 Notwithstanding anything to the contrary in this Article 6, Tenant shall maintain all insurance required by any First Mortgage and shall otherwise comply with the insurance requirements of any First Mortgage for so long as any such First Mortgage is outstanding.

Article 7. UTILITIES

     During the Term, Tenant shall pay all charges for water, sewer, electricity, heating, air conditioning and all other utilities with respect to the Property.

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Article 8. ALTERATIONS

     8.1 General. Tenant, at its sole cost and expense, shall have the right from time to time during the Term to perform Alterations, subject in all cases to the further provisions of this Article 8 and to all other applicable provisions of this Lease.

     8.2 Consent Required. Tenant may not make any Supervised Alteration to the Property without obtaining Landlord’s prior written consent, which consent may not be unreasonably withheld or delayed.

     8.3 Plans and Specifications, etc. All Supervised Alterations shall be made (a) under the supervision of an architect or engineer selected by Tenant and approved by Landlord (which approval may not be unreasonably withheld); (b) in accordance with detailed plans and specifications prepared by such architect or engineer; and (c) pursuant to a contract therefor approved by Landlord between Tenant and a general contractor engaged by Tenant which incorporates such plans and specifications. Copies of all such plans and specifications shall be delivered by Tenant to Landlord, and shall be subject to Landlord’s prior approval.

     8.4 Other Requirements. No Alteration shall be made except in compliance with, and Tenant hereby covenants that it will comply with, each of the following provisions:

     8.4.1 All Alterations shall be made with reasonable diligence and dispatch (subject to Unavoidable Delays) in a first class manner and with first class materials and workmanship.

     8.4.2 Before any Alteration has begun, Tenant shall procure, at its expense, all necessary licenses, permits, approvals and authorizations from all Governmental Authorities for such Alteration and shall, on demand, deliver photocopies thereof to Landlord. Upon Tenant’s request, Landlord shall join in the application for such licenses, permits, approvals and authorizations whenever such action is necessary, and Tenant covenants that Landlord will not suffer, sustain or incur any cost, expense or liability by reason thereof.

     8.4.3 All Alterations shall be made and completed in accordance with all governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of governmental authorities (including Environmental Laws) affecting either Tenant or the Property or any portion of or the construction, ownership, use, alteration or operation of, or any portion of any Property (whether now or hereafter enacted and in force), and all permits, licenses and authorizations and regulations relating thereto and insurance requirements under this Lease.

     8.4.4 No Alteration shall create any encroachment upon any street, easement, setback line or open yard requirement or upon any adjacent premises.

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     8.4.5 To the extent that any Alteration materially alters the footprint of any of the Improvements, Tenant shall, on written demand, promptly deliver to Landlord and the First Mortgagee a copy of a final survey of the Property, certified to Landlord and the First Mortgagee, showing the completed Alteration.

     8.4.6 No Alteration shall be made which would in the opinion of the Landlord render title to the Property or any part thereof unmarketable.

     8.4.7 No Alteration shall be performed which would tie in or connect any building or structure on the Property with any other building or structure located outside the boundary lines of the Property without the prior written consent of Landlord.

     8.4.8 All Alterations shall be performed in compliance with any and all restrictive or protective covenants affecting the Property.

     8.4.9 All expenses of Landlord in respect of the First Mortgage incurred by reason of the Alteration in question shall be reimbursed by Tenant, as additional Rent, upon demand.

     8.5 No Request or Consent by Landlord. Nothing contained in this Lease shall constitute any consent or request by Landlord, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Landlord in respect thereof.

     8.6 Notice of Non-Responsibility. Before any Alteration has begun, Landlord shall have the right to post and maintain on the Property and to record in the County Recorder’s office in the County in which the Property is located any notices of non-responsibility provided for under applicable law.

Article 9. DAMAGE TO OR DESTRUCTION OF THE IMPROVEMENTS

     9.1 In case of any damage to or destruction of the Property or any part thereof, Tenant shall give prompt notice thereof to Landlord, and, unless this Lease is amended pursuant to Section 9.4, Tenant shall promptly and with reasonable diligence (subject to Unavoidable Delays), commence and complete Restoration within six months after such damage or destruction, all in accordance with plans and specifications therefor first approved by Landlord, which approval shall not be unreasonably withheld. The replacement building(s) to be constructed shall have an area which is not less than the area of the Improvements being replaced, and shall be of a quality not less than the quality of the Improvements, as the same existed immediately prior to such damage or destruction, and assuming compliance with the maintenance requirements in this Lease.

     9.2 Unless an Event of Default has occurred and is continuing, insurance proceeds received by Landlord in accordance with Section 6.2.5 on account of any damage to or

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destruction of the Property or any part thereof (less the costs, fees and expenses incurred by Tenant in the collection thereof, which shall be paid out of such proceeds) shall be paid to Tenant as Restoration progresses, to pay for the cost of Restoration, upon written request of Tenant accompanied by evidence satisfactory to Landlord that an amount equal to the amount requested is then due and payable or has been paid and is properly a part of such cost and that the net insurance proceeds not yet advanced will be sufficient for the completion of the Restoration. Upon receipt by Landlord of evidence satisfactory to them that Restoration has been completed and the cost thereof paid in full, and that there are no mechanic’s or similar liens for labor or materials supplied in connection therewith, the balance, if any, of such insurance proceeds (and any amount so made available by Landlord) shall be paid to Landlord, without reduction in the Basic Rent. Upon the expiration or sooner termination of this Lease, any insurance proceeds not theretofore applied to the cost of Restoration shall be paid to Landlord.

     9.3 Except as provided in Section 9.4, no destruction of or damage to the Property, or any part thereof, whether such damage or destruction be partial or total or otherwise, shall entitle or permit Tenant to surrender or terminate this Lease or shall relieve Tenant from its liability to pay in full the Basic Rent and other sums and charges payable by Tenant hereunder, or from any of its other obligations under this Lease, and Tenant hereby waives any rights now or hereafter conferred upon it by statute or otherwise to surrender this Lease or quit or surrender the Property or any part thereof, or to receive any suspension, diminution, abatement or reduction of the Basic Rent or other sums and charges payable by Tenant hereunder on account of any such destruction or damage.

     9.4 In case of any damage to or destruction of the Property which occurs during the last two (2) years of the Term in respect of which the cost of Restoration is reasonably estimated to exceed forty percent (40%) of the replacement cost of the Property and/or for which substantial completion of Restoration cannot occur until more than six (6) months following such damage or destruction, as such cost of Restoration and/or date of substantial completion is estimated in good faith by a reputable general contractor promptly selected by Tenant and approved by Landlord, which approval may not be unreasonably withheld or delayed, Tenant may terminate this Lease by giving written notice thereof to Landlord within forty-five (45) days after the date of such damage or destruction. Such termination shall be effective on the date such notice is given. In case of any such termination, Tenant shall not have any obligation to repair or restore the Property, provided however Landlord shall receive insurance proceeds attributable to the Improvements at the Property, including any Alterations.

Article 10. CONDEMNATION

     10.1 In the event of a Taking of the whole or substantially all of the Property, either Tenant or Landlord may terminate this Lease, and if either party elects to terminate the Lease due to such Taking, the Basic Rent and all other sums and charges required to be paid by Tenant hereunder shall be paid to the date of such Taking. In the event of any such Taking and notwithstanding the termination of this Lease, Landlord and Tenant shall together make one claim for an award for their combined interests in the Property and, subject to the requirements of the First Mortgage, the net award received (after deduction of reasonable fees and expenses of

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collection, including, but not limited to, reasonable attorneys’ and experts’ fees) shall be paid as follows and in the following order:

     10.1.1 Tenant shall be entitled to the portion of the award made for the value of its leasehold estate computed as though this Lease had not been terminated, for Tenant’s Property, and for moving expenses; and

     10.1.2 Landlord shall receive the balance of the award.

     10.2 In the event of a Taking of less than substantially all of the Property, this Lease shall continue in full force and effect, and Tenant shall give prompt notice thereof to Landlord and Tenant shall proceed promptly and with reasonable diligence (subject to Unavoidable Delays) to commence and complete Restoration, except to the extent made impossible by any reduction in area caused by such Taking. All awards payable as a result of any Taking shall be distributed as follows and in the following order, provided that there shall first be deducted therefrom all reasonable fees and expenses of collection, including, but not limited to, reasonable attorneys’ and experts’ fees:

     10.2.1 Provided no Event of Default has occurred and is continuing, Landlord shall distribute the proceeds of such award to Tenant for the purpose of Restoration in the manner provided in Section 9.2, and subject to the terms and conditions of such Section; and

     10.2.2 The balance of the award, if any, shall be paid to Landlord.

If the Loan is no longer outstanding and all Loan Obligations have been indefeasibly paid in full, at the time such Taking occurs, Basic Rent shall be reduced by a fair and equitable amount taking into account the proportion by which the Fair Rental Value of the Property has been reduced by the Taking (if at all).

     10.3 As used herein, a Taking of “substantially all of the Property” shall mean a Taking of such portion of the Property that results in the remaining portion of the Property being insufficient to permit the continued operation of Tenant’s business thereon even if restored to an architectural unit under this Lease. Following the indefeasible payment in full of the Loan and all Loan Obligations, any dispute between the parties as to whether any particular Taking constitutes a Taking of all or substantially all, or a Taking of less than substantially all, of the Property shall be determined by arbitration in accordance with the rules of the American Arbitration Association as then in effect and any determination therein shall be final and binding on Landlord and Tenant.

Article 11. DISCHARGE OF LIENS

     Neither Landlord nor Tenant shall create any charge, lien, security interest or encumbrance on the Property, which arises for any reason, including, without limitation, liens or notices of claims of liens of mechanics and materialmen for work or materials contracted to be supplied to the Property by Landlord or Tenant, respectively, subject to Tenant’s rights as set

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forth in Sections 15.4 to create a leasehold mortgage; provided, however, nothing contained in this Lease shall prohibit (a) Landlord from granting any lien pursuant to or permitted under a First Mortgage, or (b) any First Mortgagee from granting or assigning any security interest or other interest in, or any lien or other encumbrance on, the Property. Subject to Tenant’s right to contest set forth in Article 23, Tenant shall remove and discharge any charge, lien, security interest or encumbrance on the Property which arises for any reason, other than pursuant to or permitted under a First Mortgage or by or through a First Mortgagee.

Article 12. USE OF PROPERTY

     12.1 Tenant may occupy and use the Property for any commercial purpose (except for any noxious or manufacturing use) and for any ancillary uses incidental thereto and for no other purpose without the prior written consent of Landlord. Tenant shall not use or occupy or permit any of the Property to be used or occupied, nor do or permit anything to be done in or on any of the Property, in a manner which would or might (a) violate any law or Permitted Exception, (b) make void or voidable or cause any insurer to cancel any insurance required by this Lease, or make it impossible to obtain any such insurance at commercially reasonable rates, (c) cause structural injury to any of the Improvements, (d) reduce the Fair Market Value or the Fair Rental Value of the Property, or (e) constitute a public or private nuisance or waste.

     12.2 Tenant shall not suffer any act to be done or any condition to exist on the Property or any part thereof which may, in law, constitute a nuisance, public or private.

     12.3 Tenant shall not permit any Environmental Activity on, about or under the Property other than the use, storage and disposal of the minimum quantities of Hazardous Materials in the ordinary course of business at the Property and in compliance with all Environmental Laws. Tenant shall promptly, properly and completely remediate the effect of any Environmental Activity in violation of this Section 12.3. Tenant will notify Landlord immediately upon Tenant becoming aware of (a) any actual, suspected or threatened violation of Environmental Laws with respect to the Property or with respect to any property in the vicinity of the Property, and (b) any Environmental Activity with respect to the Property or with respect to any property in the vicinity of the Property. Tenant promptly will deliver to Landlord copies of all documents delivered to or received by Tenant regarding the matters set forth in this Section 12.3, including notices of any legal proceedings or investigations concerning any Environmental Activity or concerning Landlord’s or Tenant’s status as potentially responsible party (as defined in the Environmental Laws). Tenant’s notification to Landlord in accordance with the provisions of this Section 12.3 will not be deemed to excuse any default under this Lease resulting from the Environmental Activity or the violation of Environmental Laws that is the subject of the notice.

Article 13. ENTRY ON PROPERTY BY LANDLORD

     Upon reasonable prior written notice (except in the case of an emergency, or following the occurrence of an Event of Default), Tenant shall permit each of Landlord and First Mortgagee, and their respective contractors, consultants, representatives and designees to enter the Property at all reasonable times for the purpose of (a) inspecting and testing the same and assuring compliance with all provisions of this Lease, (b) exercising its rights pursuant and

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subject to this Lease, and (c) showing the same to prospective purchasers, mortgagees and tenants (during the last six (6) months of the Term only with respect to prospective tenants, unless an Event of Default exists).

Article 14. WAIVER AND INDEMNIFICATION

     14.1 Notwithstanding anything to the contrary in this Lease, Landlord and Tenant hereby release one another and their respective partners, officers and employees from any and all liability (to the other or anyone claiming through or under them by way of subrogation or other otherwise) for any loss or damage to the extent of the amount of proceeds that have been received under the insurance described in Subsections 6.1.1 with respect to such loss or damage, even if such loss or damage shall have been caused by the fault or negligence of the other party, or anyone for whom such party may be responsible.

     14.2 Landlord shall not be responsible or liable to Tenant for any loss or damage to Tenant’s Property arising from (a) the acts or omissions of persons other than Landlord occupying premises adjacent to the Property, or transacting any business in the area of the Property, or (b) burst, stopped or leaking water, gas or sewer pipes or any failure of, or defect in, any electric line, circuit or facility, or (c) any condition of the Property.

     14.3 Each party hereto shall defend, indemnify and hold the other harmless from and against all liabilities, obligations, claims, demands, costs, charges, judgments and expenses, including, but not limited to, reasonable attorneys’ fees, which may be imposed upon or incurred or paid by or asserted against such other party to the extent arising by reason of or in connection with any negligence or willful misconduct on the part of such party or any of its agents, contractors, servants, employees, licensees or invitees and accruing or occurring during the Term.

     14.4 Without limitation to Tenant’s obligations under Section 14.3, Tenant shall defend with counsel approved by Landlord, indemnify and save Landlord harmless from and against all liabilities, obligations, damages, fines, penalties, claims, demands, costs, charges, judgments and expenses, including, but not limited to, reasonable architects’ and attorneys’ fees, which may be imposed upon or incurred or paid by or asserted against Landlord, the Property or any interest therein by reason of or in connection with any of the following accruing or occurring during the Term, or arising from events occurring during the Term:

     14.4.1 Any Alterations and anything done in, on or about the Property or any part thereof in connection therewith;

     14.4.2 The use, non-use, possession, occupation, condition, operation, maintenance or management of the Property;

     14.4.3 Any acts, omissions or negligence on the part of Tenant or any of its agents, sublessee, customers, contractors, servants, employees, licensees or invitees;

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     14.4.4 Any accident, injury, death or damage to any person or property occurring in or on the Property;

     14.4.5 Any Environmental Activity occurring during the Term on, about, to or from the Property or any part thereof; and

     14.4.6 Any failure of Tenant to perform its obligations under, or to comply with any term of, this Lease.

Nothing contained in this Section 14.4 shall be deemed to require Tenant to indemnify Landlord with respect to the gross negligence or willful misconduct of Landlord or its officers, employees, agents or contractors, or to any extent prohibited by law.

     14.5. In addition to the indemnity obligations set forth in Sections 14.3 and 14.4, Tenant shall defend with counsel approved by First Mortgagee, indemnify and save First Mortgagee harmless from and against all liabilities, obligations, damages, fines, penalties, claims, demands, costs, charges, judgments and expenses, including, but not limited to reasonable architects’ and attorneys’ fees, which may be imposed upon or incurred or paid by or asserted against First Mortgagee by reason of or in connection with any of the matters described in subsections 14.4.1 through 14.4.6 above. However, nothing contained in this Section 14.5 shall be deemed to require Tenant to indemnify First Mortgagee with respect to the gross negligence or willful misconduct of First Mortgagee or its officers, employees, agents or contractors, or to any extent prohibited by law.

     14.6 The provisions of this Article 14 shall survive the expiration or sooner termination of this Lease and the purchase of the Property pursuant to the First Offer Right.

Article 15. ASSIGNMENT

     15.1 Tenant’s interest in this Lease, the Property or any part thereof, may not be assigned or otherwise transferred without Landlord’s prior written consent, which consent shall not be unreasonably withheld. Notwithstanding anything contained herein to the contrary, Tenant may, without the necessity of the consent of Landlord, at any time assign or otherwise transfer this Lease or any portion thereof to any Life Time Affiliate.

     15.2 No consent by Landlord pursuant to this Article 15 shall waive the requirement to obtain consent in any subsequent instance. If Tenant assigns all its rights and interest under this Lease, the assignee under such assignment shall expressly assume all the obligations of Tenant hereunder which may arise on or after the date of such assignment, by a written instrument delivered to Landlord at the time of such assignment. No assignment or sublease shall affect or reduce any of the obligations of Tenant hereunder, and all such obligations shall continue in full force and effect as obligations of a principal and not as obligations of a guarantor, as if no assignment or sublease had been made. No assignment or sublease shall impose any additional obligations on Landlord under this Lease.

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     15.3 Tenant may enter into, amend, terminate or modify from time to time subleases or licenses demising up to 10% of the rentable area of the Improvements on terms acceptable to Tenant in its sole discretion. Each such sublease or license shall be subject and subordinate to the provisions of this Lease. As security for performance of its obligations under this Lease, Tenant hereby grants, conveys and assigns to Landlord all right, title and interest of Tenant in and to all subleases and licenses hereafter entered into for any or all of the Property, any and all extensions, modifications and renewals thereof and all rents, issues and profits therefrom. Landlord hereby grants to Tenant a license to collect and enjoy all rents and other sums of money payable under any sublease of any of the Property, provided, however, that Landlord shall have the absolute right at any time while an uncured Event of Default exists upon notice to Tenant and any subtenants to revoke said license and to collect such rents and sums of money and to retain the same.

     15.4 Tenant is hereby given the right by Landlord to mortgage its leasehold estate created under this Lease, under one or more leasehold mortgage(s) upon the conditions that (a) all rights acquired under such leasehold mortgage(s) shall be subject and subordinate to each and all of the covenants, conditions and restrictions set forth in this Lease and to all rights and interests of the Landlord in and to the Property and this Lease, none of which covenants, conditions, restrictions, rights or interests is or shall be waived by Landlord by reason of the right given to Tenant in this Section 15.4 to mortgage Tenant’s leasehold estate created under this Lease, and (b) such leasehold mortgagees execute and deliver to Landlord and any First Mortgagee a subordination, non-disturbance and attornment agreement, and any other documents, instruments or agreements reasonably requested by Landlord to evidence such subordination and such other matters as Landlord may reasonably request in connection therewith. Tenant’s rights under this Section 15.4 are subject to the terms and conditions of the First Mortgage.

     15.5 Landlord agrees to accept timely performance by a leasehold mortgagee of Tenant’s obligations under this Lease. In the event of any act or omission by Tenant which would give Landlord the right to damages from Tenant or the right to terminate this Lease pursuant to Article 17, Landlord will not sue for such damages nor exercise any such right to terminate until (a) it shall have given written notice of the act or omission to Tenant and to the leasehold mortgagee, if the name and address of such leasehold mortgagee has been furnished to Landlord, and (b) leasehold mortgagee shall have the right to cure any default by Tenant for the same period after receiving notice of such default from Landlord as Tenant has, plus thirty (30) additional days. In order to exercise this right to cure any default by Tenant, the leasehold mortgagee, its agents or employees, will be entitled to enter upon the Property and take whatever action may be necessary to remedy the act or omission. Landlord shall accept a cure performed within such period by any leasehold mortgagee as though the cure had been done or performed within a timely fashion by Tenant.

Article 16. ESTOPPEL CERTIFICATES

     Each party hereto agrees from time to time, upon not less than ten (10) days’ prior notice from the other, to execute, acknowledge and deliver, without charge, to the other or its designee, a statement in writing, certifying that this Lease is unmodified and in full force and effect (or if

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there have been modifications, identifying the same by the date thereof and specifying the nature thereof), the dates to which the Basic Rent and other sums and charges payable hereunder have been paid, the amount of the Basic Rent, that to its actual knowledge there are no claims against the other hereunder (or if there are any such claims, specifying the same), that to its actual knowledge the other party is not in default and there exists no circumstance which with the giving of notice or lapse of time, or both, would constitute a default (or if such party is aware of any such default or circumstance specifying the same), and such other matters as Landlord, Tenant or the First Mortgagee shall reasonably request.

Article 17. EVENTS OF DEFAULT; TERMINATION

     17.1 If any one or more of the following events (“Events of Default”) shall happen, then and in any such event, Landlord may exercise all rights and remedies permitted by law, including giving notice to Tenant specifying such Event or Events of Default and stating that this Lease and the Term shall expire and terminate on the date specified in such notice, and on such date this Lease shall terminate and Tenant shall remain liable as hereinafter provided:

     17.1.1 Tenant defaults in the payment of any Basic Rent payable under this Lease and Tenant does not cure such default within ten (10) days after such Basic Rent is due;

     17.1.2 Tenant defaults in the payment of any Rent (other than Basic Rent) payable under this Lease, and Tenant does not cure such default within ten (10) days after written notice thereof by First Mortgagee or Landlord to Tenant;

     17.1.3 Tenant shall fail duly to observe or perform any of the other terms, conditions, covenants or agreements required to be observed or performed by it under this Lease and such failure shall continue for a period of thirty (30) calendar days following written notice of such failure by Landlord or First Mortgagee to Tenant, or, if the default is of a nature which cannot with due diligence be cured within such period of thirty (30) days and (a) if the Loan and all Loan Obligations have not been indefeasibly paid in full, Tenant fails to correct the default within the period of any extension granted by GECC; or (b) where the Loan and all Loan Obligations have been indefeasibly paid in full, Tenant fails to proceed with due diligence within such period of thirty (30) days to commence to cure the same and thereafter to prosecute the curing of such default with due diligence, or fails to complete such cure within one hundred eighty (180) days after such notice from Landlord or First Mortgagee;

     17.1.4 Guarantor repudiates, refuses, purports to revoke, or fails to perform its obligations under the Guaranty, and fails to cure the same within 10 business days after written demand by Landlord or First Mortgagee, it being agreed that Guarantor’s performance under protest or with a reservation of rights may not be construed as a repudiation or refusal to perform;

     17.1.5 either Tenant or Guarantor becomes insolvent, or admits in writing its inability to pay its debts as they mature, or makes an assignment for the benefit of creditors; or Tenant or Guarantor applies for or consents to the appointment of any

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receiver, trustee or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer is appointed without the application or consent of Tenant or Guarantor; or Tenant or Guarantor institutes (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding is instituted (by petition, application or otherwise) against Tenant or Guarantor, or any judgment, writ, warrant of attachment or execution or similar process is issued or levied against a substantial party of the property of either Tenant or Guarantor;

     17.1.6 Tenant vacates or abandons the Property (temporary closures for environmental remediation or for Remodeling or repair in accordance with this Lease for a period not to exceed six months will not be deemed to be a vacation or abandonment of the Property);

     17.1.7 any representation or warranty made by Guarantor in the Guaranty or in any other document executed in connection therewith was untrue in any material respect when made;

     17.1.8 until the Loan and all Loan Obligations are indefeasibly paid in full, ownership of Tenant changes other than transfers in ownership to (a) a Life Time Affiliate, or (b) any Qualified Equityholder (as such term is defined in and made applicable to Tenant in the Reimbursement Agreement);

     17.1.9 an “Event of Default” (as defined in the Other Lease) occurs; or

     17.1.10 Tenant subleases the Property or assigns this Lease in violation of Article 15 of this Lease, and such failure is not cured within 10 business days after Landlord’s written notice thereof.

     17.2 If this Lease shall have been terminated pursuant to Section 17.1, Landlord may enter upon and repossess the Property (said repossession being hereinafter referred to as “Repossession”) by summary proceedings or ejectment, and may remove Tenant and all other persons therefrom.

     17.3 From time to time after the Repossession of the Property, Landlord may relet the Property for the account of Tenant (unless Landlord has elected to collect liquidated damages pursuant to Section 17.5 below) in the name of Landlord or otherwise, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the Term) and on such terms and for such uses as Landlord may in its reasonable business judgment determine, and may collect and receive the rent therefor. Landlord shall not be responsible or liable for any failure to collect any rent due upon any such reletting. Landlord shall act reasonably to mitigate damages.

     17.4 No termination of this Lease pursuant to Section 17.1 and no Repossession of the Property pursuant to Section 17.2 or otherwise shall relieve Tenant of its obligation to pay Basic

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Rent or any of its other obligations under this Lease, all of which shall survive any such termination or Repossession.

     17.5 In the event of any such termination or Repossession, whether or not the property shall have been relet, Tenant shall pay to Landlord the Basic Rent and other sums and charges to be paid by Tenant up to the time of such termination or Repossession, and thereafter Tenant, until the end of what would have been the Term in the absence of such termination or Repossession, shall pay to Landlord, as and for liquidated and agreed current damages for Tenant’s default, the equivalent of the amount of the Basic Rent and such other sums and charges which would be payable under this Lease by Tenant if this Lease were still in effect, less the net proceeds if any, of any reletting effected pursuant to the provisions of Section 17.3, after deducting all of Landlord’s expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage and management commissions, operating expenses legal expenses, attorneys’ fees, and reasonable, market expenses of preparation for such reletting. Tenant shall pay such current damages to Landlord monthly on the days on which the Basic Rent would have been payable under this Lease if this Lease were still in effect, and Landlord shall be entitled to recover the same from Tenant on each such day. At any time after such termination or Repossession, whether or not Landlord shall have collected any current damages as aforesaid, Landlord shall be entitled to recover from Tenant, and Tenant shall pay to Landlord on demand, as and for liquidated and agreed final damages for Tenant’s default, an amount equal to the then present value of the excess of the Basic Rent reserved under this Lease from the day of such termination or Repossession for what would be the then unexpired Term if the same had remained in effect, over the then Fair Rental Value for the same period, discounted at a rate equal to one percent (1.0%) plus the discount rate at the time of liquidation of the Federal Reserve Bank for the district in which the Property is located.

     17.6 No failure by Landlord to insist upon the strict performance of any term hereof or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial rent during the continuance of any such breach, shall constitute a waiver of any such breach or of any such term.

     17.7 Tenant may exercise and continue to exercise all of its rights under this Lease upon the occurrence and during the continuance of any default or Event of Default under this Lease up to the point of termination of this Lease and actual Repossession, as defined in Section 17.2, including, but not limited to, the First Offer Right.

Article 18. SURRENDER OF THE PROPERTY

     18.1 In the event Tenant does not exercise and fulfill the requirements of the First Offer Right, upon the expiration or sooner termination of this Lease, Tenant shall quit and surrender the Property, in the condition required to be maintained in accordance with this Lease, to Landlord without any payment therefor by Landlord without delay, free and clear of all lettings and occupancies. Upon such expiration or termination of this Lease, any Tenant’s Property which shall remain on the Property after the expiration or termination of this Lease may, at the option of Landlord, be deemed to have been abandoned, and may either be retained by Landlord as its property or be disposed at Tenant’s expense or without accountability, as Landlord may see

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fit, provided that if Landlord shall store or warehouse any such property for any period of time Tenant shall reimburse Landlord for all expenses incurred in connection therewith, which obligation shall survive any such expiration or termination of this Lease.

     18.2 In connection with the surrender of the Property pursuant to Section 18.1, Tenant shall be entitled to remove on or before the expiration or sooner termination of this Lease, Tenant’s Property and shall leave in place all Alterations. Tenant shall promptly repair, at its sole cost and expense, any damage to the Property caused by the removal of any of Tenant’s Property.

     18.3 The provisions of this Article 18 shall survive the expiration or sooner termination of this Lease.

Article 19. NO MERGER OF TITLE

     There shall be no merger of Tenant’s interest in this Lease nor of the leasehold estate created by this Lease with the fee estate in the Property or any part thereof by reason of the fact that the same person may acquire or own or hold, directly or indirectly, (a) Tenant’s interest in this Lease or the leasehold estate created by this Lease or any interest therein, and (b) the fee estate in the Property or any part thereof or any interest therein, and no such merger shall occur unless and until all persons, if any, then having an interest in, which interest shall have been voluntarily created by the holders of, the ownership interests described in (a) and (b) above, shall join in a written instrument effecting such merger and shall duly record the same.

Article 20. QUIET ENJOYMENT

     Landlord covenants that Tenant, upon paying the Basic Rent and all other sums and charges herein provided for and observing and keeping all covenants, agreements and conditions of this Lease on its part to be observed and kept, shall quietly have and enjoy the Property during the Term without disturbance by anyone claiming by, through or under Landlord subject, however, to the exceptions, reservations, and conditions of this Lease.

Article 21. PERFORMANCE FOR TENANT

     21.1 If Tenant shall at any time fail to make any payment or perform any act on its part to be made or performed hereunder, then Landlord, after thirty (30) days’ (or such longer period as may be reasonably necessary to cure the same) notice to Tenant, except when other notice is expressly provided for in this Lease, and without waiving or releasing Tenant from any obligation of Tenant contained in this Lease, may (but shall be under no obligation to) make such payment or perform such act, and may enter upon the Property for any such purpose, and take all such action thereon as may be necessary therefor. Notwithstanding anything to the contrary contained in this Lease, in the event Tenant fails to maintain insurance required pursuant to Article 6 of this Lease, Landlord shall have the right to obtain such insurance on behalf of Tenant and Tenant shall reimburse Landlord, as additional Rent, within five (5) days of receipt of notice of the procurement of such insurance.

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     21.2 All sums so paid by Landlord and all reasonable out of pocket costs and expenses incurred by Landlord in connection with the performance of any such act, together with interest thereon at a rate equal to the lesser of (a) ten percent (10%) per annum and (b) the maximum rate permitted by law, from the respective dates of Landlord’s making of each such payment or incurring of each such cost and expense, and reasonable attorney fees incurred by Landlord in connection therewith or in enforcing its rights hereunder, shall be paid by Tenant to Landlord on demand as additional Rent hereunder.

     21.3 The provisions of this Article 21 shall survive the expiration or sooner termination of this Lease.

Article 22. NOTICES

     All notices, requests, demands, consents, approvals, and other communications which may or are required to be served or given hereunder (for the purposes of this Article collectively called “Notices”) shall be in writing and shall be delivered personally, or sent by nationally recognized overnight delivery service, or sent by registered or certified mail, return receipt requested, postage prepaid, addressed to the party to receive such Notice at its address first above set forth. Either party may, by Notice given as aforesaid, change its address for all subsequent Notices, except that neither party may require Notices to it to be sent to more than two addresses. Mailed Notices shall be deemed given when mailed in the manner aforesaid, provided that in the case of a notice of default to Tenant the same shall be deemed given only upon actual receipt by Tenant. So long as a First Mortgagee exists, both parties shall provide First Mortgagee with copies of any notices delivered to the other with respect to requests for consent or approval or notices alleging default under this Lease.

Article 23. CONTESTS

     23.1 After written notice to Landlord and First Mortgagee, if any, Tenant may at its expense contest, by appropriate proceedings conducted in good faith and with due diligence (all such proceedings together with appeals therefrom being hereinafter referred to as “Contests”) the amount, validity or application, in whole or in part, of any Tax, mechanics’ lien, encumbrance, charge or any other adverse claim for which Tenant is responsible under this Lease (hereinafter collectively “claims”) provided that:

     23.1.1 In the case of an unpaid claim, such Contest shall operate to suspend the collection of the same from Landlord and Tenant therein; and

     23.1.2 Neither the Property nor any part thereof nor any interest therein shall be, in the reasonable opinion of Landlord, in imminent danger of being forfeited or lost.

     23.2 During the period Tenant carries forward any such Contest in good faith, Tenant shall be relieved from its obligations herein contained to pay the claims, or to clear the liens with respect to which such contest is conducted. If and to the extent Tenant shall not prevail in any such Contest, Tenant shall immediately pay and discharge the claim in question to such extent.

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     23.3 All such Contests may be brought by Tenant in the name of Tenant or, if reasonably necessary, in the name of Landlord or Tenant and Landlord, as may be appropriate. Each party agrees to cooperate with the other in such Contests, short of the payment of money with respect thereto, except where this Lease otherwise requires payment. Each party will endorse such pleadings, checks and other documents as will be appropriate to carry out the purposes of this Section 23.3.

Article 24. NO WARRANTIES/“AS IS”

     LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE PROPERTY “AS IS”, AND TENANT ACKNOWLEDGES THAT LANDLORD HAS NOT MADE AND WILL NOT MAKE, NOR SHALL LANDLORD BE DEEMED TO HAVE MADE, ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE PROPERTY, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO ITS FITNESS FOR USE OR PURPOSE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, OR AS TO VALUE, LOCATION, USE, CONDITION, QUALITY, DESCRIPTION, OR DURABILITY OF OPERATION. THE PROVISIONS OF THIS ARTICLE 24 HAVE BEEN NEGOTIATED, AND THE FOREGOING PROVISIONS ARE INTENDED TO BE A COMPLETE PRECLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE PROPERTY, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.

Article 25. TENANT’S RIGHT TO CURE LANDLORD’S DEFAULT UNDER FIRST MORTGAGE

     If Landlord shall default in the payment of any monies required to be paid under any First Mortgage or shall fail to perform any other term or provision thereof (provided that the performance of the same is not the obligation of Tenant under this Lease), then, upon twenty (20) days prior written notice to Landlord (except in the case of emergency, when no notice shall be required), Tenant may, but shall not be obligated to, make such payment directly to the First Mortgagee or perform such term or provision and in any such event Tenant shall be entitled to credit the amount of such payment and the cost of such performance against Basic Rent hereunder, and the installments thereof, next coming due hereunder.

Article 26. SUBORDINATION AND NON-DISTURBANCE

     Tenant agrees that, upon the request of Landlord made in writing, Tenant will subordinate this Lease to any First Mortgage and to all renewals, modifications, consolidations, replacements and extensions thereof; provided, however, that the First Mortgagee shall enter into a binding agreement (the “Non-Disturbance Agreement”) with Tenant providing that for so long as Tenant is not in default hereunder beyond any applicable notice and cure period, Tenant shall

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not be disturbed in its possession of the Property or its rights hereunder terminated or impaired by the First Mortgagee, purchaser at foreclosure or other such party and that this Lease shall continue in full force and effect following any foreclosure thereof or any deed given in lieu thereof, except that this Lease may nonetheless be terminated pursuant to the provisions of this Lease providing for such termination, including without limitation pursuant to Article 17. In the event the First Mortgagee or other purchaser at foreclosure sale succeeds to the interest of Landlord under this Lease, Tenant will automatically become the tenant of and shall be deemed to have attorned to such successor in interest as Landlord under this Lease without change in the terms or provisions of this Lease, provided, however, that such successor in interest shall not be bound by any amendment or modification of this Lease made after Tenant enters into the Non-Disturbance Agreement without the written consent of such First Mortgagee or such successor in interest. Upon written request by such successor in interest, Tenant and such successor shall execute and deliver an instrument or instruments whereby Tenant confirms the attornment herein provided for and in which such successor shall acknowledge its obligations and responsibilities to Tenant under the Lease and, with respect thereto, shall recognize this Lease and the tenancy hereunder of Tenant.

Article 27. FIRST OFFER RIGHT

     27.1 Landlord shall not (a) sell, transfer, assign or otherwise dispose of any partial interest in the Property or any part thereof to an unrelated third party, or (b) sell, transfer, assign or otherwise dispose of its interest in the Property to an unrelated third party until at least fifteen (15) days after it has given Tenant written notice (the “Landlord’s Notice”) as herein provided of its intention to dispose of the Property. The Landlord’s Notice shall describe in reasonable detail Landlord’s determination of the Fair Market Value of the Property at which Landlord intends to sell the Property (including, if the proposed consideration for such disposition is property other than cash, the Fair Market Value of such property, in Landlord’s opinion, as of the date of the notice), and the other terms of such proposed disposition. Tenant shall have and is hereby granted the first right and option (“First Offer Right”) to purchase the Property in the manner, at the price and on the terms provided in the Landlord’s Notice. During the Term and except as required by the terms of the First Mortgage, Landlord shall not transfer, sell or convey all or any portion of the Property.

     27.2 The First Offer Right may be exercised by Tenant by giving notice to Landlord at any time within ten (10) days after receipt of the Landlord’s Notice.

     27.3 The purchase price for the Property pursuant to exercise of the First Offer Right shall be the price stated in the Landlord’s Notice as the price at which Landlord proposes to sell, transfer or assign the Property; provided that (a) if all or any part of the proposed consideration for said sale, transfer or assignment is property other than cash, such portion of the purchase price to be paid by Tenant shall be based on the Fair Market Value of the Property as of the date of Landlord’s Notice to be determined by appraisal in accordance with Article 28 below, and (b) if the Property is being disposed of together with other land or property, then Tenant may elect to have the consideration payable by it for the Property equal the Fair Market Value of such interest as of the date of Landlord’s Notice to be determined by appraisal in accordance with the procedure provided in Article 28 below.

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     27.4 Contemporaneously with giving the Landlord’s Notice, Landlord shall provide a title insurance commitment for the Property with a then-current effective date. If such commitment reflects any matter materially and adversely affecting title to the Property in addition to the Permitted Exceptions (other than this Lease, a First Mortgage, and any encumbrances created on or after the date hereof by Tenant or those claiming by, through or under Tenant or with Tenant’s consent), then Tenant may give Landlord written notice of such matter. If Tenant gives Landlord such notice, Landlord use reasonable efforts to cause such matter to be removed and corrected of record within said ten (10) days of receipt of Tenant’s notice. If Landlord fails to do so within said thirty (30) days, Tenant may at its option (a) attempt to cause such encumbrances to be removed, (b) proceed to close, or (c) terminate the agreement formed by exercise of the First Offer Right by giving written notice thereof to Landlord, without such termination releasing Landlord from liability for damages hereunder. If Tenant elects alternative (a) above, closing shall be postponed until the encumbrances in question are removed and, if Tenant is unable within a further period of ten (10) days to cause such encumbrances to be removed, Tenant may then elect either alternative (b) or (c) above. All costs and expenses incurred by Tenant in causing or attempting to cause such encumbrances to be removed, including reasonable attorneys fees, shall be payable by Landlord.

     27.5 Subject to postponement pursuant to Section 27.4, Landlord shall convey the Property to Tenant on the first business day occurring thirty (30) days after the date Tenant exercises the First Offer Right at Landlord’s main offices. The deed shall be in the usual, proper limited warranty form for recording and registration, subject only to Permitted Exceptions and the other matters permitted pursuant to Section 27.4, and shall be accompanied by all documents necessary to allow the deed to be recorded. Landlord shall pay any state deed tax or revenue stamps or other transfer tax. Landlord shall pay any prepayment penalty or provision payable under the First Mortgage if the First Mortgage is satisfied in connection with the closing. Tenant shall pay any assumption fee payable under the First Mortgage in connection with such closing if Tenant assumes the First Mortgage. The purchase price (less the unpaid principal balance of the First Mortgage if assumed (subject to the terms thereof) by Tenant at the closing) shall be payable by wire transfer or other readily available funds. This Lease and all of the terms and provisions hereof shall remain in full force and effect until the purchase has closed, except as otherwise provided herein. Notwithstanding anything to the contrary in this Article 27, to the extent Tenant (subject to the terms of the First Mortgage) does not assume the First Mortgage, Landlord shall discharge the First Mortgage and all documents and agreements associated therewith at the closing.

     27.6 If Tenant fails to exercise the First Offer Right within the ten (10) day period provided in Section 27.2, Landlord shall be free to sell the Property free from the First Offer Right but subject to this Lease on the same price and terms provided in the Landlord’s Notice for a period of one hundred eighty (180) days following the expiration of such ten (10) day period. If Landlord does not close upon the transfer of the Property within such one hundred eighty (180) day period on substantially the same terms as those provided in the Landlord’s Notice, then the First Offer Right shall revive and Landlord shall be obligated to re-offer the Property to Tenant in accordance with Section 27.1 prior to any sale, transfer or disposition of the same. As used in this Section 27.6, “substantially the same” terms shall mean that the purchase price

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pursuant to which Landlord proposes to sell the Property is not less than ninety-five percent (95%) of that provided in the Landlord’s Notice, adjusted for any difference in treatment of closing costs, and the terms are otherwise the same terms as provided in the Landlord’s Notice, provided that the provision of representations, warranties or other comfort to a third party purchaser, to the extent they relate to matters which such third party purchaser, not like Tenant having been in possession of and having knowledge of the Property, may require, shall not cause such transaction not to be on the same terms. Tenant shall, within five (5) days after Landlord’s request therefore, deliver an instrument in form reasonably satisfactory to Landlord confirming the provisions of this Section 27.6, but no such instrument shall be necessary to make the provisions hereof effective.

     27.7 If Tenant does not timely exercise its First Offer Right and the Property is transferred to a third party, Tenant will attorn to such third party as Landlord so long as such third party and Landlord notify Tenant in writing of such transfer.

     27.8 Notwithstanding anything to the contrary contained herein, the provisions of this Article 27 shall not apply to or prohibit the following:

     27.8.1 The giving or granting of the First Mortgage;

     27.8.2 Any sale of the Property pursuant to a private power of sale under or judicial foreclosure of the First Mortgage;

     27.8.3 Any transfer of Landlord’s interest in the Property to First Mortgagee in lieu of foreclosure of the First Mortgage; or

     27.8.4 Any Taking.

     27.9 Any prepaid obligations paid to Landlord shall be prorated as of the closing date, and the prorated unapplied balance shall be deducted from the purchase price due to Landlord.

     27.10 The First Offer Right herein granted to Tenant is a continuing right of first offer and shall apply as often as any then holder of any part of the Landlord’s interest hereunder (including, but not limited to, any such holder who or which shall have acquired its interest in a disposition to which the First Offer Right applied but was not exercised) shall make or propose to make a sale, transfer, conveyance or other disposition of all or any part of the Property or any interest therein during the Term.

     27.11 The provisions of this Article 27 shall apply to any sale, transfer, assignment or other disposition of any membership or other interest in Landlord which result in a change of control of Landlord in the same manner as to a transfer of title to the Property.

Article 28. APPRAISAL

     28.1 Whenever Fair Market Value or Fair Rental Value is to be determined by appraisal in accordance with this Lease, the parties shall proceed as follows:

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     28.1.1 Landlord and Tenant shall make good faith efforts to reach agreement as to the Fair Market Value or Fair Rental Value, as the case may be, within the thirty (30) days following the date of the event which gave rise to the need for such determination. Authorized representatives of Landlord and Tenant shall meet at least once during that period. If they reach agreement as to the Fair Market Value or Fair Rental Value, as the case may be, they shall put the same in writing and it shall then be binding on both parties for the purposes for which determined.

     28.1.2 If Landlord and Tenant do not reach agreement as to the Fair Rental Value or Fair Market Value, as the case may be, within the time permitted in Section 28.1.1 above, each party will choose a person with at least ten (10) years experience as a real estate appraiser appraising similar properties who shall be a member in good standing of the American Institute of Real Estate Appraisers (or successor organization or, if no such organization exists, then persons of similar professional qualifications) and given notice of the name and address of such person to the other within thirty (30) days after the period for reaching agreement in Section 28.1.1 has expired. Those two persons shall within fifteen (15) days select a third appraiser who has the minimum qualifications set forth above for the first two appraisers. If either party does not designate an appraiser within the prescribed thirty (30) day period, or if the two appraisers do not select a third appraiser within the prescribed fifteen (15) day period, the second or third appraiser, or both, as the case may be, shall be appointed by the president of the chapter of the American Institute of Real Estate Appraiser in a county where the Property is located (or successor organization, or, if no such organization exists, any judge of a court of general jurisdiction in such county). The three persons (the “Experts”) shall, after initially consulting each other, make a determination of the Fair Rental Value or Fair Market Value, as the case may be, as expeditiously as possible thereafter and in any event within thirty (30) days after the selection of the third Expert. The determination of the experts shall be made as follows:

28.1.2.1 Each Expert will independently determine the Fair Rental Value or Fair Market Value, as the case may be, and then all will meet and simultaneously disclose to the others their respective determinations.

28.1.2.2 If neither the highest nor the lowest determination differs from the middle determination by more than ten percent (10%) of such middle determination, then the Fair Rental Value or Fair Market Value, as the case may be, shall be the average of all three determinations.

28.1.2.3 The Experts shall promptly notify Landlord and Tenant of each of their separate determinations and the resulting Fair Rental Value or Fair Market Value, as the case may be. Judgment upon any appraisal decision rendered in accordance with the procedure may be entered by any Court having jurisdiction thereof. The determination of the Fair Rental Value pursuant to this procedure shall be final, binding and conclusive upon Landlord and Tenant.

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Article 29. TENANT’S PROPERTY

     29.1 The following property whether or not located in or on the Property or Improvements is collectively referred to as “Tenant’s Property;” provided, however, Tenant’s Property shall exclude the Improvements:

     29.1.1 All items of personal property, equipment and fixtures located on the Property, and whether or however attached to the Building, at any time that are necessary, incidental or convenient to the businesses from time to time conducted at the Property, including, without limitation, exercise equipment, kitchen equipment and furnishings, work stations, portable or movable partitions, receptionist desks, millwork, credenzas, computer installations (including computers, computer hardware, raised flooring, freestanding supplemental air conditioning or cooling systems therefor), communications systems and equipment, financial services equipment (such as ATM’s), safes, safe doors, bulletin boards, book shelves and file cabinets, but excluding the Improvements;

     29.1.2 All furniture, inventory, machinery, racking, shelving, and other personal property, excluding the Improvements;

     29.1.3 Any personal property, equipment or fixtures which is either not owned by Landlord or Tenant or is on consignment to Tenant, including any personal property owned by Tenant’s subtenants, employees or invitees;

     29.1.4 All signs and other forms of business identification;

     29.1.5 Any other items of personal property whatsoever located on the Property, excluding the Improvements; and

     29.1.6 All proceeds of the foregoing.

     29.2 Tenant’s Property does not constitute a portion of the Property, and, as between Landlord and Tenant, shall at all times during and after the Term be deemed to be the property of Tenant.

     29.3 Tenant shall have the right in its sole and absolute discretion from time to time to install, alter, remove and/or replace such of Tenant’s Property as it shall deem to be useful or desirable in connection with its business in the Property; provided, however, Tenant shall promptly repair, at its sole cost and expense, any damage to the Property caused by any installation, alteration, removal or replacement of any of Tenant’s Property. Tenant further shall have the right to enter into such agreements and assignments with respect to the Tenant’s Property as Tenant in its sole discretion shall deem advisable, including financing and similar arrangements.

     29.4 Landlord shall execute such landlord consents and other agreements as shall be reasonably requested by Tenant in connection with any such agreements and arrangements.

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Landlord hereby waives each and every right which Landlord now has or may hereafter have under Legal Requirements or by the terms of any agreement now in effect or hereafter exercised by Landlord or First Mortgagee to levy or distrain upon any of Tenant’s Property for rent or to claim or assert title to any of Tenant’s Property.

Article 30. MISCELLANEOUS

     30.1 In any case under this Lease which requires that a consent or approval may not be unreasonably withheld, such consent or approval shall be acted on promptly and without unreasonable delay.

     30.2 If any term of this Lease or any application thereof shall be invalid or unenforceable, the remainder of this Lease and any other application of such term shall not be affected thereby. This Lease may be amended, changed, waived, discharged or terminated only by an instrument in writing signed by the then owners of the Landlord and Tenant interests herein and, until the Loan and the Loan Obligations are indefeasibly paid in full, First Mortgagee. This Lease shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto and, until the Loan and the Loan Obligations are indefeasibly paid in full, First Mortgagee. The headings of this Lease are for purposes of reference only and shall not limit or define the meaning hereof. This Lease may be executed in any number of counterparts, each of which is an original, but all of which shall constitute one instrument.

     30.3 This is governed by and shall be construed according to the laws of the state in which the Property is located.

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SIGNATURE PAGE
TO
LEASE AGREEMENT

     IN WITNESS WHEREOF, the parties hereto have executed this Lease Agreement as of the day and year first above written.

LANDLORD:
LTF REAL ESTATE VRDN I, LLC,
a Delaware limited liability company
By:
	Eric J. Buss
Its:	Secretary
TENANT:
LTF CLUB OPERATIONS COMPANY, INC.,
a Minnesota corporation
By:
	Eric J. Buss
Its:	Secretary

Overland, Kansas

EXHIBIT A

Legal Description of Land

PARCEL 1:

Lot 16, CORBIN PARK, SECOND PLAT, a subdivision of Land in the City of Overland Park, Johnson County, Kansas, except any part taken, used or dedicated for roads or public right of ways.

PARCEL 2:

Non-exclusive easements for the benefit of Parcel 1 for Access as described in Section 4, Paragraph A, Utility and Storm Sewer as described in Section 4, Paragraph C, Drainage as in Section 4, Paragraph D, and for Access Easements for Monument Signage as described in Section 4, Paragraph B as created in an Easement Agreement Dated November 18, 2005, Filed December 2, 2005 in Book 200512, at Page 000955 over, under and across the Land described on Exhibits D, E1, E2 and F therein, except any part thereof that lies within the boundaries of Lot 14, CORBIN PARK, SECOND PLAT, a subdivision in the City of Overland Park, Johnson County, Kansas. Subject to the terms, provisions and limitations and conditions as set forth in said instrument.

A-1

EXHIBIT B

Permitted Exceptions

1.	Taxes and assessments for the year 2008 and subsequent years, none are now do and payable.
2.	Resolution enlarging Consolidated Main Sewer District of Johnson County, Kansas, as recorded in Volume 4988, Page 719 and Volume 4989, Page 842, and refiled in Volume 5009, Page 627.
3.	Terms and provisions of a Joint Declaration of Restrictive Covenants November 18, 2005, recorded December 2, 2005, in Volume 200512, Page 000957. Amendments recorded in Volume 200705, Page 001797; Volume 200712, Page 003876 and Page 003877.
4.	Terms and provisions of an Easement Agreement November 18, 2005, recorded December 2, 2005, in Volume 200512, Page 000955.
5.	Right-of-Way Grant to Consolidate Main Sewer District of Johnson County, filed September 1, 2005 in Volume 200509, Page 000226.
6.	An easement for Kansas City Power and Light Company in the document recorded in Volume 200605, Page 005582 of Official Records.
7.	An easement for Water District No. 1 in the document recorded in Volume 200511, Page 008542, Confined in Volume 200606, Page 009070, which was re-recorded in Volume 200610, Page 005339 of Official Records.

B-1

EX-10.8

Exhibit 10.8

LEASE GUARANTY AND NEGATIVE
PLEDGE AGREEMENT

     THIS LEASE GUARANTY AND NEGATIVE PLEDGE AGREEMENT is dated as of June 1, 2008 (this “Guaranty”), by LIFE TIME FITNESS, INC., a Minnesota corporation (“Guarantor”), whose mailing address is 2902 Corporate Place, Chanhassen, MN 55317, in favor of LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company, its successors and assigns (“Landlord”), whose address is 2902 Corporate Place, Chanhassen, MN 55317, with reference to the recitals set forth below.

R E C I T A L S:

     A. Landlord has agreed to lease to LTF Club Operations Company, Inc., a Minnesota corporation (“Tenant”), certain real property and improvements thereon located on the real property legally described on (i) Exhibit A-1 hereto (the “Minnesota Premises”) pursuant to the Lease Agreement dated as of June 13, 2008 (the “Minnesota Lease”) between Landlord and Tenant and (ii) Exhibit A-2 hereto (the “Kansas Premises”; the Minnesota Premises and the Kansas Premises are collectively referred to herein as the “Premises”) pursuant to the Lease Agreement dated as of June 13, 2008 (the “Kansas Lease”; the Minnesota Lease and the Kansas Lease are referred to herein individually as a “Lease” and collectively as the “Leases”) between Landlord and Tenant.

     B. General Electric Capital Corporation (“GECC”) has agreed to issue an irrevocable direct pay letter of credit (the “Letter of Credit”) for the account of Landlord pursuant to the terms of the Reimbursement Agreement dated as of June 1, 2008 (the “Reimbursement Agreement”) among GECC, Landlord and GE Government Finance, Inc. As security for its reimbursement obligations under the Reimbursement Agreement, Landlord has, (i) pursuant to the terms of the Mortgage, Security Agreement, Assignment of Leases and Rents, Financing Statement and Fixture Filing of even date herewith, (a) granted a mortgage lien to GECC on the Minnesota Premises and (b) assigned all of its rights and interest in the Minnesota Lease to GECC, and (ii) pursuant to the terms of the Mortgage, Security Agreement, Assignment of Leases and Rents, Financing Statement and Fixture Filing of even date herewith, (a) granted a mortgage lien to GECC on the Kansas Premises and (b) assigned all of its rights and interest in the Kansas Lease to GECC.

     C. As a condition precedent to issuing the Letter of Credit, GECC requires that Tenant obtain the execution of this Guaranty by Guarantor, and Landlord will be relying on the terms hereof in leasing the Premises. As a condition precedent to GECC’s issuing the Letter of Credit, GECC requires that Landlord assign its rights in this Guaranty to GECC.

     D. The leasing of the Premises by Landlord to Tenant and the issuance of the Letter of Credit are of value to Guarantor, are reasonably expected to benefit Guarantor, directly or indirectly, and are in furtherance of Guarantor’s interests.

     In consideration of Landlord’s leasing the Premises to Tenant, and as an inducement to Landlord to do so, Guarantor hereby agrees, warrants and covenants as follows:

     1. Guarantor hereby unconditionally, irrevocably and absolutely guarantees the full and prompt payment when due, whether by acceleration or otherwise, of (a) all rent and all other sums and charges whatsoever payable by Tenant under the Leases, including, without limitation, all costs of collection, attorneys’ fees, court costs, and other advances and extensions thereunder, and (b) the full, faithful and prompt performance and observance of all the covenants, terms and conditions and agreements to be performed and observed by Tenant under the Leases, all without set-off, counterclaim, recoupment, or deduction of any amounts owing or alleged to be owing by Landlord to Tenant. It is expressly understood that this Guaranty covers, without limitation, (y) any and all amendments, extensions, modifications, rearrangements and renewals of the Leases; and (z) all interest, default interest, late payment fees and other amounts that would have accrued under the Leases but for the commencement of a case under the Federal Bankruptcy Code or any other similar federal or state law. Without limiting the foregoing, Guarantor specifically guarantees payment of any judgment entered against the Tenant and any damages that may be awarded in any action brought against the Tenant by Landlord arising out of or relating to either Lease. All of the indebtedness, obligations and liabilities described in this paragraph are referred to herein collectively as the “Guaranteed Obligations.” This Guaranty is a guaranty of payment and not merely of collection.

     2. This Guaranty shall take effect when received by Landlord without the necessity of any acceptance by Landlord or of any notice to Guarantor or to Tenant, shall be continuing and irrevocable, and shall remain in full force and effect until all the Guaranteed Obligations are fully and finally paid. If payment is made by Tenant, whether voluntarily or otherwise, or by any third party, on the Guaranteed Obligations and thereafter Landlord is forced to remit, rescind or restore the amount of that payment under any federal or state bankruptcy law or law for the relief of debtors or for any other reason, (a) the amount of such payment shall be considered to have been unpaid at all times for the purposes of enforcement of this Guaranty and (b) the obligations of Tenant guaranteed herein shall be automatically reinstated to the extent of such payment.

     3. The obligations of Guarantor hereunder are separate and independent of the obligations of Tenant. Guarantor expressly agrees that a separate action may be brought against Guarantor whether or not Tenant is joined in such action.

     4. Guarantor represents, warrants, and covenants to Landlord that (a) Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota; (b) Guarantor is in good standing and is duly licensed or qualified to transact business in the State of Minnesota and the State of Kansas; (c) Guarantor expects to derive financial and other advantages and benefits, directly or indirectly, from the making of this Guaranty; (d) Guarantor executed this Guaranty without any intent to hinder, delay, or defraud any current or future creditor of Guarantor; (e) Guarantor is not insolvent and will not become insolvent as a result of the execution of this Guaranty; (f) Guarantor is not engaged, and is not about to engage, in any business or transaction for which any property remaining with Guarantor has an unreasonably small capital or for which the remaining assets of Guarantor are unreasonably small in relation to the business of Guarantor or the transaction contemplated by this Guaranty; (g) Guarantor does not intend to incur, and does not believe and has no reason to believe, that Guarantor will incur, debts beyond Guarantor’s ability to pay such debts as they become due; (h) no representations or agreements of any kind have been made to Guarantor which would limit or qualify in any way the terms of this

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Guaranty; (i)  Landlord has made no representation to Guarantor as to the creditworthiness of Tenant; (j) Guarantor has established adequate means of obtaining from Tenant on a continuing basis information regarding Tenant’s financial condition; (k) Guarantor will keep adequately informed of any facts, events or circumstances which might in any way affect Guarantor’s risks under this Guaranty; (l) this Guaranty shall not be affected by Landlord’s failure to disclose to Guarantor any information or documents (financial or otherwise) heretofore or hereafter acquired by Landlord in the course of its relationship with Tenant; (m) Guarantor has been fully authorized to execute, deliver and perform this Guaranty, and to incur the obligations herein provided for, under the terms and provisions of the resolutions of its board of directors, or by other appropriate official approval, and further represents, covenants and warrants that all requirements have been met, and procedures have occurred in order to ensure the enforceability of this Guaranty and this Guaranty has been duly authorized, executed and delivered; (n) the officer of Guarantor executing this Guaranty has been duly authorized to execute and deliver this Guaranty under the terms and provisions of a resolution of Guarantor’s board of directors, or by other appropriate official approval; (o) this Guaranty constitutes a valid and legally binding obligation of Guarantor enforceable against Guarantor in accordance with its terms, except to the extent limited by bankruptcy, reorganization or other laws of general application relating to effecting the enforcement of creditors’ rights; (p) the execution and delivery of this Guaranty, the consummation of the transactions contemplated hereby and the fulfillment of the terms and conditions hereof do not and will not violate any law, rule, regulation or order, conflict with or result in a breach of any of the terms or conditions of the articles of incorporation or bylaws of Guarantor or of any agreement or instrument to which Guarantor is now a party and does not and will not constitute a default under any of the foregoing or result in the creation or imposition of any liens, charges or encumbrances of any nature upon any of the property or assets of Guarantor contrary to the terms of any instrument or agreement to which Guarantor is a party or by which it is bound; and (q) Guarantor’s federal tax identification number is 41-1689746.

     5. Guarantor agrees that all terms and conditions of agreements heretofore or hereafter made between Landlord and the Tenant (including, without limitation, the Leases) shall not affect Guarantor’s obligations under this Guaranty and further agrees that any of the following actions of the Landlord taken without further consent of or disclosure or notice to Guarantor, and without affecting or releasing the obligations of Guarantor hereunder, and accordingly Landlord may, without affecting Guarantor’s obligations under this Guaranty: (a) surrender, exchange, release, assign, or sell any collateral or waive, release, assign, sell, or subordinate any security interest, in whole or in part; (b) waive, delay the exercise of, release, compromise, or grant indulgences in respect of any rights or remedies of Landlord against the Tenant or any surety or guarantor (including, without limitation, rights or remedies of Landlord against Guarantor under this Guaranty); (c) waive or delay the exercise of any rights or remedies of Landlord in respect of any collateral or security interest now or hereafter held; (d) renew, extend, waive, accelerate, or modify the terms of any Guaranteed Obligation or the obligations of any surety or guarantor; (e) realize on any security interest with or without preservation of a deficiency judgment; (f) apply payments received from Tenant or any surety or guarantor (including Guarantor) or from any collateral to any indebtedness, liability, or obligations of Tenant or such sureties or guarantors whether or not a Guaranteed Obligation hereunder; or (g) adjust, compromise or receive less than the amount due upon any collateral or the Guaranteed Obligations, and enter into any accord and satisfaction or novation agreement with respect to the same as Landlord shall deem advisable.

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     6. Guarantor waives notice of (a) Landlord’s acceptance of this Guaranty or its intention to act or its actions in reliance hereon; (b) the present existence or future incurring of any Guaranteed Obligations or any terms or amounts thereof or any change therein; (c) any default by the Tenant or any surety or guarantor; (d) the obtaining of any guaranty or surety agreement (in addition to this Guaranty); (e) the obtaining of any pledge, assignment or other security for any Guaranteed Obligations; (f) the release of the Tenant or any surety or guarantor; (g) the release of any collateral; and (h)  any other demands or notices whatsoever with respect to the Guaranteed Obligations or this Guaranty. The Guarantor further waives notice of presentment, demand, protest, notice of nonpayment, notice of intent to accelerate, and notice of protest in relation to any instrument or agreement evidencing any Guaranteed Obligation.

     7. Guarantor hereby waives (a) promptness and diligence and all other notices, demands and protests, and all other formalities of every kind in connection with the enforcement of either Lease or of the obligations of Guarantor hereunder, the omission of or delay in which, but for the provisions of this paragraph, might constitute grounds for relieving the Guarantor of its obligations hereunder; and (b) any requirement that Landlord protect, secure, perfect or insure any lien or security interest or other encumbrance or any property subject thereto or pursue or exhaust any right or take any action (including mitigation of damages) against or with respect to the Tenant or any other person or entity or any collateral.

     8. Guarantor expressly waives any and all rights to defenses under this Guaranty arising by reason of (a) any “one-action” or “anti-deficiency” law or any other law which may prevent Landlord from bringing any action, including a claim for deficiency against Guarantor, before or after Landlord’s commencement or completion of any action against Tenant; (b) ANY ELECTION OF REMEDIES BY LANDLORD (INCLUDING WITHOUT LIMITATION ANY TERMINATION OF EITHER LEASE) WHICH DESTROYS OR OTHERWISE ADVERSELY AFFECTS GUARANTOR’S SUBROGATION RIGHTS OR GUARANTOR’S RIGHTS TO PROCEED AGAINST TENANT FOR REIMBURSEMENT; (c) any defense of Tenant or of any other person, or by reason of the cessation of Tenant’s liability from any cause whatsoever, other than full and final payment in legal tender of the Guaranteed Obligations; (d) any right to claim discharge of the Guaranteed Obligations on the basis of unjustified impairment of any collateral for the Guaranteed Obligations; (e) any change in the corporate relationship between Guarantor and Tenant or any termination of such relationship; (f) any irregularity, defect or unauthorized action by Landlord or Tenant or any of their respective officers, directors or other agents in executing and delivering any instrument or agreements relating to the Guaranteed Obligations or in carrying out or attempting to carry out the terms of any such agreements; (g) any receivership, insolvency, bankruptcy, reorganization or similar proceeding by or against Tenant, Landlord or Guarantor; (h) any setoff, counterclaim, recoupment, deduction, defense or other right which Guarantor may have against Landlord, Tenant or any other person for any reason whatsoever whether related to the Guaranteed Obligations or otherwise; (i) any assignment, endorsement or transfer, in whole or in part, of the Guaranteed Obligations, whether made with or without notice to or the consent of Guarantor; (j) if the recovery from Tenant or any other person or entity becomes barred by any statute of limitations or is otherwise prevented; or (k) any neglect, delay, omission, failure or refusal of Landlord to take or prosecute any action for the collection of any of the Guaranteed Obligations or to foreclose or take or prosecute any action in connection with any lien or right of security

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(including perfection thereof) existing or to exist in connection with, or as security for, any of the Guaranteed Obligations, it being the intention hereof that Guarantor shall remain liable as a principal on the Guaranteed Obligations notwithstanding any act, omission or event which might, but for the provisions hereof, otherwise operate as a legal or equitable discharge of Guarantor. Guarantor hereby waives all defenses of a surety to which it may be entitled by statute or otherwise.

     9. Guarantor hereby agrees and covenants not to allow a Change of Control (as defined in the Reimbursement Agreement) to occur, until such time as the Guaranteed Obligations have been fully satisfied.

     10. [Reserved.]

     11. Guarantor hereby irrevocably waives all claims it has or may acquire against Tenant in respect of the Guaranteed Obligations, including rights of exoneration, reimbursement and subrogation, unless and until all of the obligations under the Reimbursement Agreement and the Environmental Indemnity Agreement have been paid in full.

     12. Guarantor will deliver, or cause to be delivered, to GECC each of the following, which shall be in form and detail acceptable to GECC:

     (a) as soon as available, and in any event within 120 days after the end of each fiscal year of Guarantor, or if longer, within the period allowed by the Securities and Exchange Commission to file annual financial statements, copies of publicly available reports;

     (b) if the reports set forth in subsection (a) of this Section are no longer publicly available, as soon as available, and in any event within 120 days after the end of each fiscal year of Guarantor, consolidated audited financial statements of Guarantor with the unqualified opinion of independent certified public accountants selected by Guarantor and acceptable to GECC, which annual financial statements shall include the balance sheet of Guarantor as at the end of such fiscal year and the related statements of income, retained earnings and cash flows of Guarantor for the fiscal year then ended, all in reasonable detail and prepared in accordance with GAAP, together with a certificate of the chief financial officer of Guarantor stating that such financial statements have been prepared in accordance with GAAP; and

     (c) promptly upon knowledge thereof, notice of any Material Adverse Effect. “Material Adverse Effect” means a material adverse effect upon (i) the ability of Guarantor to perform, or of GECC to enforce, any material provision of this Guaranty, (ii) the enforceability of any material provision of this Guaranty, and (iii) the financial or operating condition of Guarantor.

     13. Guarantor shall not (a) sell, lease, assign, transfer or otherwise dispose of any of its assets, unless allowed pursuant to the terms of the Credit Agreement or waived or consented to by the administrative agent and lead arranger and/or the banks thereunder; or (b) consolidate with or merge into any person, or permit any other person to merge into it or acquire (in a

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transaction analogous in purpose or effect to a consolidation or merger) all or substantially all of the assets of any other person, unless allowed pursuant to the terms of the Credit Agreement. “Credit Agreement” means that certain Second Amended and Restated Credit Agreement dated as of May 31, 2007, as amended by the Amendment No. 1 to Second Amended and Restated Credit Agreement dated as of January 24, 2008, among Guarantor, the banks from time to time a party thereto, U.S. Bank National Association, as administrative agent and lead arranger, J.P. Morgan Securities Inc. and Royal Bank of Canada, as co-syndication agents, and BMO Capital Markets, as documentation agent, as the same may be amended from time to time and/or replaced with a similar credit agreement.

     14. This Guaranty shall be legally binding upon Guarantor and its successors and assigns, and shall inure to the benefit of Landlord and its successors and assigns, provided that the obligations of Guarantor hereunder are personal to it and the Guarantor may not assign any of its rights or obligations hereunder. Landlord may, without any notice whatsoever to Guarantor, or to anyone else, sell, assign or transfer either Lease, with or without any security therefor, and in that event each and every immediate and successive assignee, transferee or holder of all or any part of such Lease shall have the right to enforce this Guaranty, by suit or otherwise, for the benefit of such assignee, transferee or holder as though such parties were herein by name specifically given those rights, powers and benefits. Guarantor acknowledges that Landlord is assigning all of its rights and interests in this Guaranty to GECC. Guarantor acknowledges that GECC may rely on this Guaranty and may enforce it as Landlord’s assignee as fully as if GECC were a party thereto.

     15. This Guaranty, including all matters of construction, validity and performance, shall be construed in accordance with the laws of the State of Minnesota.

     16. No delay on the part of Landlord in exercising any right, power or privilege under this Guaranty shall operate as a waiver of any such right, power or privilege, nor shall any exercise or waiver of any privilege or right preclude any other or further exercise of such privilege or right or the exercise of any other right, power or privilege. All of Landlord’s rights and remedies shall be cumulative. In the event Landlord in its sole discretion elects to give notice of any action with respect to the sale of collateral, if any, securing the Guaranteed Obligations or any part thereof, Guarantor agrees that ten (10) days prior written notice shall be deemed reasonable notice of any matters contained in such notice.

     17. If any provision of this Guaranty or any portion of any provision of this Guaranty shall be deemed to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not alter the remaining portion of such provision, or any other provision hereof, as each provision of this Guaranty shall be deemed severable from all other provisions hereof.

     18. This Guaranty shall expire and be of no further force or effect at such time as all of the obligations under the Reimbursement Agreement have been satisfied.

     19. GUARANTOR HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS GUARANTY AND ANY DEALINGS BY GUARANTOR RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED BY THIS

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GUARANTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY. IN THE EVENT OF LITIGATION, THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK;
EXECUTION PAGE FOLLOWS]

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     IN WITNESS WHEREOF, Guarantor has executed or has caused this Guaranty to be executed under seal by its duly authorized representative as of the date written above.

GUARANTOR:

LIFE TIME FITNESS, INC.

By:

Name: Eric J. Buss

Title: Secretary

ASSIGNMENT OF THIS GUARANTY

     LTF Real Estate VRDN I, LLC hereby assigns all of its rights and interests in this Guaranty to General Electric Capital Corporation.

LTF REAL ESTATE VRDN I, LLC

By:

Name: Eric J. Buss

Title: Secretary

[EXECUTION PAGE OF LEASE GUARANTY AND NEGATIVE PLEDGE AGREEMENT]

EXHIBIT A-1

LEGAL DESCRIPTION OF MINNESOTA PREMISES

Property Address:  2902 Corporate Place
 Chanhassen, MN

Parcel 1: Lot 2, Block 1, LIFE TIME FITNESS 2ND ADDITION, according to the recorded plat thereof, Carver County, Minnesota.

Torrens Property-Certificate of Title No. 33647.0

Parcel 2: Non-exclusive easements as contained in the Declaration of Cross Access, Parking, Sanitary Sewer, Storm Water and Water Easements dated February 18, 2008, recorded March 19, 2008, as Document No. 166225

APN: 25.077004

EXHIBIT A-2

LEGAL DESCRIPTION OF KANSAS PREMISES

PARCEL 1:

LOT 16, CORBIN PARK, SECOND PLAT, A SUBDIVISION OF LAND IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS, EXCEPT ANY PART TAKEN, USED OR DEDICATED FOR ROADS OR PUBLIC RIGHT OF WAYS.

PARCEL 2:

NON-EXCLUSIVE EASEMENTS FOR THE BENEFIT OF PARCEL 1 FOR ACCESS AS DESCRIBED IN SECTION 4, PARAGRAPH A, UTILITY AND STORM SEWER AS DESCRIBED IN SECTION 4, PARAGRAPH C, DRAINAGE AS DESCRIBED IN SECTION 4, PARAGRAPH D, AND FOR ACCESS EASEMENTS FOR MONUMENT SIGNAGE AS DESCRIBED IN SECTION 4, PARAGRAPH B AS CREATED IN AN EASEMENT AGREEMENT DATED NOVEMBER 18, 2005, FILED DECEMBER 2, 2005 IN BOOK 200512, AT PAGE 000955 OVER, UNDER AND ACROSS THE LAND DESCRIBED ON EXHIBITS D AND F THEREIN, EXCEPT ANY PART THEREOF THAT LIES WITHIN THE BOUNDARIES OF LOT 16, CORBIN PARK, SECOND PLAT, A SUBDIVISION IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS. SUBJECT TO THE TERMS, PROVISIONS, LIMITATIONS AND CONDITIONS AS SET FORTH IN SAID INSTRUMENT.

TRACT 1:

LOT 16, CORBIN PARK, SECOND PLAT, A SUBDIVISION OF LAND IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS, EXCEPT ANY PART TAKEN, USED OR DEDICATED FOR ROADS OR PUBLIC RIGHT OF WAYS.

TRACT 2:

NON-EXCLUSIVE EASEMENTS FOR THE BENEFIT OF PARCEL 1 FOR ACCESS AS DESCRIBED IN SECTION 4, PARAGRAPH A AND FOR STORM SEWER AS DESCRIBED IN SECTION 4, PARAGRAPH C AS CREATED IN AN EASEMENT AGREEMENT DATED NOVEMBER 18, 2005, FILED DECEMBER 2, 2005 IN BOOK 200512, AT PAGE 000955 OVER, UNDER AND ACROSS THE LAND DESCRIBED ON EXHIBITS D AND F THEREIN, EXCEPT ANY PART THEREOF THAT LIES WITHIN THE BOUNDARIES OF LOT 16, CORBIN PARK, SECOND PLAT, A SUBDIVISION IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS. SUBJECT TO THE TERMS, PROVISIONS, LIMITATIONS AND CONDITIONS AS SET FORTH IN SAID INSTRUMENT.

TRACT 3:

TEMPORARY, NON-EXCLUSIVE EASEMENTS FOR THE BENEFIT OF PARCEL 1 AS CREATED BY A TEMPORARY ACCESS AND CONSTRUCTION STAGING EASEMENT DATED NOVEMBER 18, 2005, FILED DECEMBER 2, 2005 IN BOOK 200512, AT PAGE 000956 FOR A TEMPORARY ACCESS EASEMENT AND A TEMPORARY CONSTRUCTION STAGING EASEMENT OVER, UNDER AND ACROSS THE LAND DESCRIBED IN EXHIBIT C AND EXHIBIT D THEREIN. SUBJECT TO THE TERMS, PROVISIONS, LIMITATIONS AND CONDITIONS AS SET FORTH IN SAID INSTRUMENT.

EX-10.9

Exhibit 10.09

NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS MORTGAGE AT ANY ONE TIME, THE MAXIMUM PRINCIPAL AMOUNT OF INDEBTEDNESS SECURED BY THIS MORTGAGE, EXCLUDING ADVANCES MADE BY THE MORTGAGEE IN PROTECTION OF THE MORTGAGED PROPERTY OR THE LIEN OF THIS MORTGAGE, IS $17,194,529.00 UNDER CHAPTER 287 OF MINNESOTA STATUTES.

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING

     THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING is made as of June 1, 2008 (this “Instrument”), by the Mortgagor, LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company, whose mailing address is 2902 Corporate Place, Chanhassen, MN 55317 (“Mortgagor”), in favor of and for the benefit of the Mortgagee, GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, whose mailing address is Suite 470, 8400 Normandale Lake Boulevard, Minneapolis, Minnesota 55437 (“Mortgagee”).

     Mortgagor, in consideration of the indebtedness herein recited, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, irrevocably gives, grants, sells, conveys, warrants, sets over, mortgages and assigns to Mortgagee, as security for such indebtedness, all of Mortgagor’s estate, right, title and interest, now owned or hereafter acquired, including any reversion or remainder interest, in the real property located in the City of Chanhassen, County of Carver, State of Minnesota described on Exhibit A attached hereto and incorporated herein including all heretofore or hereafter vacated alleys and streets abutting the property, and all easements, rights, appurtenances, tenements, hereditaments, rents, royalties, mineral, oil and gas rights and profits, water, water rights and water stock appurtenant to the property (collectively “Premises”);

     TOGETHER with all of Mortgagor’s estate, right, title and interest, now owned or hereafter acquired, in, under and to:

Chanhassen, Minnesota

     (a) all buildings, structures, improvements, parking areas, landscaping, equipment, fixtures and articles of property now or hereafter erected on or attached to the Premises; including, but without being limited to, all heating, air conditioning, manufacturing and incinerating apparatus and equipment; all boilers, engines, motors, dynamos, generating equipment, piping and plumbing fixtures, water heaters, walk-in refrigerators and freezers, cooling, ventilating, sprinkling and vacuum cleaning systems, fire extinguishing apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding, elevators, escalators, partitions, mantels, built-in mirrors, window shades, blinds, draperies, screens, storm sash, awnings, signs, and outdoor shrubbery and plants, and including also all interest of any owner of the Premises in any of such items hereafter at any time acquired under conditional sale contract, chattel mortgage or other title retaining or security instrument, all of which property mentioned in this clause (a) shall be deemed part of the realty covered by this Instrument and not severable wholly or in part without material injury to the freehold of the Premises (all of the foregoing together with replacements and additions thereto are referred to herein as “Improvements”); and

     (b) all compensation, awards, damages, rights of action and proceeds, including interest thereon and/or the proceeds of any policies of insurance therefor, arising out of or relating to a (i) taking or damaging of the Premises or Improvements thereon by reason of any public or private improvement, condemnation proceeding (including change of grade), sale or transfer in lieu of condemnation, or fire, earthquake or other casualty, or (ii) any injury to or decrease in the value of the Premises or the Improvements for any reason whatsoever;

     (c) proceeds under any insurance any time provided with respect to the Premises, Improvements and other collateral described herein for the benefit of or naming Mortgagee and refunds or rebates of taxes or assessments on the Premises;

     (d) all written and oral leases and rental agreements (including, without limitation, that certain Lease Agreement dated June 13, 2008 (the “Lease Agreement”) between Mortgagor and LTF Club Operations Company, Inc. (“Tenant”)) (including extensions, renewals and subleases; each of the foregoing singularly shall be referred to herein as a “Lease,” and all of the foregoing shall be referred to collectively herein as the “Leases”) now or hereafter affecting the Premises including, without limitation, all rents, issues, income, profits and other revenues and income therefrom and from the renting, leasing or bailment of Improvements and equipment (“Rents”), all guaranties of tenants’ performance under the Leases (including, without limitation, all rights, title and interest in that certain Lease Guaranty and Negative Pledge Agreement dated as of June 1, 2008 by Life Time Fitness, Inc.), all letter-of-credit rights and all other supporting obligations associated with the Leases and all rights and claims of any kind that Mortgagor may have against any tenant under the Leases or in connection with the termination or rejection of the Leases in a bankruptcy or insolvency proceeding;

     (e) to the extent assignable without third party consents, plans, specifications, documents, contracts and agreements relating to the design or construction of the Improvements; Mortgagor’s rights under any payment, performance, or other bond in connection with the design or construction of the Improvements; all landscaping and construction materials, supplies, and equipment used or to be used or consumed in connection with construction of the Improvements, whether stored on the Premises or at some other location; and contracts, agreements, and

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purchase orders with contractors, subcontractors, suppliers, and materialmen incidental to the design or construction of the Improvements;

     (f) to the extent permitted by applicable law and to the extent assignable without third party consents, all contracts, deposits, deposit accounts, accounts, rights, claims or causes of action pertaining to or affecting the Premises or the Improvements, including, without limitation, all supporting obligations and any and all proceeds thereof, options or contracts to acquire other property for use in connection with operation or development of the Premises or Improvements, management contracts, service or supply contracts, permits, licenses, franchises and certificates with respect to the Premises and Improvements, and all commitments or agreements, now or hereafter in existence with respect to the Premises and Improvements, intended by the obligor thereof to provide Mortgagor with proceeds to satisfy the obligations evidenced hereby or improve the Premises or Improvements, and the right to receive all proceeds due under such commitments or agreements including refundable deposits and fees;

     (g) all books, records, surveys, reports and other documents related to the Premises, the Improvements, the Leases or other items of collateral described herein; and

     (h) all additions, accessions, replacements, substitutions, proceeds and products of the real and personal property, tangible and intangible, described herein.

     All of the foregoing described collateral is exclusive of any goods, equipment, inventory, furniture, furnishings or trade fixtures owned and supplied by tenants or subtenants of the Premises. The Premises, the Improvements, the Leases and all of the rest of the foregoing property are herein referred to as the “Property.”

     TO HAVE AND TO HOLD the Property and all parts, rights, members and appurtenances thereof to the use, benefit and behoof of Mortgagee and its successors and assigns in fee simple forever.

     TO SECURE TO Mortgagee (a) the repayment of the obligations under the Reimbursement Agreement dated as of June 1, 2008 (as amended, the “Reimbursement Agreement”) by and among Mortgagor, Mortgagee and GE Government Finance, Inc. and all renewals, extensions and modifications thereof; (c) the repayment of any future advances, with interest thereon, made by Mortgagee to Mortgagor pursuant to Section 30 hereof (the “Future Advances”); (d) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Instrument or to fulfill any of Mortgagor’s obligations hereunder or under the other Financing Documents (as defined below); (e) the performance of the covenants and agreements of Mortgagor contained herein or in the other Financing Documents; and (f) the repayment of all sums now or hereafter owing to Mortgagee by Mortgagor pursuant to any instrument which recites that it is secured hereby. The indebtedness and obligations described in clauses (a)-(f) above are collectively referred to herein as the “Indebtedness.” The Reimbursement Agreement, this Instrument, and all other documents evidencing, securing or guaranteeing the Indebtedness (except the Environmental Indemnity Agreement Regarding Hazardous Substances), as the same may be modified or amended from time to time, are referred to herein as the “Financing Documents.” The terms of the Financing Documents secured hereby may provide that the interest rate or payment terms or balance due

Chanhassen, Minnesota

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may be indexed, adjusted, renewed, or renegotiated from time to time, and this Instrument shall continue to secure the Indebtedness notwithstanding any such indexing, adjustment, renewal or renegotiation. If not sooner paid, the Indebtedness secured by this Instrument is due and payable in full on June 1, 2033.

     Mortgagor represents and warrants that Mortgagor has good, marketable and insurable title to, and has the right to mortgage an indefeasible fee simple estate in, the Premises, Improvements, Rents and Leases, and the right to convey the other Property, that the Property is unencumbered and that Mortgagor will warrant and forever defend unto Mortgagee the title to the Property against all claims and demands, subject only to the permitted exceptions set forth in Exhibit B attached hereto (herein “Permitted Exceptions”).

     Mortgagor represents, warrants, covenants and agrees for the benefit of Mortgagee as follows:

     Section 1. Payment of Principal and Interest. Mortgagor shall promptly pay or cause to be paid when due the principal of and interest on the Indebtedness, any prepayment and other charges provided in the Financing Documents and all other sums secured by this Instrument.

     Section 2. Funds for Taxes, Insurance and Other Charges. Except as is hereinafter provided with respect to the impounding of such payments by Mortgagee following the occurrence of an Event of Default (hereinafter defined), Mortgagor shall pay or cause to be paid when due, prior to delinquency, all annual real estate taxes, insurance premiums, assessments, water and sewer rates, ground rents and other charges (the “Impositions”) payable with respect to the Property. Upon the occurrence of an Event of Default, and at Mortgagee’s sole option at any time thereafter, Mortgagor shall pay in addition to each monthly payment due under the Reimbursement Agreement, one-twelfth of the annual Impositions (as estimated by Mortgagee in its sole discretion), to be held by Mortgagee in escrow without interest to Mortgagor, for the payment of such Impositions (such payments being referred to herein as “Impounds”).

     Annually during the term of this Instrument, Mortgagee shall compare the Impounds collected to the Impositions paid or to be paid. If the amount of such Impounds held by Mortgagee at such time shall exceed the amount deemed necessary by Mortgagee to provide for the payment of Impositions as they fall due, if no Event of Default shall have occurred and be continuing, such excess shall be at Mortgagor’s option, either repaid to Mortgagor or credited to Mortgagor on the next monthly installment or installments of Impounds due. If at any time the amount of the Impounds held by Mortgagee shall be less than the amount deemed necessary by Mortgagee to pay Impositions as they fall due, Mortgagor shall pay to Mortgagee any amount necessary to make up the deficiency within 30 days after notice from Mortgagee to Mortgagor requesting payment thereof. Upon the occurrence of an Event of Default hereunder, Mortgagee may apply, in any amount and in any order as Mortgagee shall determine in Mortgagee’s sole discretion, any Impounds held by Mortgagee at the time of application (i) to pay Impositions which are now or will hereafter become due, or (ii) as a credit against sums secured by this Instrument. Upon payment in full of all sums secured by this Instrument, Mortgagee shall refund to Mortgagor any Impounds then held by Mortgagee.

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     Section 3. Application of Payments. (a) Each installment payment received by Mortgagee from Mortgagor under or with respect to the Reimbursement Agreement or this Instrument or the other Financing Documents shall be applied by Mortgagee to the Indebtedness in such order as provided in the Financing Documents.

     (b) If requested by Mortgagee, Mortgagor shall promptly furnish to Mortgagee all notices of Impositions which become due, and in the event Mortgagor shall make payment directly, Mortgagor shall promptly furnish to Mortgagee receipts evidencing such payments.

     Section 4. Charges, Liens. Mortgagor shall promptly discharge any lien which has, or may have, priority over or equality with, the lien of this Instrument, and Mortgagor shall pay, when due, the claims of all persons supplying labor or materials to or in connection with the Property. Mortgagor shall not allow any lien to be perfected against the Property other than the Permitted Exceptions set forth in Exhibit B attached hereto. If any such lien is filed against the Property, Mortgagor shall promptly, at its own expense, cause such lien to be released of record or bonded off and to deliver evidence of such release or bonding to Mortgagee. Mortgagor may contest any such lien by appropriate proceedings in good faith, timely filed, provided that enforcement of the lien is stayed pending such contest or Mortgagor pays to Mortgagee 125% of the amount of the lien to be held by Mortgagee in escrow without interest to Mortgagor. Mortgagee may require that Mortgagor post security for payment of such lien.

     Section 5. Insurance and Damage or Destruction of Property. Mortgagor shall obtain and maintain the types of insurance upon and relating to the Property as required by the Reimbursement Agreement, and, upon the damage or destruction of the Property, insurance proceeds shall be disbursed as provided in the Reimbursement Agreement.

     Section 6. [Reserved.]

     Section 7. [Reserved.]

     Section 8. Protection of Mortgagee’s Security. If an Event of Default shall have occurred and be continuing, or if any action or proceeding is commenced which affects the Property or title thereto or the interest of Mortgagee therein, including, but not limited to, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then Mortgagee at Mortgagee’s option may make such appearances, disburse such sums and take such action as Mortgagee deems necessary, in its sole discretion, to protect Mortgagee’s interest, including, but not limited to (a) disbursement of reasonable attorneys’ fees, (b) entry upon the Property to make repairs and (c) procurement of satisfactory insurance as provided in Section 5 hereof.

     Any amounts disbursed by Mortgagee pursuant to this Section, with interest thereon, shall become additional Indebtedness of Mortgagor secured by this Instrument. Unless Mortgagor and Mortgagee agree to other terms of payment, such amounts shall be immediately due and payable and shall bear interest from the date of disbursement at the Post-Default Rate (as defined in the Reimbursement Agreement). Mortgagor hereby covenants and agrees that Mortgagee shall be subrogated to the lien of any mortgage or other lien discharged, in whole or

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in part, by the Indebtedness. Nothing contained in this Section shall require Mortgagee to incur any expense or take any action hereunder.

     Section 9. Inspection. Mortgagee may make or cause to be made entries upon the Property to inspect the interior and exterior thereof. Except in the case of emergency, such inspection shall be with reasonable prior notice and shall in any case be with due regard to rights of tenants.

     Section 10. Condemnation. If the Property, or any part thereof, shall be condemned for any reason, including without limitation fire or earthquake damage, or otherwise taken for public or quasi-public use under the power of eminent domain, or be transferred in lieu thereof, all damages or other amounts awarded for the taking of, or injury to, the Property shall be paid and applied as provided in the Reimbursement Agreement.

     Section 11. Mortgagor and Lien not Released. From time to time, and subject to the requirements of the Reimbursement Agreement, Mortgagee may, at Mortgagee’s option, without giving notice to or obtaining the consent of Mortgagor, Mortgagor’s successors or assigns or of any junior lienholder or guarantors, without liability on Mortgagee’s part and notwithstanding Mortgagor’s breach of any covenant or agreement of Mortgagor in this Instrument, extend the time for payment of the Indebtedness or any part thereof, reduce the payments thereon, release anyone liable on any of the Indebtedness, accept an extension or modification or renewal note or notes therefor, modify the terms and time of payment of the Indebtedness, release from the lien of this Instrument any part of the Property, take or release other or additional security, reconvey any part of the Property, consent to any map or plan of the Property, consent to the granting of any easement, join in any extension or subordination agreement, and agree in writing with Mortgagor to modify the rate of interest or period of amortization of the obligations under the Reimbursement Agreement or decrease the amount of the monthly installments payable thereunder. Any actions taken by Mortgagee pursuant to the terms of this Section shall not affect the obligation of Mortgagor or Mortgagor’s successors or assigns to pay the sums secured by this Instrument and to observe the covenants of Mortgagor contained herein, shall not affect the guaranty of any person, corporation, partnership or other entity for payment of the Indebtedness, and shall not affect the lien or priority of the lien hereof on the Property. Mortgagor shall pay Mortgagee a service charge, together with such title insurance premiums and attorneys’ fees as may be incurred at Mortgagee’s option, for any such action if taken at Mortgagor’s request.

     Section 12. Forbearance by Mortgagee not a Waiver. Any forbearance by Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any other right or remedy. The acceptance by Mortgagee of payment of any sum secured by this Instrument after the due date of such payment shall not be a waiver of Mortgagee’s right to either require prompt payment when due of all other sums so secured or to declare a default for failure to make prompt payment. The procurement of insurance or the payment of taxes or other liens or charges by Mortgagee shall not be a waiver of Mortgagee’s right to accelerate the maturity of the Indebtedness secured by this Instrument, nor shall Mortgagee’s receipt of any awards, proceeds or damages under Sections 5 and 10 hereof operate to cure or waive Mortgagor’s default in payment of sums secured by this Instrument.

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     Section 13. Uniform Commercial Code Security Agreement. This Instrument is intended to be a security agreement pursuant to the Uniform Commercial Code, as enacted in the State of Minnesota (the “Uniform Commercial Code”) for any of the items specified above as part of the Property which, under applicable law, may be subject to a security interest pursuant to the Uniform Commercial Code, and Mortgagor hereby grants and conveys to Mortgagee a first and prior security interest in all of the Property that constitutes personalty, whether now owned or hereafter acquired. Mortgagor agrees that Mortgagee may file this Instrument, or a reproduction thereof, in the real estate records or other appropriate index, as a financing statement for any of the items specified above as part of the Property. Any reproduction of this Instrument or of any other security agreement or financing statement shall be sufficient as a financing statement. In addition, Mortgagor agrees to execute and deliver to Mortgagee, upon Mortgagee’s request, any financing statements, extensions, renewals, amendments and other records, and reproductions of this Instrument in such form as Mortgagee may require to perfect a security interest with respect to the foregoing items. Mortgagor shall pay all costs of filing such financing statements and any extensions, renewals, amendments and releases thereof, and shall pay all costs and expenses of any record searches for financing statements Mortgagee may require. Mortgagor hereby waives any and all rights Mortgagor may have to file in the real estate records or any other index or record any financing statement, amendment, termination statement or other record pertaining to the Collateral and/or Mortgagee’s interest therein. Without the prior written consent of Mortgagee, Mortgagor shall not create or suffer to be created pursuant to the Uniform Commercial Code any other security interest in said items, including replacements and additions thereto. Upon an Event of Default, Mortgagee shall have the remedies of a secured party under the Uniform Commercial Code, and Mortgagee may also invoke the remedies provided in Sections 24, 25, 26 and 27 hereof as to such items. In exercising any of said remedies Mortgagee may proceed against the items of real property and any items of personal property specified above separately or together and in any order whatsoever, without in any way affecting the availability of Mortgagee’s remedies under the Uniform Commercial Code or of the remedies provided in Sections 24, 25, 26 and 27 hereof.

     Section 14. Leases of the Property. Mortgagor shall comply with and observe Mortgagor’s obligations as landlord under all Leases of the Property or any part thereof. All Leases now or hereafter entered into will be in form and substance subject to the approval of Mortgagee. Mortgagor shall pay all reasonable attorneys’ fees incurred by Mortgagee in reviewing any Lease or proposed Lease. All Leases of the Property shall specifically provide that such Leases are subordinate to this Instrument; that the tenant attorns to Mortgagee, such attornment to be effective upon Mortgagee’s acquisition of title to the Property; that the tenant agrees to execute such further evidences of attornment as Mortgagee may from time to time request; that the attornment of the tenant shall not be terminated by foreclosure; and that Mortgagee may, at Mortgagee’s option, accept or reject such attornments. Mortgagor shall not, without Mortgagee’s prior written consent, request or consent to the subordination of any Lease of all or any part of the Property to any lien subordinate to this Instrument. If Mortgagor becomes aware that any tenant proposes to do, or is doing, any act or thing which may give rise to any right of set-off against rent, Mortgagor shall (i) take such steps as shall be reasonably calculated to prevent the accrual of any right to a set-off against rent, (ii) immediately notify Mortgagee thereof in writing and of the amount of said set-offs, and (iii) within ten (10) days after such accrual, reimburse the tenant who shall have acquired such right to set-off or take such

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other steps as shall effectively discharge such setoff and as shall assure that rents thereafter due shall continue to be payable without set-off or deduction. Upon Mortgagee’s receipt of notice of the occurrence of any default or violation by Mortgagor of any of its obligations under the Leases, Mortgagee shall have the immediate right, but not the duty or obligation, without prior written notice to Mortgagor or to any third party, to enter upon the Property and to take such actions as Mortgagee may deem necessary to cure the default or violation by Mortgagor under the Leases. The costs incurred by Mortgagee in taking any such actions pursuant to this paragraph shall become part of the Indebtedness, shall bear interest at the Post-Default Rate, and shall be payable by Mortgagor to Mortgagee on demand. Mortgagee shall have no liability to Mortgagor or to any third party for any actions taken by Mortgagee or not taken pursuant to this paragraph.

     Section 15. Remedies Cumulative. Each remedy provided in this Instrument is distinct and cumulative to all other rights or remedies under this Instrument or afforded by law or equity, and may be exercised concurrently, independently or successively, in any order whatsoever.

     Section 16. Transfers of the Property or Beneficial Interests in Mortgagor; Assumption. Mortgagee may, at its option, declare all sums secured by this Instrument to be immediately due and payable, and Mortgagee may invoke any remedies permitted or not prohibited by Sections 24, 25, 26 and 27 hereof, if, except as otherwise permitted under the Reimbursement Agreement, title to the Property is changed or there is any transfer of any interest in the Property or in the income therefrom, by sale, lease, contract, mortgage, deed of trust, further encumbrance or otherwise (including any such transfers as security for additional financing of the Property).

     Section 17. Notice. Except for any notice required under applicable law to be given in another manner, all notices, certificates, requests, demands and other communications provided for hereunder or under any other Financing Document shall be in writing and shall be (a) personally delivered, (b) sent by first class United States mail, or (c) sent by overnight courier of national reputation, in each case addressed to the party to whom notice is being given at its address as set forth above or, as to each party, at such other address as may hereafter be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section. All such notices, requests, demands and other communications shall be deemed to have been given on (a) the date received if personally delivered, (b) when deposited in the mail if delivered by mail, or (c) the date sent if sent by overnight courier.

     Section 18. Successors and Assigns Bound; Joint and Several Liability; Agents; Captions. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective heirs, successors and assigns of Mortgagee and Mortgagor, subject to the provisions of Section 16 hereof. If Mortgagor is comprised of more than one person or entity, whether as individuals, partners, partnerships or corporations, each such person or entity shall be jointly and severally liable for Mortgagor’s obligations hereunder. In exercising any rights hereunder or taking any actions provided for herein, Mortgagee may act through its employees, agents or independent contractors as authorized by Mortgagee. The captions and headings of the sections of this Instrument are for convenience only and are not to be used to interpret or define the provisions hereof.

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     Section 19. Waiver of Statute of Limitations. Mortgagor hereby waives the right to assert any statute of limitations as a bar to the enforcement of the lien of this Instrument or to any action brought to enforce the Reimbursement Agreement or any other obligation secured by this Instrument.

     Section 20. Waiver of Marshalling. Notwithstanding the existence of any other security interests in the Property held by Mortgagee or by any other party, Mortgagee shall have the right to determine the order in which any or all of the Property shall be subjected to the remedies provided herein. Mortgagee shall have the right to determine the order in which any or all portions of the Indebtedness secured hereby are satisfied from the proceeds realized upon the exercise of the remedies provided herein. Mortgagor, any party who consents to this Instrument and any party who now or hereafter acquires a security interest in the Property and who has actual or constructive notice hereof hereby waives any and all right to require the marshalling of assets in connection with the exercise of any of the remedies permitted by applicable law or provided herein.

     Section 21. Advances, Costs and Expenses. Mortgagor shall pay within ten (10) days after written demand from Mortgagee all sums advanced by Mortgagee and all out-of-pocket costs and expenses incurred by Mortgagee in taking any actions pursuant to the Financing Documents including reasonable attorneys’ fees and disbursements, accountants’ fees, appraisal and inspection fees and the costs for title reports and guaranties, together with interest thereon at the Post-Default Rate from the date such costs were advanced or incurred. All such costs and expenses incurred by Mortgagee, and advances made, shall constitute advances under this Instrument to protect the Property and shall be secured by and have the same priority as the lien of this Instrument. If Mortgagor fails to pay any such advances, costs and expenses and interest thereon, Mortgagee, without foreclosing the lien of this Instrument, may at its option commence an independent action against Mortgagor for the recovery of the costs, expenses and/or advances, with interest, together with costs of suit, costs of title reports and guaranty of title, disbursements of counsel and attorneys’ fees incurred therein or in any appeal therefrom.

     Section 22. Assignment of Leases and Rents. Mortgagor, for good and valuable consideration, the receipt of which is hereby acknowledged, to secure the Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell, transfer, assign, convey, set over and deliver unto Mortgagee all right, title and interest of Mortgagor in, to and under the Leases of the Property, whether now in existence or hereafter entered into, and all guaranties, amendments, extensions and renewals of said Leases and any of them, and all Rents which may now or hereafter be or become due or owing under the Leases, and any of them, or on account of the use of the Property.

          Mortgagor represents, warrants, covenants and agrees with Mortgagee as follows:

          (a) The sole ownership of the entire lessor’s interest in the Leases is vested in Mortgagor, and Mortgagor has not, and shall not, perform any acts or execute any other instruments which might prevent Mortgagee from fully exercising its rights with respect to the Leases under any of the terms, covenants and conditions of this Instrument.

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          (b) The Leases are and shall be valid and enforceable in accordance with their terms and have not been and shall not be altered, modified, amended, terminated, canceled, renewed or surrendered except as approved in writing by Mortgagee. The terms and conditions of the Leases have not been and shall not be waived in any manner whatsoever except as approved in writing by Mortgagee.

          (c) Mortgagor shall not amend any Lease without prior written notice to Mortgagee and Mortgagee’s prior written consent.

          (d) There are no defaults now existing under any of the Leases and, to the best of Mortgagor’s knowledge, there exists no state of facts which, with the giving of notice or lapse of time or both, would constitute a default under any of the Leases.

          (e) Mortgagor shall give prompt written notice to Mortgagee of any notice received by Mortgagor claiming that a default has occurred under any of the Leases on the part of Mortgagor, together with a complete copy of any such notice.

          (f) Each of the Leases shall remain in full force and effect irrespective of any merger of the interest of lessor and any lessee under any of the Leases.

          (g) Mortgagor will not permit any Lease to become subordinate to any lien other than the lien of this Instrument.

          The assignment made hereunder is an absolute, present assignment from Mortgagor to Mortgagee, effective immediately, and is not merely an assignment for security purposes but is irrevocable by Mortgagor so long as the Indebtedness remains outstanding. Notwithstanding the foregoing, until a notice is sent to the Mortgagor in writing that an Event of Default (as defined below) has occurred under the terms and conditions of the Reimbursement Agreement or any instrument constituting security for Mortgagor’s obligations under the Reimbursement Agreement (which notice is hereafter called a “Notice”), Mortgagor is granted a license to receive, collect and enjoy the Rents accruing from the Property.

          If an Event of Default shall occur, Mortgagee may, at its option, after service of a Notice, receive and collect all such Rents as they become due, from the Property. Mortgagee shall thereafter continue to receive and collect all such Rents, until Mortgagee shall otherwise agree in writing. All sums received by Mortgagor after service of such Notice shall be deemed received in trust and shall be immediately turned over to Mortgagee.

          Upon the occurrence and during the continuation of an Event of Default, Mortgagor hereby irrevocably appoints Mortgagee its true and lawful attorney-in-fact with power of substitution and with full power for Mortgagee in its own name and capacity or in the name and capacity of Mortgagor, from and after service of Notice, to demand, collect, receive and give complete acquittances for any and all Rents accruing from the Property, either in its own name or in the name of Mortgagor or otherwise, which Mortgagee may deem necessary or desirable in order to collect and enforce the payment of the Rents and to demand, collect, receive, endorse, and deposit all checks, drafts, money orders or notes given in payment of such Rents. Such appointment is coupled with an interest and is irrevocable. Mortgagee shall not be

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liable for or prejudiced by any loss of any note, checks, drafts, etc., unless such loss shall have been found by a court of competent jurisdiction to have been due to the gross negligence or willful misconduct of Mortgagee.

          Mortgagee shall apply the Rents received from Mortgagor’s lessees, toward Mortgagor’s obligations under the Reimbursement Agreement. If no Event of Default remains uncured, amounts received in excess of Mortgagor’s obligations under the Reimbursement Agreement shall be remitted to Mortgagor in a timely manner. Nothing contained herein shall be construed to constitute Mortgagee as a mortgagee-in-possession in absence of its physically taking possession of the Property.

          Upon the occurrence and during the continuation of an Event of Default, Mortgagor also hereby irrevocably appoints Mortgagee from and after service of notice as its true and lawful attorney-in-fact to appear in any state or federal bankruptcy, insolvency, or reorganization proceeding in any state or federal court involving any of the tenants of the Leases. Lessees of the Property are hereby expressly authorized and directed, from and after service of a Notice to pay any and all amounts due Mortgagor pursuant to the Leases to Mortgagee or such nominee as Mortgagee may designate in writing delivered to and received by such lessees who are expressly relieved of any and all duty, liability or obligation to Mortgagor in respect of all payments so made.

          If an Event of Default shall occur, Mortgagee is hereby vested with full power from and after service of a Notice to use all measures, legal and equitable, deemed by it necessary or proper to enforce the assignment granted hereunder and to collect the Rents assigned hereunder, including the right of Mortgagee or its designee, to enter upon the Property, or any part thereof, and take possession of all or any part of the Property together with all personal property, fixtures, documents, books, records, papers and accounts of Mortgagor relating thereto, and may exclude the Mortgagor, its agents and servants, wholly therefrom. Mortgagor hereby grants full power and authority to Mortgagee to exercise all rights, privileges and powers herein granted at any and all times after service of a Notice, with full power to use and apply all of the Rents and other income herein assigned to the payment of the costs of managing and operating the Property and of any indebtedness or liability of Mortgagor to Mortgagee, including but not limited to the payment of taxes, special assessments, insurance premiums, damage claims, the costs of maintaining, repairing, rebuilding and restoring the Improvements on the Premises or of making the same rentable, reasonable attorneys’ fees incurred in connection with the enforcement of the assignment granted hereunder, and of payments due from Mortgagor to Mortgagee under the Reimbursement Agreement and this Instrument, all in such order as Mortgagee may determine. Mortgagee shall be under no obligation to exercise or prosecute any of the rights or claims assigned to it hereunder or to perform or carry out any of the obligations of the lessor under any of the Leases and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Mortgagor in the Leases. It is further understood that the assignment granted hereunder shall not operate to place responsibility for the control, care, management or repair of the Property, or parts thereof, upon Mortgagee, nor shall it operate to make Mortgagee liable for the performance of any of the terms and conditions of any of the Leases, or for any waste of the Property by any lessee under any of the Leases or any other person, or for any dangerous or

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defective condition of the Property or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger, unless the same shall have been found by a court of competent jurisdiction to have been due to the gross negligence or willful misconduct of Mortgagee.

     Section 23. Default. The following shall each constitute an event of default (“Event of Default”):

     (a) The occurrence of an “Event of Default” (as defined in either Lease Agreement) under either Lease Agreement or the termination of either Lease Agreement; or

     (b) Except as permitted by the Reimbursement Agreement, the Property is transferred or any agreement to transfer any part or interest in the Property in any manner whatsoever is made or entered into; or

     (c) If any lease agreement covering any portion of the Property is executed by Mortgagor (other than the Lease Agreement) without Mortgagee’s prior written consent, except as permitted in either Subordination, Attornment or Lessee-Lessor Estoppel Agreement of even date herewith among Mortgagor, Mortgagee and Tenant; or

     (d) Any warranty, representation or statement furnished to Mortgagee by or on behalf of Mortgagor under this Instrument, any of the other Financing Documents or the Environmental Indemnity Agreement Regarding Hazardous Substances, shall prove to have been false or misleading in any material respect; or

     (e) Failure of Mortgagor to observe or perform any other covenant, condition or obligation under this Instrument, any other Financing Document or the Environmental Indemnity Regarding Hazardous Substances for a period of 30 days after written notice is given to Mortgagor specifying such failure and directing that it be remedied, or if the failure stated in such notice cannot be corrected within such 30-day period, Mortgagor fails within such time to commence and pursue curative action with reasonable diligence or fails at any time after expiration of such applicable cure period to continue with reasonable diligence all necessary curative actions; or

     (f) The abandonment or vacation of the Property by Tenant, except for a period not to exceed six months for the purpose of environmental remediation or remodeling or repairing the Improvements in accordance with the terms of the Reimbursement Agreement; or

     (g) An Event of Default shall occur under the Reimbursement Agreement.

     Section 24. Rights and Remedies on Default. Upon the occurrence of any Event of Default and at any time thereafter, Mortgagee may exercise any one or more of the following rights and remedies:

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     (a) Mortgagee may declare the entire Indebtedness immediately due and payable, without notice, presentment, protest, demand or action of any nature whatsoever (each of which hereby is expressly waived by Mortgagor), whereupon the same shall become immediately due and payable.

     (b) Mortgagee shall have the right to foreclose this Instrument in accordance with applicable law.

     (c) In the event of any foreclosure, to the extent permitted by applicable law, Mortgagee will be entitled to a judgment which will provide that if the foreclosure sale proceeds are insufficient to satisfy the judgment, execution may issue for any amount by which the unpaid balance of the obligations secured by this Instrument exceeds the net sale proceeds payable to Mortgagee.

     (d) With respect to all or any part of the Property that constitutes personalty, Mortgagee shall have all rights and remedies of secured party under the Uniform Commercial Code.

     (e) Mortgagee shall have the right to have a receiver appointed to take possession of any or all of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, to collect all the Rents from the Property and apply the proceeds, over and above cost of the receivership, against the sums due under this Instrument, and to exercise all of the rights with respect to the Property described in Section 22 above. The receiver may serve without bond if permitted by law. To the extent permitted by law, Mortgagee’s right to the appointment of a receiver shall exist whether or not apparent value of the Property exceeds the sums due under this Instrument by a substantial amount. Employment by Mortgagee shall not disqualify a person from serving as a receiver.

     (f) In the event Mortgagor remains in possession of the Property after the Property is sold as provided above or Mortgagee otherwise becomes entitled to possession of the Property upon default of Mortgagor, Mortgagor shall become a tenant at will of Mortgagee or the purchaser of the Property and shall pay a reasonable rental for use of the Property while in Mortgagee’s possession.

     (g) Mortgagee shall have any other right or remedy provided in this Instrument, the Reimbursement Agreement or any other Financing Document or instrument delivered by Mortgagor in connection therewith, or available at law, in equity or otherwise.

     (h) Mortgagor does hereby grant and confer upon Mortgagee the fullest rights and remedies available for foreclosure of this Instrument by action or by advertisement pursuant to Minn. Stat. Chapters 580, 581 and 582, as said statutes may be amended from time to time, and pursuant to other applicable Minnesota laws and statutes, as amended, governing and authorizing mortgage foreclosures by action or by advertisement; and the power of sale granted to Mortgagee in this Instrument shall include, without limitation,

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the power of sale required to permit, at Mortgagee’s option, lawful foreclosure of this Instrument by advertisement in accordance with the statutes then made and provided.

     Section 25. Sale of the Property. In exercising its rights and remedies, Mortgagee may, at Mortgagee’s sole discretion, cause all or any part of the Property to be sold as a whole or in parcels, and certain portions of the Property may be sold without selling other portions. Mortgagee may bid at any public sale on all or any portion of the Property.

     Section 26. Notice of Sale. Mortgagee shall give Mortgagor reasonable notice of the time and place of any public sale of any personal property or of the time after which any private sale or other intended disposition of the personal property is to be made. Reasonable notice shall mean notice given in accordance with applicable law, including notices given in the manner and at the times required for notices in a nonjudicial foreclosure.

     Section 27. Waiver; Election of Remedies. A waiver by either party of a breach of a provision of this Instrument shall not constitute a waiver of or prejudice the party’s right otherwise to demand strict compliance with that provision or any other provision. Election by Mortgagee to pursue any remedy shall not exclude pursuit of any other remedy, and all remedies of Mortgagee under this Instrument are cumulative and not exclusive. An election to make expenditures or take action to perform an obligation of Mortgagor shall not affect Mortgagee’s right to declare a default and exercise its remedies under this Instrument.

     Mortgagee’s rights and remedies hereunder upon the occurrence of an Event of Default shall include, without limitation, the fullest range and benefit of the rights and remedies made available to a mortgagee pursuant to Minn. Stat. § 576.01 and Minn. Stat. § 559.17, as said statutes may be amended from time to time. In the event that Mortgagee elects to exercise its remedies under said statutes, or any of said remedies, the terms and provisions of said statutes, as amended, governing the exercise of said remedies shall govern, control and take precedence over any contrary terms contained in this Instrument. The exercise by Mortgagee of the statutory remedies referenced in this paragraph shall not constitute Mortgagee a “mortgagee-in-possession” under Minnesota law, or give rise to any liability which might otherwise attach to Mortgagee as a mortgagee-in-possession.

     Section 28. Satisfaction of Mortgage. Upon payment of all sums secured by this Instrument, Mortgagee shall execute a satisfaction of this Instrument and shall surrender this Instrument to the person or persons legally entitled thereto. Such person or persons shall pay Mortgagee’s costs incurred in connection with satisfaction of this Instrument.

     Section 29. Use of Property. The Property is not currently used for agricultural, farming, timber or grazing purposes. Mortgagor warrants that this Instrument is and will at all times constitute a commercial mortgage, as defined under appropriate state law.

     Section 30. Future Advances. Upon request of Mortgagor, Mortgagee, at Mortgagee’s option so long as this Instrument secures Indebtedness held by Mortgagee, may make Future Advances to Mortgagor. Such Future Advances, with interest thereon, shall be secured by this Instrument when evidenced by promissory notes stating that said notes are secured hereby.

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     Section 31. Imposition of Tax by State.

          (a) The following constitute state taxes to which this Section applies:

     (i) A specific tax upon mortgages or upon all or any part of the indebtedness secured by a mortgage.

     (ii) A specific tax on a mortgagor which the taxpayer is authorized or required to deduct from payments on the indebtedness secured by a mortgage.

     (iii) A tax on a mortgage chargeable against the mortgagee or the holder of the note secured.

     (iv) A specific tax on all or any portion of the indebtedness or on payments of principal and interest made by a mortgagor.

     (b) If any state tax to which this Section applies is enacted subsequent to the date of this Instrument, this shall have the same effect as an Event of Default, and Mortgagee may exercise any or all of the remedies available to it unless the following conditions are met:

     (i) Mortgagor may lawfully pay the tax or charge imposed by state tax, and

     (ii) Mortgagor pays the tax or charge within 30 days after notice from Mortgagee that the tax law has been levied.

     Section 32. Attorneys’ Fees. In the event suit or action is instituted to enforce or interpret any of the terms of this Instrument (including without limitation efforts to modify or vacate any automatic stay or injunction), the prevailing party shall be entitled to recover all expenses reasonably incurred at, before and after trial and on appeal whether or not taxable as costs, or in any bankruptcy proceeding including (without limitation) attorneys’ fees, witness fees (expert and otherwise), deposition costs, copying charges and other expenses. Whether or not any court action is involved, all reasonable expenses, including but not limited to the costs of searching records, obtaining title reports, surveyor reports and title insurance incurred by Mortgagee that are necessary at any time in Mortgagee’s opinion for the protection of its interest or enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest from the date of expenditure until repaid at the interest rate as provided in the Reimbursement Agreement. The term “attorneys’ fees” as used in the Financing Documents shall be deemed to mean such fees as are reasonable and actually incurred.

     Section 33. Governing Law; Severability. This Instrument shall be governed by the law of the State of Minnesota applicable to contracts made and to be performed therein (excluding choice-of-law principles). In the event that any provision or clause of this Instrument or the Reimbursement Agreement conflicts with applicable law, such conflict shall not affect other provisions of this Instrument or the Reimbursement Agreement which can be given effect

Chanhassen, Minnesota

15

without the conflicting provision, and to this end the provisions of this Instrument and the Reimbursement Agreement are declared to be severable.

     Section 34. Time of Essence. Time is of the essence of this Instrument.

     Section 35. Changes in Writing. This Instrument and any of its terms may only be changed, waived, discharged or terminated by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any agreement subsequently made by Mortgagor or Mortgagee relating to this Instrument shall be superior to the rights of the holder of any intervening lien or encumbrance.

     Section 36. No Offset. Mortgagor’s obligation to make payments and perform all obligations, covenants and warranties under this Instrument and under the Financing Documents shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation any setoff, counterclaim, abatement, suspension, recoupment, deduction, defense or other right that Mortgagor or any guarantor may have or claim against Mortgagee or any entity participating in the obligations secured hereby. The foregoing provisions of this Section, however, do not constitute a waiver of any claim or demand which Mortgagor or any guarantor may have in damages or otherwise against Mortgagee or any other person, or preclude Mortgagor from maintaining a separate action thereon; provided, however, that Mortgagor waives any right it may have at law or in equity to consolidate such separate action with any action or proceeding brought by Mortgagee.

     Section 37. Reimbursement Agreement. If any conflict or inconsistency exists between the terms of this Instrument and the terms of the Reimbursement Agreement, the terms of the Reimbursement Agreement shall govern.

     Section 38. Mortgage Registry Tax. Mortgagor agrees to pay upon demand, or upon demand to promptly reimburse Mortgagee for the payment of, the amount of the Mortgage Registry Tax payable with respect to and upon the recording of this Instrument in accordance with Minn. Stat. § 287.05.

     Section 39. Waiver of Jury Trial. MORTGAGOR AND MORTGAGEE HEREBY KNOWINGLY, VOLUNTARILY AND INTELLIGENTLY WAIVE ANY AND ALL RIGHTS THAT MORTGAGOR OR MORTGAGEE MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR THE STATE OF MINNESOTA, TO A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT, THE FINANCING DOCUMENTS OR ANY TRANSACTIONS CONTEMPLATED THEREBY OR RELATED THERETO. IT IS INTENDED THAT THIS WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS, CLAIMS AND/OR COUNTERCLAIMS IN ANY SUCH ACTION OR PROCEEDING.

     EACH PARTY UNDERSTANDS THAT THIS WAIVER IS A WAIVER OF A CONSTITUTIONAL SAFEGUARD, AND EACH PARTY INDIVIDUALLY BELIEVES THAT THERE ARE SUFFICIENT ALTERNATE PROCEDURAL AND SUBSTANTIVE

Chanhassen, Minnesota

16

SAFEGUARDS, INCLUDING, A TRIAL BY AN IMPARTIAL JUDGE, THAT ADEQUATELY OFFSET THE WAIVER CONTAINED HEREIN.

     Section 40. Special Provisions Modifying or Affecting this Instrument by Reason of the State in which the Property is Located. By virtue of the fact that the Property is located in the State of Minnesota, the provisions set forth below shall be applicable to this Instrument, and to the extent applicable, shall modify, affect and supplement the other provisions hereof.

     (a) Application of Rents. In the event that a receiver has been appointed, all Rents collected by Mortgagee pursuant to such receiver, shall, to the extent required by applicable law, be held and applied in the following order:

     (i) to payment of all reasonable fees of the receiver, if any, approved by the court;

     (ii) to the repayment when due of all tenant security deposits pursuant to the provisions of Minnesota Statutes § 504B.178;

     (iii) to payment of all delinquent or current real estate taxes and special assessments payable with respect to the Property or, if this Instrument so requires, to the periodic escrow for the payment thereof;

     (iv) to payment of all premiums then due for the insurance required by the provisions of this Instrument or, if this Instrument so requires, to the periodic escrow for the payment thereof;

     (v) to payment of expenses incurred for normal maintenance of the Property;

     (vi) if received prior to any foreclosure sale of the Property to Mortgagee for payment of the Indebtedness secured by this Instrument, but no such payment made after acceleration of the Indebtedness shall affect such acceleration; and

     (vii) if received during or with respect to a period after a foreclosure sale of the Property:

          (1) if the purchaser at the foreclosure sale is not Mortgagee, first to Mortgagee to the extent of any deficiency of the sale proceeds to repay the Indebtedness secured by this Instrument, second to the purchaser as a credit to the redemption price, but if the Property is not redeemed, then to the purchaser of the Property; and

          (2) if the purchaser at the foreclosure sale is Mortgagee, first to Mortgagee to the extent of any deficiency of the sale proceeds to repay the Indebtedness secured by this Instrument and the balance to be retained by Mortgagee as a credit to the redemption price, but if the

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Property is not redeemed, then to Mortgagee, whether or not such deficiency exists.

     The rights and powers of Mortgagee under the Assignment of Leases and Rents contained in this Instrument and the application of the Rents shall continue and remain in full force and effect both before and after commencement of any action or procedure to foreclose this Instrument, after any foreclosure sale of Mortgagor’s interest in the Property in connection with the foreclosure of this Instrument, and until expiration of the period of redemption from any such foreclosure sale, whether or not any deficiency from the unpaid balance of the Indebtedness exists after such foreclosure sale.

     (b) Foreclosure; Action or Advertisement. Mortgagee may (and is hereby authorized and empowered to) foreclose this Instrument by action or advertisement, pursuant to the statutes of the State of Minnesota in such case made and provided, power being expressly granted to sell the Property at public auction and convey the same to the purchaser to the full extent of Mortgagor’s interest and, out of the proceeds arising from such sale, to pay all Indebtedness secured hereby with interest, and all legal costs and charges of such foreclosure and the maximum attorneys’ fees permitted by law, which costs, charges and fees Mortgagor agrees to pay. Any real estate or interest or estate sold hereunder may be sold in one parcel, as an entirety, or in such parcels and in such manner or order as Mortgagee, in its sole discretion, may elect. In case of any sale of the Property pursuant to any judgment or decree of any court or at public auction or otherwise in connection with the enforcement of any of the terms of this Instrument, Mortgagee, its successors and assigns, may become the purchaser, and for the purpose of making settlement for or payment of the purchase price, shall be entitled to deliver over and use any sum then due under the Reimbursement Agreement and any claims for interest accrued and unpaid thereon, together with all other sums, with interest, advanced and unpaid hereunder, and all statutory charges for such foreclosure including maximum attorney’s fees allowed by law in order that there may be credited as paid on the purchase price the sum then due under the Reimbursement Agreement and all other sums, with interest, advanced and unpaid hereunder, and all charges and expenses of such foreclosure including maximum attorney’s fees allowed by law.

     (c) Instrument as Fixture Filing. From the date of its recording, this Instrument shall be effective as a financing statement filed as a fixture filing with respect to all goods constituting part of the Property (as more particularly described in item (a) of the granting clause of this Instrument) which are or are to become fixtures related to the real estate described herein. For this purpose, the following information is set forth:

(i)	Name and Address of Mortgagor:
	LTF REAL ESTATE VRDN I, LLC
	2902 Corporate Place
	Chanhassen, Minnesota 55317
(ii)	Name and Address of Mortgagee:

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18

	GENERAL ELECTRIC CAPITAL CORPORATION
	8400 Normandale Lake Boulevard, Suite 470
	Minneapolis, Minnesota 55437
(iii)	This document covers goods which are or are to become fixtures.
(iv)	The name of the record owner of the Property is the Mortgagor described above.
(v)	Mortgagor is organized as a limited liability company.
(vi)	Mortgagor’s jurisdiction of organization is Delaware.
(vii)	Mortgagor’s organizational identification number is DE 4543759.

[REMAINDER OF PAGE INTENTIONALLY BLANK;
EXECUTION PAGE FOLLOWS]

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     IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS INSTRUMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN INSTRUMENT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS INSTRUMENT ONLY BY ANOTHER WRITTEN INSTRUMENT.

     IN WITNESS WHEREOF, Mortgagor has executed this Instrument or has caused the same to be executed by its representatives thereunto duly authorized.

MORTGAGOR:

LTF REAL ESTATE VRDN I, LLC,

a Delaware limited liability company

By:

Name:

Title:

STATE OF MINNESOTA	)
	)	ss.
COUNTY OF	)

     This instrument was acknowledged before me a notary public on                           , 2008 by Eric J. Buss, as the Secretary of LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company, on behalf of said limited liability company.

Notary Public

My commission expires:

Prepared by, recording requested by and,
after recording, return to:

Andrews P. Romshek, Esq.
Kutak Rock LLP
1650 Farnam Street
Omaha, NE 68102-2186
(402) 346-6000

[EXECUTION PAGE OF MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF LEASES AND RENTS AND FIXTURE FILING]

Chanhassen, Minnesota

Exhibit A to Mortgage

DESCRIPTION OF PROPERTY

Property Address:	2902 Corporate Place
	Chanhassen, MN

Parcel 1: Lot 2, Block 1, LIFE TIME FITNESS 2ND ADDITION, according to the recorded plat thereof, Carver County, Minnesota.

Torrens Property-Certificate of Title No. 33647.0

Parcel 2: Non-exclusive easements as contained in the Declaration of Cross Access, Parking, Sanitary Sewer, Storm Water and Water Easements dated February 18, 2008, recorded March 19, 2008, as Document No. 166225

APN: 25.077004

Chanhassen, Minnesota

Exhibit B to Mortgage

PERMITTED EXCEPTIONS

     1. Real estate taxes for the year 2009 and thereafter, not yet due and payable.

     2. Special assessments hereafter levied, not yet due and payable.

     3. Final Certificate memorialized on the Certificate of Title for purposes of showing existing access control only, dated March 24, 1980, recorded April 21, 1980 as Document No. T31518.

     4. Right of Way in favor of the Public for purposes of showing existing access control only, dated January 14, 2000, recorded January 20, 2000 as Document No. T112494.

     5. Terms and conditions of Arboretum Business Park Development Contract/PUD Agreement dated August 25, 1997, recorded September 12, 1997 as Document No. T98262, as amended by the following:

     Addendum “A” to Development Contract/PUD Agreement dated September 22, 1997, recorded February 18, 1998 as Document No. T100332.

     Addendum “B” to Development Contract/PUD Agreement dated May 11, 1998, recorded July 8, 1998 as Document No. T102658.

     First Amendment to Arboretum Business Park Development Contract/PUD Agreement dated August 20, 2001, recorded December 4, 2001 as Document No. T123316.

     Second Amendment to Arboretum Business Park Development Contract/PUD Agreement dated December 10, 2001, recorded September 12, 2003 as Document No. T140561.

     Third Amendment to Arboretum Business Park Development Contract/PUD Agreement dated April 14, 2003, recorded December 3, 2003 as Document No. T142928.

     Certificate of Compliance granted September 13, 2004 from the City of Chanhassen, a municipal corporation to Chaska Gateway Partners Limited Partnership and recorded November 17, 2004 as Document No. T149708.

     6. Conveyance of the right of access, being the right of ingress to and egress from the land to State Highway No. 5 as contained in Warranty Deed dated July 21, 2000, recorded July 31, 2000 as Document No. T115101.

     7. Terms and conditions of Arboretum Business Park 4th Addition Development Contract/PUD Agreement dated June 24, 2002, recorded July 22, 2002 as Document No. T128490.

Chanhassen, Minnesota

     8. Terms, conditions, covenants, restrictions and easements created pursuant to Declaration of Covenants, Conditions, Restrictions and Easements dated July 8, 2002, recorded July 22, 2002 as Document No. T128493.

     9. Easement for lane dividers and landscaping purposes, together with any incidental rights, in favor of the City of Chanhassen, as contained in the Declaration of Easements, dated November 6, 2004, recorded November 17, 2004 as Document No. 149707.

     10. Easements as shown on the recorded plat of LIFE TIME FITNESS and on the recorded plat of LIFE TIME FITNESS 2ND ADDITION.

     11. Terms and conditions of Life Time Fitness Development Contract/PUD Agreement dated August 9, 2004, recorded December 8, 2004 as Document No. T150097.

     12. Terms and conditions of Site Plan Permit # 04-22 by and between the City of Chanhassen and Life Time Fitness dated August 9, 2004, recorded December 8, 2004 as Document No. T150099.

     13. Terms, conditions, easements, restrictions, covenants and provisions as contained in the Declaration of Cross Access, Parking, Sanitary Sewer, Storm Water and Water Easements dated February.

     14. The following as disclosed by the survey prepared by Alliant Engineering, Inc., dated April 25, 2008, Job No. 60035:

          a. drainage and utility easement per Arboretum Business Park;

          b. storm sewer line crossing the western side of the land.

Chanhassen, Minnesota

EX-10.10

Exhibit 10.10

Prepared by, recording requested by and,
after recording, return to:

Andrew P. Romshek, Esq.
Kutak Rock LLP
The Omaha Building
1650 Farnam Street
Omaha, NE 68102

MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING

     THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING is made as of June 1, 2008 (this “Instrument”), by the Mortgagor, LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company, whose mailing address is 2902 Corporate Place, Chanhassen, MN 55317 (“Mortgagor”), in favor of and for the benefit of the Mortgagee, GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, whose mailing address is Suite 470, 8400 Normandale Lake Boulevard, Minneapolis, Minnesota 55437 (“Mortgagee”).

WITNESSETH

     THAT, WHEREAS, Mortgagor is justly indebted to Mortgagee in the principal sum of $35,090,875 pursuant to that certain Reimbursement Agreement (as defined below); and

     THAT, WHEREAS, the maximum principal amount secured by this Instrument is $17,896,346, plus interest and protective advances;

     NOW, THEREFORE, Mortgagor, in consideration of the indebtedness herein recited, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, irrevocably grants, conveys, mortgages, warrants and assigns to Mortgagee, as security for such indebtedness, all of Mortgagor’s estate, right, title and interest, now owned or hereafter acquired, including any reversion or remainder interest, in the real property located in

Overland Park, Kansas

the City of Overland Park, County of Johnson, State of Kansas described on Exhibit A attached hereto and incorporated herein including all heretofore or hereafter vacated alleys and streets abutting the property, and all easements, rights, appurtenances, tenements, hereditaments, rents, royalties, mineral, oil and gas rights and profits, water, water rights and water stock appurtenant to the property (collectively “Premises”);

     TOGETHER with all of Mortgagor’s estate, right, title and interest, now owned or hereafter acquired, in, under and to:

     (a) all buildings, structures, improvements, parking areas, landscaping, equipment, fixtures and articles of property now or hereafter erected on or attached to the Premises; including, but without being limited to, all heating, air conditioning, manufacturing and incinerating apparatus and equipment; all boilers, engines, motors, dynamos, generating equipment, piping and plumbing fixtures, water heaters, walk-in refrigerators and freezers, cooling, ventilating, sprinkling and vacuum cleaning systems, fire extinguishing apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding, elevators, escalators, partitions, mantels, built-in mirrors, window shades, blinds, draperies, screens, storm sash, awnings, signs, and outdoor shrubbery and plants, and including also all interest of any owner of the Premises in any of such items hereafter at any time acquired under conditional sale contract, chattel mortgage or other title retaining or security instrument, all of which property mentioned in this clause (a) shall be deemed part of the realty covered by this Instrument and not severable wholly or in part without material injury to the freehold of the Premises (all of the foregoing together with replacements and additions thereto are referred to herein as “Improvements”); and

     (b) all compensation, awards, damages, rights of action and proceeds, including interest thereon and/or the proceeds of any policies of insurance therefor, arising out of or relating to a (i) taking or damaging of the Premises or Improvements thereon by reason of any public or private improvement, condemnation proceeding (including change of grade), sale or transfer in lieu of condemnation, or fire, earthquake or other casualty, or (ii) any injury to or decrease in the value of the Premises or the Improvements for any reason whatsoever;

     (c) proceeds under any insurance any time provided with respect to the Premises, Improvements and other collateral described herein for the benefit of or naming Mortgagee and refunds or rebates of taxes or assessments on the Premises;

     (d) all written and oral leases and rental agreements (including, without limitation, that certain Lease Agreement dated June 13, 2008 (the “Lease Agreement”) between Mortgagor and LTF Club Operations Company, Inc. (“Tenant”)) (including extensions, renewals and subleases; each of the foregoing singularly shall be referred to herein as a “Lease,” and all of the foregoing shall be referred to collectively herein as the “Leases”) now or hereafter affecting the Premises including, without limitation, all rents, issues, income, profits and other revenues and income therefrom and from the renting, leasing or bailment of Improvements and equipment (“Rents”), all guaranties of tenants’ performance under the Leases (including, without limitation, all rights, title and interest in that certain Lease Guaranty and Negative Pledge Agreement dated as of June 1, 2008 by Life Time Fitness, Inc.), all letter-of-credit rights and all other supporting obligations associated with the Leases and all rights and claims of any kind that Mortgagor may

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have against any tenant under the Leases or in connection with the termination or rejection of the Leases in a bankruptcy or insolvency proceeding;

     (e) to the extent assignable without third party consents, plans, specifications, documents, contracts and agreements relating to the design or construction of the Improvements; Mortgagor’s rights under any payment, performance, or other bond in connection with the design or construction of the Improvements; all landscaping and construction materials, supplies, and equipment used or to be used or consumed in connection with construction of the Improvements, whether stored on the Premises or at some other location; and contracts, agreements, and purchase orders with contractors, subcontractors, suppliers, and materialmen incidental to the design or construction of the Improvements;

     (f) to the extent permitted by applicable law and to the extent assignable without third party consents, all contracts, deposits, deposit accounts, accounts, rights, claims or causes of action pertaining to or affecting the Premises or the Improvements, including, without limitation, all supporting obligations and any and all proceeds thereof, options or contracts to acquire other property for use in connection with operation or development of the Premises or Improvements, management contracts, service or supply contracts, permits, licenses, franchises and certificates with respect to the Premises and Improvements, and all commitments or agreements, now or hereafter in existence with respect to the Premises and Improvements, intended by the obligor thereof to provide Mortgagor with proceeds to satisfy the obligations evidenced hereby or improve the Premises or Improvements, and the right to receive all proceeds due under such commitments or agreements including refundable deposits and fees;

     (g) all books, records, surveys, reports and other documents related to the Premises, the Improvements, the Leases or other items of collateral described herein; and

     (h) all additions, accessions, replacements, substitutions, proceeds and products of the real and personal property, tangible and intangible, described herein.

     All of the foregoing described collateral is exclusive of any goods, equipment, inventory, furniture, furnishings or trade fixtures owned and supplied by tenants or subtenants of the Premises. The Premises, the Improvements, the Leases and all of the rest of the foregoing property are herein referred to as the “Property.”

     TO HAVE AND TO HOLD the Property and all parts, rights, members and appurtenances thereof to the use, benefit and behoof of Mortgagee and its successors and assigns in fee simple forever.

     TO SECURE TO Mortgagee (a) the repayment of the obligations under the Reimbursement Agreement dated as of June 1, 2008 (as amended, the “Reimbursement Agreement”) by and among Mortgagor, Mortgagee and GE Government Finance, Inc., in the aggregate principal sum of up to $35,090,875, of which $17,896,346 is secured by this Instrument, and all renewals, extensions and modifications thereof; (c) the repayment of any future advances, with interest thereon, made by Mortgagee to Mortgagor pursuant to Section 30 hereof (the “Future Advances”); (d) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Instrument or to fulfill any of

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Mortgagor’s obligations hereunder or under the other Financing Documents (as defined below); (e) the performance of the covenants and agreements of Mortgagor contained herein or in the other Financing Documents; and (f) the repayment of all sums now or hereafter owing to Mortgagee by Mortgagor pursuant to any instrument which recites that it is secured hereby. The indebtedness and obligations described in clauses (a)-(f) above are collectively referred to herein as the “Indebtedness.” The Reimbursement Agreement, this Instrument, and all other documents evidencing, securing or guaranteeing the Indebtedness (except the Environmental Indemnity Agreement Regarding Hazardous Substances), as the same may be modified or amended from time to time, are referred to herein as the “Financing Documents.” The obtaining of any judgment by Mortgagee (other than a judgment foreclosing this Instrument) and any levy of any execution under any such judgment upon the Property shall not affect in any manner or to the extent the lien of this Instrument upon the Property or any part thereof, or any liens, powers, rights and remedies of Mortgagee hereunder, but such liens, powers, rights and remedies shall continue unimpaired as before until the judgment or levy is satisfied. The terms of the Financing Documents secured hereby may provide that the interest rate or payment terms or balance due may be indexed, adjusted, renewed, or renegotiated from time to time, and this Instrument shall continue to secure the Indebtedness notwithstanding any such indexing, adjustment, renewal or renegotiation. If not sooner paid, the Indebtedness secured by this Instrument is due and payable in full on June 1, 2033.

     Mortgagor represents and warrants that Mortgagor has good, marketable and insurable title to, and has the right to grant, convey and assign an indefeasible fee simple estate in, the Premises, Improvements, Rents and Leases, and the right to convey the other Property, that the Property is unencumbered and that Mortgagor will warrant and forever defend unto Mortgagee the title to the Property against all claims and demands, subject only to the permitted exceptions set forth in Exhibit B attached hereto (herein “Permitted Exceptions”).

     Mortgagor represents, warrants, covenants and agrees for the benefit of Mortgagee as follows:

     Section 1. Payment of Principal and Interest. Mortgagor shall promptly pay or cause to be paid when due the principal of and interest on the Indebtedness, any prepayment and other charges provided in the Financing Documents and all other sums secured by this Instrument.

     Section 2. Funds for Taxes, Insurance and Other Charges. Except as is hereinafter provided with respect to the impounding of such payments by Mortgagee following the occurrence of an Event of Default (hereinafter defined), Mortgagor shall pay or cause to be paid when due, prior to delinquency, all annual real estate taxes, insurance premiums, assessments, water and sewer rates, ground rents and other charges (the “Impositions”) payable with respect to the Property. Upon the occurrence of an Event of Default, and at Mortgagee’s sole option at any time thereafter, Mortgagor shall pay in addition to each monthly payment due under the Reimbursement Agreement, one-twelfth of the annual Impositions (as estimated by Mortgagee in its sole discretion), to be held by Mortgagee in escrow without interest to Mortgagor, for the payment of such Impositions (such payments being referred to herein as “Impounds”).

     Annually during the term of this Instrument, Mortgagee shall compare the Impounds collected to the Impositions paid or to be paid. If the amount of such Impounds held by

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Mortgagee at such time shall exceed the amount deemed necessary by Mortgagee to provide for the payment of Impositions as they fall due, if no Event of Default shall have occurred and be continuing, such excess shall be at Mortgagor’s option, either repaid to Mortgagor or credited to Mortgagor on the next monthly installment or installments of Impounds due. If at any time the amount of the Impounds held by Mortgagee shall be less than the amount deemed necessary by Mortgagee to pay Impositions as they fall due, Mortgagor shall pay to Mortgagee any amount necessary to make up the deficiency within 30 days after notice from Mortgagee to Mortgagor requesting payment thereof. Upon the occurrence of an Event of Default hereunder, Mortgagee may apply, in any amount and in any order as Mortgagee shall determine in Mortgagee’s sole discretion, any Impounds held by Mortgagee at the time of application (i) to pay Impositions which are now or will hereafter become due, or (ii) as a credit against sums secured by this Instrument. Upon payment in full of all sums secured by this Instrument, Mortgagee shall refund to Mortgagor any Impounds then held by Mortgagee.

     Section 3. Application of Payments. (a) Each installment payment received by Mortgagee from Mortgagor under or with respect to the Reimbursement Agreement or this Instrument or the other Financing Documents shall be applied by Mortgagee to the Indebtedness in such order as provided in the Financing Documents.

     (b) If requested by Mortgagee, Mortgagor shall promptly furnish to Mortgagee all notices of Impositions which become due, and in the event Mortgagor shall make payment directly, Mortgagor shall promptly furnish to Mortgagee receipts evidencing such payments.

     Section 4. Charges, Liens. Mortgagor shall promptly discharge any lien which has, or may have, priority over or equality with, the lien of this Instrument, and Mortgagor shall pay, when due, the claims of all persons supplying labor or materials to or in connection with the Property. Mortgagor shall not allow any lien to be perfected against the Property other than the Permitted Exceptions set forth in Exhibit B attached hereto. If any such lien is filed against the Property, Mortgagor shall promptly, at its own expense, cause such lien to be released of record or bonded off and to deliver evidence of such release or bonding to Mortgagee. Mortgagor may contest any such lien by appropriate proceedings in good faith, timely filed, provided that enforcement of the lien is stayed pending such contest or Mortgagor pays to Mortgagee 125% of the amount of the lien to be held by Mortgagee in escrow without interest to Mortgagor. Mortgagee may require that Mortgagor post security for payment of such lien.

     Section 5. Insurance and Damage or Destruction of Property. Mortgagor shall obtain and maintain the types of insurance upon and relating to the Property as required by the Reimbursement Agreement, and, upon the damage or destruction of the Property, insurance proceeds shall be disbursed as provided in the Reimbursement Agreement.

     Section 6. [Reserved.]

     Section 7. [Reserved.]

     Section 8. Protection of Mortgagee’s Security. If an Event of Default shall have occurred and be continuing, or if any action or proceeding is commenced which affects the Property or title thereto or the interest of Mortgagee therein, including, but not limited to,

Overland Park, Kansas

5

eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then Mortgagee at Mortgagee’s option may make such appearances, disburse such sums and take such action as Mortgagee deems necessary, in its sole discretion, to protect Mortgagee’s interest, including, but not limited to (a) disbursement of reasonable attorneys’ fees, (b) entry upon the Property to make repairs and (c) procurement of satisfactory insurance as provided in Section 5 hereof.

     Any amounts disbursed by Mortgagee pursuant to this Section, with interest thereon, shall become additional Indebtedness of Mortgagor secured by this Instrument. Unless Mortgagor and Mortgagee agree to other terms of payment, such amounts shall be immediately due and payable and shall bear interest from the date of disbursement at the Post-Default Rate (as defined in the Reimbursement Agreement). Mortgagor hereby covenants and agrees that Mortgagee shall be subrogated to the lien of any mortgage or other lien discharged, in whole or in part, by the Indebtedness. Nothing contained in this Section shall require Mortgagee to incur any expense or take any action hereunder.

     Section 9. Inspection. Mortgagee may make or cause to be made entries upon the Property to inspect the interior and exterior thereof. Except in the case of emergency, such inspection shall be with reasonable prior notice and shall in any case be with due regard to rights of tenants.

     Section 10. Condemnation. If the Property, or any part thereof, shall be condemned for any reason, including without limitation fire or earthquake damage, or otherwise taken for public or quasi-public use under the power of eminent domain, or be transferred in lieu thereof, all damages or other amounts awarded for the taking of, or injury to, the Property shall be paid and applied as provided in the Reimbursement Agreement.

     Section 11. Mortgagor and Lien not Released. From time to time, and subject to the requirements of the Reimbursement Agreement, Mortgagee may, at Mortgagee’s option, without giving notice to or obtaining the consent of Mortgagor, Mortgagor’s successors or assigns or of any junior lienholder or guarantors, without liability on Mortgagee’s part and notwithstanding Mortgagor’s breach of any covenant or agreement of Mortgagor in this Instrument, extend the time for payment of the Indebtedness or any part thereof, reduce the payments thereon, release anyone liable on any of the Indebtedness, accept an extension or modification or renewal note or notes therefor, modify the terms and time of payment of the Indebtedness, release from the lien of this Instrument any part of the Property, take or release other or additional security, reconvey any part of the Property, consent to any map or plan of the Property, consent to the granting of any easement, join in any extension or subordination agreement, and agree in writing with Mortgagor to modify the rate of interest or period of amortization of the obligations under the Reimbursement Agreement or decrease the amount of the monthly installments payable thereunder. Any actions taken by Mortgagee pursuant to the terms of this Section shall not affect the obligation of Mortgagor or Mortgagor’s successors or assigns to pay the sums secured by this Instrument and to observe the covenants of Mortgagor contained herein, shall not affect the guaranty of any person, corporation, partnership or other entity for payment of the Indebtedness, and shall not affect the lien or priority of the lien hereof on the Property. Mortgagor shall pay

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Mortgagee a service charge, together with such title insurance premiums and attorneys’ fees as may be incurred at Mortgagee’s option, for any such action if taken at Mortgagor’s request.

     Section 12. Forbearance by Mortgagee not a Waiver. Any forbearance by Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any other right or remedy. The acceptance by Mortgagee of payment of any sum secured by this Instrument after the due date of such payment shall not be a waiver of Mortgagee’s right to either require prompt payment when due of all other sums so secured or to declare a default for failure to make prompt payment. The procurement of insurance or the payment of taxes or other liens or charges by Mortgagee shall not be a waiver of Mortgagee’s right to accelerate the maturity of the Indebtedness secured by this Instrument, nor shall Mortgagee’s receipt of any awards, proceeds or damages under Sections 5 and 10 hereof operate to cure or waive Mortgagor’s default in payment of sums secured by this Instrument.

     Section 13. Uniform Commercial Code Security Agreement. This Instrument is intended to be a security agreement pursuant to the Uniform Commercial Code, as enacted in the State of Minnesota (the “Uniform Commercial Code”) for any of the items specified above as part of the Property which, under applicable law, may be subject to a security interest pursuant to the Uniform Commercial Code, and Mortgagor hereby grants and conveys to Mortgagee a first and prior security interest in all of the Property that constitutes personalty, whether now owned or hereafter acquired. Mortgagor agrees that Mortgagee may file this Instrument, or a reproduction thereof, in the real estate records or other appropriate index, as a financing statement for any of the items specified above as part of the Property. Any reproduction of this Instrument or of any other security agreement or financing statement shall be sufficient as a financing statement. In addition, Mortgagor agrees to execute and deliver to Mortgagee, upon Mortgagee’s request, any financing statements, extensions, renewals, amendments and other records, and reproductions of this Instrument in such form as Mortgagee may require to perfect a security interest with respect to the foregoing items. Mortgagor shall pay all costs of filing such financing statements and any extensions, renewals, amendments and releases thereof, and shall pay all costs and expenses of any record searches for financing statements Mortgagee may require. Mortgagor hereby waives any and all rights Mortgagor may have to file in the real estate records or any other index or record any financing statement, amendment, termination statement or other record pertaining to the Collateral and/or Mortgagee’s interest therein. Without the prior written consent of Mortgagee, Mortgagor shall not create or suffer to be created pursuant to the Uniform Commercial Code any other security interest in said items, including replacements and additions thereto. Upon an Event of Default, Mortgagee shall have the remedies of a secured party under the Uniform Commercial Code, and Mortgagee may also invoke the remedies provided in Sections 24, 25, 26 and 27 hereof as to such items. In exercising any of said remedies Mortgagee may proceed against the items of real property and any items of personal property specified above separately or together and in any order whatsoever, without in any way affecting the availability of Mortgagee’s remedies under the Uniform Commercial Code or of the remedies provided in Sections 24, 25, 26 and 27 hereof.

     Section 14. Leases of the Property. Mortgagor shall comply with and observe Mortgagor’s obligations as landlord under all Leases of the Property or any part thereof. All

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Leases now or hereafter entered into will be in form and substance subject to the approval of Mortgagee. Mortgagor shall pay all reasonable attorneys’ fees incurred by Mortgagee in reviewing any Lease or proposed Lease. All Leases of the Property shall specifically provide that such Leases are subordinate to this Instrument; that the tenant attorns to Mortgagee, such attornment to be effective upon Mortgagee’s acquisition of title to the Property; that the tenant agrees to execute such further evidences of attornment as Mortgagee may from time to time request; that the attornment of the tenant shall not be terminated by foreclosure; and that Mortgagee may, at Mortgagee’s option, accept or reject such attornments. Mortgagor shall not, without Mortgagee’s prior written consent, request or consent to the subordination of any Lease of all or any part of the Property to any lien subordinate to this Instrument. If Mortgagor becomes aware that any tenant proposes to do, or is doing, any act or thing which may give rise to any right of set-off against rent, Mortgagor shall (i) take such steps as shall be reasonably calculated to prevent the accrual of any right to a set-off against rent, (ii) immediately notify Mortgagee thereof in writing and of the amount of said set-offs, and (iii) within ten (10) days after such accrual, reimburse the tenant who shall have acquired such right to set-off or take such other steps as shall effectively discharge such setoff and as shall assure that rents thereafter due shall continue to be payable without set-off or deduction. Upon Mortgagee’s receipt of notice of the occurrence of any default or violation by Mortgagor of any of its obligations under the Leases, Mortgagee shall have the immediate right, but not the duty or obligation, without prior written notice to Mortgagor or to any third party, to enter upon the Property and to take such actions as Mortgagee may deem necessary to cure the default or violation by Mortgagor under the Leases. The costs incurred by Mortgagee in taking any such actions pursuant to this paragraph shall become part of the Indebtedness, shall bear interest at the Post-Default Rate, and shall be payable by Mortgagor to Mortgagee on demand. Mortgagee shall have no liability to Mortgagor or to any third party for any actions taken by Mortgagee or not taken pursuant to this paragraph.

     Section 15. Remedies Cumulative. Each remedy provided in this Instrument is distinct and cumulative to all other rights or remedies under this Instrument or afforded by law or equity, and may be exercised concurrently, independently or successively, in any order whatsoever.

     Section 16. Transfers of the Property or Beneficial Interests in Mortgagor; Assumption. Mortgagee may, at its option, declare all sums secured by this Instrument to be immediately due and payable, and Mortgagee may invoke any remedies permitted or not prohibited by Sections 24, 25, 26 and 27 hereof, if, except as otherwise permitted under the Reimbursement Agreement, title to the Property is changed or there is any transfer of any interest in the Property or in the income therefrom, by sale, lease, contract, mortgage, deed of trust, further encumbrance or otherwise (including any such transfers as security for additional financing of the Property).

     Section 17. Notice. Except for any notice required under applicable law to be given in another manner, all notices, certificates, requests, demands and other communications provided for hereunder or under any other Financing Document shall be in writing and shall be (a) personally delivered, (b) sent by first class United States mail, or (c) sent by overnight courier of national reputation, in each case addressed to the party to whom notice is being given at its address as set forth above or, as to each party, at such other address as may hereafter be

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designated by such party in a written notice to the other party complying as to delivery with the terms of this Section. All such notices, requests, demands and other communications shall be deemed to have been given on (a) the date received if personally delivered, (b) when deposited in the mail if delivered by mail, or (c) the date sent if sent by overnight courier.

     Section 18. Successors and Assigns Bound; Joint and Several Liability; Agents; Captions. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective heirs, successors and assigns of Mortgagee and Mortgagor, subject to the provisions of Section 16 hereof. If Mortgagor is comprised of more than one person or entity, whether as individuals, partners, partnerships or corporations, each such person or entity shall be jointly and severally liable for Mortgagor’s obligations hereunder. In exercising any rights hereunder or taking any actions provided for herein, Mortgagee may act through its employees, agents or independent contractors as authorized by Mortgagee. The captions and headings of the sections of this Instrument are for convenience only and are not to be used to interpret or define the provisions hereof.

     Section 19. Waiver of Statute of Limitations. Mortgagor hereby waives the right to assert any statute of limitations as a bar to the enforcement of the lien of this Instrument or to any action brought to enforce the Reimbursement Agreement or any other obligation secured by this Instrument.

     Section 20. Waiver of Marshalling. Notwithstanding the existence of any other security interests in the Property held by Mortgagee or by any other party, Mortgagee shall have the right to determine the order in which any or all of the Property shall be subjected to the remedies provided herein. Mortgagee shall have the right to determine the order in which any or all portions of the Indebtedness secured hereby are satisfied from the proceeds realized upon the exercise of the remedies provided herein. Mortgagor, any party who consents to this Instrument and any party who now or hereafter acquires a security interest in the Property and who has actual or constructive notice hereof hereby waives any and all right to require the marshalling of assets in connection with the exercise of any of the remedies permitted by applicable law or provided herein.

     Section 21. Advances, Costs and Expenses. Mortgagor shall pay within ten (10) days after written demand from Mortgagee all sums advanced by Mortgagee and all out-of-pocket costs and expenses incurred by Mortgagee in taking any actions pursuant to the Financing Documents including reasonable attorneys’ fees and disbursements, accountants’ fees, appraisal and inspection fees and the costs for title reports and guaranties, together with interest thereon at the Post-Default Rate from the date such costs were advanced or incurred. All such costs and expenses incurred by Mortgagee, and advances made, shall constitute advances under this Instrument to protect the Property and shall be secured by and have the same priority as the lien of this Instrument. If Mortgagor fails to pay any such advances, costs and expenses and interest thereon, Mortgagee, without foreclosing the lien of this Instrument, may at its option commence an independent action against Mortgagor for the recovery of the costs, expenses and/or advances, with interest, together with costs of suit, costs of title reports and guaranty of title, disbursements of counsel and attorneys’ fees incurred therein or in any appeal therefrom.

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     Section 22. Assignment of Leases and Rents. Mortgagor, for good and valuable consideration, the receipt of which is hereby acknowledged, to secure the Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell, transfer, assign, convey, set over and deliver unto Mortgagee all right, title and interest of Mortgagor in, to and under the Leases of the Property, whether now in existence or hereafter entered into, and all guaranties, amendments, extensions and renewals of said Leases and any of them, and all Rents which may now or hereafter be or become due or owing under the Leases, and any of them, or on account of the use of the Property.

          Mortgagor represents, warrants, covenants and agrees with Mortgagee as follows:

          (a) The sole ownership of the entire lessor’s interest in the Leases is vested in Mortgagor, and Mortgagor has not, and shall not, perform any acts or execute any other instruments which might prevent Mortgagee from fully exercising its rights with respect to the Leases under any of the terms, covenants and conditions of this Instrument.

          (b) The Leases are and shall be valid and enforceable in accordance with their terms and have not been and shall not be altered, modified, amended, terminated, canceled, renewed or surrendered except as approved in writing by Mortgagee. The terms and conditions of the Leases have not been and shall not be waived in any manner whatsoever except as approved in writing by Mortgagee.

          (c) Mortgagor shall not amend any Lease without prior written notice to Mortgagee and Mortgagee’s prior written consent.

          (d) There are no defaults now existing under any of the Leases and, to the best of Mortgagor’s knowledge, there exists no state of facts which, with the giving of notice or lapse of time or both, would constitute a default under any of the Leases.

          (e) Mortgagor shall give prompt written notice to Mortgagee of any notice received by Mortgagor claiming that a default has occurred under any of the Leases on the part of Mortgagor, together with a complete copy of any such notice.

          (f) Each of the Leases shall remain in full force and effect irrespective of any merger of the interest of lessor and any lessee under any of the Leases.

          (g) Mortgagor will not permit any Lease to become subordinate to any lien other than the lien of this Instrument.

          The assignment made hereunder is an absolute, present assignment from Mortgagor to Mortgagee, effective immediately, and is not merely an assignment for security purposes but is irrevocable by Mortgagor so long as the Indebtedness remains outstanding. Notwithstanding the foregoing, until a notice is sent to the Mortgagor in writing that an Event of Default (as defined below) has occurred under the terms and conditions of the Reimbursement Agreement or any instrument constituting security for Mortgagor’s obligations under the Reimbursement Agreement (which notice is hereafter called a “Notice”), Mortgagor is granted a license to receive, collect and enjoy the Rents accruing from the Property.

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          If an Event of Default shall occur, Mortgagee may, at its option, after service of a Notice, receive and collect all such Rents as they become due, from the Property. Mortgagee shall thereafter continue to receive and collect all such Rents, until Mortgagee shall otherwise agree in writing. All sums received by Mortgagor after service of such Notice shall be deemed received in trust and shall be immediately turned over to Mortgagee.

          Upon the occurrence and during the continuation of an Event of Default, Mortgagor hereby irrevocably appoints Mortgagee its true and lawful attorney-in-fact with power of substitution and with full power for Mortgagee in its own name and capacity or in the name and capacity of Mortgagor, from and after service of Notice, to demand, collect, receive and give complete acquittances for any and all Rents accruing from the Property, either in its own name or in the name of Mortgagor or otherwise, which Mortgagee may deem necessary or desirable in order to collect and enforce the payment of the Rents and to demand, collect, receive, endorse, and deposit all checks, drafts, money orders or notes given in payment of such Rents. Such appointment is coupled with an interest and is irrevocable. Mortgagee shall not be liable for or prejudiced by any loss of any note, checks, drafts, etc., unless such loss shall have been found by a court of competent jurisdiction to have been due to the gross negligence or willful misconduct of Mortgagee.

          Mortgagee shall apply the Rents received from Mortgagor’s lessees, toward Mortgagor’s obligations under the Reimbursement Agreement. If no Event of Default remains uncured, amounts received in excess of Mortgagor’s obligations under the Reimbursement Agreement shall be remitted to Mortgagor in a timely manner. Nothing contained herein shall be construed to constitute Mortgagee as a mortgagee-in-possession in absence of its physically taking possession of the Property.

          Upon the occurrence and during the continuation of an Event of Default, Mortgagor also hereby irrevocably appoints Mortgagee from and after service of notice as its true and lawful attorney-in-fact to appear in any state or federal bankruptcy, insolvency, or reorganization proceeding in any state or federal court involving any of the tenants of the Leases. Lessees of the Property are hereby expressly authorized and directed, from and after service of a Notice to pay any and all amounts due Mortgagor pursuant to the Leases to Mortgagee or such nominee as Mortgagee may designate in writing delivered to and received by such lessees who are expressly relieved of any and all duty, liability or obligation to Mortgagor in respect of all payments so made.

          If an Event of Default shall occur, Mortgagee is hereby vested with full power from and after service of a Notice to use all measures, legal and equitable, deemed by it necessary or proper to enforce the assignment granted hereunder and to collect the Rents assigned hereunder, including the right of Mortgagee or its designee, to enter upon the Property, or any part thereof, and take possession of all or any part of the Property together with all personal property, fixtures, documents, books, records, papers and accounts of Mortgagor relating thereto, and may exclude the Mortgagor, its agents and servants, wholly therefrom. Mortgagor hereby grants full power and authority to Mortgagee to exercise all rights, privileges and powers herein granted at any and all times after service of a Notice, with full power to use and apply all of the Rents and other income herein assigned to the payment of the costs of

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managing and operating the Property and of any indebtedness or liability of Mortgagor to Mortgagee, including but not limited to the payment of taxes, special assessments, insurance premiums, damage claims, the costs of maintaining, repairing, rebuilding and restoring the Improvements on the Premises or of making the same rentable, reasonable attorneys’ fees incurred in connection with the enforcement of the assignment granted hereunder, and of payments due from Mortgagor to Mortgagee under the Reimbursement Agreement and this Instrument, all in such order as Mortgagee may determine. Mortgagee shall be under no obligation to exercise or prosecute any of the rights or claims assigned to it hereunder or to perform or carry out any of the obligations of the lessor under any of the Leases and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Mortgagor in the Leases. It is further understood that the assignment granted hereunder shall not operate to place responsibility for the control, care, management or repair of the Property, or parts thereof, upon Mortgagee, nor shall it operate to make Mortgagee liable for the performance of any of the terms and conditions of any of the Leases, or for any waste of the Property by any lessee under any of the Leases or any other person, or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger, unless the same shall have been found by a court of competent jurisdiction to have been due to the gross negligence or willful misconduct of Mortgagee.

     Section 23. Default. The following shall each constitute an event of default (“Event of Default”):

     (a) The occurrence of an “Event of Default” (as defined in either Lease Agreement) under either Lease Agreement or the termination of either Lease Agreement; or

     (b) Except as permitted by the Reimbursement Agreement, the Property is transferred or any agreement to transfer any part or interest in the Property in any manner whatsoever is made or entered into; or

     (c) If any lease agreement covering any portion of the Property is executed by Mortgagor (other than the Lease Agreement) without Mortgagee’s prior written consent, except as permitted in either Subordination, Attornment or Lessee-Lessor Estoppel Agreement of even date herewith among Mortgagor, Mortgagee and Tenant; or

     (d) Any warranty, representation or statement furnished to Mortgagee by or on behalf of Mortgagor under this Instrument, any of the other Financing Documents or the Environmental Indemnity Agreement Regarding Hazardous Substances, shall prove to have been false or misleading in any material respect; or

     (e) Failure of Mortgagor to observe or perform any other covenant, condition or obligation under this Instrument, any other Financing Document or the Environmental Indemnity Regarding Hazardous Substances for a period of 30 days after written notice is given to Mortgagor specifying such failure and directing that it be remedied, or if the failure stated in such notice cannot be corrected within such 30-day period, Mortgagor fails within such time to commence and pursue curative action with reasonable diligence

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or fails at any time after expiration of such applicable cure period to continue with reasonable diligence all necessary curative actions; or

     (f) The abandonment or vacation of the Property by Tenant, except for a period not to exceed six months for the purpose of environmental remediation or remodeling or repairing the Improvements in accordance with the terms of the Reimbursement Agreement; or

     (g) An Event of Default shall occur under the Reimbursement Agreement.

     Section 24. Rights and Remedies on Default. Upon the occurrence of any Event of Default and at any time thereafter, Mortgagee may exercise any one or more of the following rights and remedies:

     (a) Mortgagee may declare the entire Indebtedness immediately due and payable, without notice, presentment, protest, demand or action of any nature whatsoever (each of which hereby is expressly waived by Mortgagor), whereupon the same shall become immediately due and payable.

     (b) Mortgagee shall have the right to foreclose this Instrument in accordance with applicable law.

     (c) In the event of any foreclosure, to the extent permitted by applicable law, Mortgagee will be entitled to a judgment which will provide that if the foreclosure sale proceeds are insufficient to satisfy the judgment, execution may issue for any amount by which the unpaid balance of the obligations secured by this Instrument exceeds the net sale proceeds payable to Mortgagee.

     (d) With respect to all or any part of the Property that constitutes personalty, Mortgagee shall have all rights and remedies of secured party under the Uniform Commercial Code.

     (e) Mortgagee shall have the right to have a receiver appointed to take possession of any or all of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, to collect all the Rents from the Property and apply the proceeds, over and above cost of the receivership, against the sums due under this Instrument, and to exercise all of the rights with respect to the Property described in Section 22 above. The receiver may serve without bond if permitted by law. To the extent permitted by law, Mortgagee’s right to the appointment of a receiver shall exist whether or not apparent value of the Property exceeds the sums due under this Instrument by a substantial amount. Employment by Mortgagee shall not disqualify a person from serving as a receiver.

     (f) In the event Mortgagor remains in possession of the Property after the Property is sold as provided above or Mortgagee otherwise becomes entitled to possession of the Property upon default of Mortgagor, Mortgagor shall become a tenant

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at will of Mortgagee or the purchaser of the Property and shall pay a reasonable rental for use of the Property while in Mortgagee’s possession.

     (g) Mortgagee shall have any other right or remedy provided in this Instrument, the Reimbursement Agreement or any other Financing Document or instrument delivered by Mortgagor in connection therewith, or available at law, in equity or otherwise.

     Section 25. Sale of the Property. In exercising its rights and remedies, Mortgagee may, at Mortgagee’s sole discretion, cause all or any part of the Property to be sold as a whole or in parcels, and certain portions of the Property may be sold without selling other portions. Mortgagee may bid at any public sale on all or any portion of the Property.

     Section 26. Notice of Sale. Mortgagee shall give Mortgagor reasonable notice of the time and place of any public sale of any personal property or of the time after which any private sale or other intended disposition of the personal property is to be made. Reasonable notice shall mean notice given in accordance with applicable law, including notices given in the manner and at the times required for notices in a nonjudicial foreclosure.

     Section 27. Waiver; Election of Remedies. A waiver by either party of a breach of a provision of this Instrument shall not constitute a waiver of or prejudice the party’s right otherwise to demand strict compliance with that provision or any other provision. Election by Mortgagee to pursue any remedy shall not exclude pursuit of any other remedy, and all remedies of Mortgagee under this Instrument are cumulative and not exclusive. An election to make expenditures or take action to perform an obligation of Mortgagor shall not affect Mortgagee’s right to declare a default and exercise its remedies under this Instrument.

     Section 28. Satisfaction of Mortgage. Upon payment of all sums secured by this Instrument, Mortgagee shall execute a satisfaction of this Instrument and shall surrender this Instrument to the person or persons legally entitled thereto. Such person or persons shall pay Mortgagee’s costs incurred in connection with satisfaction of this Instrument.

     Section 29. Use of Property. The Property is not currently used for agricultural, farming, timber or grazing purposes. Mortgagor warrants that this Instrument is and will at all times constitute a commercial mortgage, as defined under appropriate state law.

     Section 30. Future Advances. Upon request of Mortgagor, Mortgagee, at Mortgagee’s option so long as this Instrument secures Indebtedness held by Mortgagee, may make Future Advances to Mortgagor. Such Future Advances, with interest thereon, shall be secured by this Instrument when evidenced by promissory notes stating that said notes are secured hereby. The parties hereby acknowledge and agree that this Instrument may secure future advances up to the principal amount of $17,896,346 with interest and charges thereon pursuant to K.S.A. 58-2336, as it may be amended from time to time, or to any similar or successor law thereto.

     Section 31. Imposition of Tax by State.

     (a) The following constitute state taxes to which this Section applies:

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     (i) A specific tax upon mortgages or upon all or any part of the indebtedness secured by a mortgage.

     (ii) A specific tax on a mortgagor which the taxpayer is authorized or required to deduct from payments on the indebtedness secured by a mortgage.

     (iii) A tax on a mortgage chargeable against the mortgagee or the holder of the note secured.

     (iv) A specific tax on all or any portion of the indebtedness or on payments of principal and interest made by a mortgagor.

     (b) If any state tax to which this Section applies is enacted subsequent to the date of this Instrument, this shall have the same effect as an Event of Default, and Mortgagee may exercise any or all of the remedies available to it unless the following conditions are met:

     (i) Mortgagor may lawfully pay the tax or charge imposed by state tax, and

     (ii) Mortgagor pays the tax or charge within 30 days after notice from Mortgagee that the tax law has been levied.

     Section 32. Attorneys’ Fees. In the event suit or action is instituted to enforce or interpret any of the terms of this Instrument (including without limitation efforts to modify or vacate any automatic stay or injunction), the prevailing party shall be entitled to recover all expenses reasonably incurred at, before and after trial and on appeal whether or not taxable as costs, or in any bankruptcy proceeding including (without limitation) attorneys’ fees, witness fees (expert and otherwise), deposition costs, copying charges and other expenses. Whether or not any court action is involved, all reasonable expenses, including but not limited to the costs of searching records, obtaining title reports, surveyor reports and title insurance incurred by Mortgagee that are necessary at any time in Mortgagee’s opinion for the protection of its interest or enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest from the date of expenditure until repaid at the interest rate as provided in the Reimbursement Agreement. The term “attorneys’ fees” as used in the Financing Documents shall be deemed to mean such fees as are reasonable and actually incurred.

     Section 33. Governing Law; Severability. This Instrument shall be governed by the law of the State of Kansas applicable to contracts made and to be performed therein (excluding choice-of-law principles). In the event that any provision or clause of this Instrument or the Reimbursement Agreement conflicts with applicable law, such conflict shall not affect other provisions of this Instrument or the Reimbursement Agreement which can be given effect without the conflicting provision, and to this end the provisions of this Instrument and the Reimbursement Agreement are declared to be severable.

     Section 34. Time of Essence. Time is of the essence of this Instrument.

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     Section 35. Changes in Writing. This Instrument and any of its terms may only be changed, waived, discharged or terminated by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any agreement subsequently made by Mortgagor or Mortgagee relating to this Instrument shall be superior to the rights of the holder of any intervening lien or encumbrance.

     Section 36. No Offset. Mortgagor’s obligation to make payments and perform all obligations, covenants and warranties under this Instrument and under the Financing Documents shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation any setoff, counterclaim, abatement, suspension, recoupment, deduction, defense or other right that Mortgagor or any guarantor may have or claim against Mortgagee or any entity participating in the obligations secured hereby. The foregoing provisions of this Section, however, do not constitute a waiver of any claim or demand which Mortgagor or any guarantor may have in damages or otherwise against Mortgagee or any other person, or preclude Mortgagor from maintaining a separate action thereon; provided, however, that Mortgagor waives any right it may have at law or in equity to consolidate such separate action with any action or proceeding brought by Mortgagee.

     Section 37. Reimbursement Agreement. If any conflict or inconsistency exists between the terms of this Instrument and the terms of the Reimbursement Agreement, the terms of the Reimbursement Agreement shall govern.

     Section 38. Waiver of Redemption and Other Rights and Exemptions. To the fullest extent permitted by law, Mortgagor hereby specifically waives the benefit of all laws now existing or hereafter enacted in any way extending the time for enforcement or collection of the Indebtedness or creating or extending a period of redemption from any sale of the Property. Without limiting the foregoing, Mortgagor also waives any equity of redemption, homestead rights, dower and courtesy rights, and all other rights and exemptions of every kind and description with respect to the real property hereinabove described.

     Section 39. Waiver of Jury Trial. MORTGAGOR AND MORTGAGEE HEREBY KNOWINGLY, VOLUNTARILY AND INTELLIGENTLY WAIVE ANY AND ALL RIGHTS THAT MORTGAGOR OR MORTGAGEE MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR THE STATE OF MINNESOTA, TO A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT, THE FINANCING DOCUMENTS OR ANY TRANSACTIONS CONTEMPLATED THEREBY OR RELATED THERETO. IT IS INTENDED THAT THIS WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS, CLAIMS AND/OR COUNTERCLAIMS IN ANY SUCH ACTION OR PROCEEDING.

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     EACH PARTY UNDERSTANDS THAT THIS WAIVER IS A WAIVER OF A CONSTITUTIONAL SAFEGUARD, AND EACH PARTY INDIVIDUALLY BELIEVES THAT THERE ARE SUFFICIENT ALTERNATE PROCEDURAL AND SUBSTANTIVE SAFEGUARDS, INCLUDING, A TRIAL BY AN IMPARTIAL JUDGE, THAT ADEQUATELY OFFSET THE WAIVER CONTAINED HEREIN.

     Section 40. Fixture Filing. From the date of its recording, this Instrument shall be effective as a financing statement filed as a fixture filing with respect to all goods constituting part of the Property (as more particularly described in item (a) of the granting clause of this Instrument) which are or are to become fixtures related to the real estate described herein. For this purpose, the following information is set forth:

(i)	Name and Address of Mortgagor:
	LTF REAL ESTATE VRDN I, LLC 2902 Corporate Place Chanhassen, Minnesota 55317
(ii)	Name and Address of Mortgagee:
	GENERAL ELECTRIC CAPITAL CORPORATION 8400 Normandale Lake Boulevard, Suite 470 Minneapolis, Minnesota 55437
(iii)	This document covers goods which are or are to become fixtures.
(iv)	The name of the record owner of the Property is the Mortgagor described above.
(v)	Mortgagor is organized as a limited liability company.
(vi)	Mortgagor’s jurisdiction of organization is Delaware.
(vii)	Mortgagor’s organizational identification number is DE 4543759.

[REMAINDER OF PAGE INTENTIONALLY BLANK;
EXECUTION PAGE FOLLOWS]

Overland Park, Kansas

17

     IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS INSTRUMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN INSTRUMENT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS INSTRUMENT ONLY BY ANOTHER WRITTEN INSTRUMENT.

     IN WITNESS WHEREOF, Mortgagor has executed this Instrument or has caused the same to be executed by its representatives thereunto duly authorized.

MORTGAGOR:

LTF REAL ESTATE VRDN I, LLC,
a Delaware limited liability company

By:

Name:

Title:

STATE OF MINNESOTA	)
	) ss.
COUNTY OF	)

     This instrument was acknowledged before me a notary public on                      ___, 2008 by Eric J. Buss, as the Secretary of LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company, on behalf of said limited liability company.

Notary Public

My commission expires:

[EXECUTION PAGE OF MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF LEASES AND RENTS AND FIXTURE FILING]

Overland Park, Kansas

Exhibit A to Mortgage

DESCRIPTION OF PROPERTY

Property Address:	6800 W. 138th Street
	Overland Park, KS

PARCEL 1:

LOT 16, CORBIN PARK, SECOND PLAT, A SUBDIVISION OF LAND IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS, EXCEPT ANY PART TAKEN, USED OR DEDICATED FOR ROADS OR PUBLIC RIGHT OF WAYS.

PARCEL 2:

NON-EXCLUSIVE EASEMENTS FOR THE BENEFIT OF PARCEL 1 FOR ACCESS AS DESCRIBED IN SECTION 4, PARAGRAPH A, UTILITY AND STORM SEWER AS DESCRIBED IN SECTION 4, PARAGRAPH C, DRAINAGE AS DESCRIBED IN SECTION 4, PARAGRAPH D, AND FOR ACCESS EASEMENTS FOR MONUMENT SIGNAGE AS DESCRIBED IN SECTION 4, PARAGRAPH B AS CREATED IN AN EASEMENT AGREEMENT DATED NOVEMBER 18, 2005, FILED DECEMBER 2, 2005 IN BOOK 200512, AT PAGE 000955 OVER, UNDER AND ACROSS THE LAND DESCRIBED ON EXHIBITS D AND F THEREIN, EXCEPT ANY PART THEREOF THAT LIES WITHIN THE BOUNDARIES OF LOT 16, CORBIN PARK, SECOND PLAT, A SUBDIVISION IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS. SUBJECT TO THE TERMS, PROVISIONS, LIMITATIONS AND CONDITIONS AS SET FORTH IN SAID INSTRUMENT.

TRACT 1:

LOT 16, CORBIN PARK, SECOND PLAT, A SUBDIVISION OF LAND IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS, EXCEPT ANY PART TAKEN, USED OR DEDICATED FOR ROADS OR PUBLIC RIGHT OF WAYS.

TRACT 2:

NON-EXCLUSIVE EASEMENTS FOR THE BENEFIT OF PARCEL 1 FOR ACCESS AS DESCRIBED IN SECTION 4, PARAGRAPH A AND FOR STORM SEWER AS DESCRIBED IN SECTION 4, PARAGRAPH C AS CREATED IN AN EASEMENT AGREEMENT DATED NOVEMBER 18, 2005, FILED DECEMBER 2, 2005 IN BOOK 200512, AT PAGE 000955 OVER, UNDER AND ACROSS THE LAND DESCRIBED ON EXHIBITS D AND F THEREIN, EXCEPT ANY PART THEREOF THAT LIES WITHIN THE BOUNDARIES OF

Overland Park, Kansas

LOT 16, CORBIN PARK, SECOND PLAT, A SUBDIVISION IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS. SUBJECT TO THE TERMS, PROVISIONS, LIMITATIONS AND CONDITIONS AS SET FORTH IN SAID INSTRUMENT.

TRACT 3:

TEMPORARY, NON-EXCLUSIVE EASEMENTS FOR THE BENEFIT OF PARCEL 1 AS CREATED BY A TEMPORARY ACCESS AND CONSTRUCTION STAGING EASEMENT DATED NOVEMBER 18, 2005, FILED DECEMBER 2, 2005 IN BOOK 200512, AT PAGE 000956 FOR A TEMPORARY ACCESS EASEMENT AND A TEMPORARY CONSTRUCTION STAGING EASEMENT OVER, UNDER AND ACROSS THE LAND DESCRIBED IN EXHIBIT C AND EXHIBIT D THEREIN. SUBJECT TO THE TERMS, PROVISIONS, LIMITATIONS AND CONDITIONS AS SET FORTH IN SAID INSTRUMENT.

Overland Park, Kansas

Exhibit B to Mortgage

PERMITTED EXCEPTIONS

     1. Taxes and assessments for the year 2008 and subsequent years, not yet due and payable.

     2. Resolution enlarging Consolidated Main Sewer District of Johnson County, Kansas, as recorded in Volume 4988, Page 719 and Volume 4989, Page 842, and refiled in Volume 5009, Page 627.

     3. Terms and provisions of a Joint Declaration of Restrictive Covenants November 18, 2005, recorded December 2, 2005, in Volume 200512, Page 000957. Amendments recorded in Volume 200705, Page 001797; Volume 200712, Page 003876 and Page 003877.

     4. Terms and provisions of an Easement Agreement November 18, 2005, recorded December 2, 2005, in Volume 200512, Page 000955.

     5. Right-of-Way Grant to Consolidate Main Sewer District of Johnson County, filed September 1, 2005 in Volume 200509, Page 000226.

     6. An easement for Kansas City Power and Light Company in the document recorded in Volume 200605, Page 005582 of Official Records.

     7. An easement for Water District No. 1 in the document recorded in Volume 200511, Page 008542, Confined in Volume 200606, Page 009070, which was re-recorded in Volume 200610, Page 005339 of Official Records.

Overland Park, Kansas

EX-10.11

Exhibit 10.11

SUBORDINATION, ATTORNMENT
AND LESSEE-LESSOR ESTOPPEL AGREEMENT

(2902 Corporate Place, Chanhassen, MN)

     THIS SUBORDINATION, ATTORNMENT AND LESSEE-LESSOR ESTOPPEL AGREEMENT (this “Agreement”) is entered into as of June 1, 2008, by and among LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company, whose address is 2902 Corporate Place, Chanhassen, MN 55317 (“Lessor”), LTF CLUB OPERATIONS COMPANY, INC., a Minnesota corporation, whose address is 2902 Corporate Place, Chanhassen, MN 55317 (“Lessee”), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, whose address is Suite 470, 8400 Normandale Lake Boulevard, Minneapolis, Minnesota 55437 (“GECC”).

RECITALS:

     A. Lessee is the present lessee, and Lessor is the current lessor, under that certain Lease Agreement dated as of June                     , 2008 (as amended with the consent of GECC, the “Lease”) between Lessor, as lessor, and Lessee, as lessee, demising all or a portion of the premises in Chanhassen, Carver County, Minnesota, commonly known as 2902 Corporate Place, Chanhassen, MN, and more particularly described on Exhibit A attached hereto (the “Leased Premises”). Capitalized terms used herein but not defined herein shall have the meanings

Chanhassen, MN

ascribed to such terms in the Lease unless otherwise specified herein, in each case, without giving effect to any amendment or supplement to the Lease not consented to by GECC.

     B. Lessee acknowledges that the Lease has been or will be assigned by Lessor to GECC as security for the obligations under the Reimbursement Agreement dated as of June 1, 2008 (the “Reimbursement Agreement”) among Lessor, GECC and GE Government Finance, Inc., which obligations are secured by, among other things, a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing (the “Security Instrument”) to be recorded contemporaneously herewith covering the Leased Premises.

     C. A condition precedent to GECC’s entering into the Reimbursement Agreement is that Lessor obtain this Agreement from Lessee in order to confirm certain matters and to subordinate the Lease and Lessee’s interest in the Leased Premises to the lien of the Security Instrument.

     NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1. Lessee represents and warrants to GECC as follows:

     (a) Lessee has accepted possession and is in occupancy of the Leased Premises pursuant to the terms of the Lease, and the Lease is in full force and effect.

     (b) The improvements and space required to be furnished according to the Lease have been completed in all respects, all amounts owing from Lessor to Lessee in connection with delivery and construction of the Leased Premises (including, without limitation, tenant improvement costs, liquidated damages and charges for construction delays) have been paid and Lessee hereby waives any and all rights and remedies which Lessee may have against Lessor (including, without limitation, any right to terminate the Lease) as a result of any breach by Lessor of any of its obligations under the Lease relating to the delivery, construction or initial condition of the Leased Premises.

     (c) Lessor has done everything that it promised to do in order to induce Lessee to enter into the Lease. All conditions to the commencement of the Lease have been satisfied. There are no concessions or inducements which have been promised by Lessor or any other party to Lessee other than as set forth in the Lease.

     (d) The Lease as described above has not been modified, altered or amended.

     (e) There are no offsets or credits against rentals, nor have rentals been prepaid under the Lease.

     (f) Rental commenced to accrue on June ___, 2008 (the “Commencement Date”), current Basic Rent equals the sum of 49% of the Loan Obligations and there is currently no outstanding unpaid rent. The primary Lease term (the “Initial Term”) commenced on the Commencement Date and expires on July 31, 2023.

Chanhassen, MN

2

     (g) Lessee has no notice of a currently effective assignment, hypothecation or pledge of rents on the Lease to any party other than GECC and the lender (if any) whose loan is being repaid upon closing.

     (h) The Lease does not contain, and Lessee does not have, an outstanding option to extend or renew the term of the Lease except as follows: five extension options of five years each.

     (i) Lessee has no claim to or interest in the Leased Premises, legal or equitable, or any contract or option therefor other than as a lessee under the Lease. The Lease does not contain, and Lessee does not otherwise have, an outstanding option to purchase the Leased Premises, other than a first offer right contained in Article 27 of the Lease pursuant to which Lessee has the right of first offer to purchase the Leased Premises.

     (j) Sufficient parking facilities for Lessee’s purposes under the Lease are located on the Leased Premises.

     (k) Lessor is not in default of any of its obligations under the Lease, and, to the best of Lessee’s knowledge, no event has occurred which, with notice, the passage of time or both, would constitute a default in any of Lessor’s obligations under the Lease.

     (l) Lessee has not paid Lessor a security or similar type deposit.

     2. Lessee shall promptly provide GECC at its address first shown above with a written notice of any default on the part of the Lessor under the Lease. Except in accordance with Section 5 below, Lessee agrees that it shall not terminate the Lease or withhold Rent, nor invoke any of its remedies under the Lease or any other remedies available to Lessee at law or in equity without the prior written consent of GECC.

     3. Without the prior written consent of GECC, Lessee shall not (a) modify or in any manner alter the terms of the Lease; (b) pay the rent or any other sums becoming due under the terms of the Lease more than one month in advance; (c) accept Lessor’s waiver of or release from the performance of any obligation under the Lease; (d) assign the Lease to any entity that is not a Life Time Affiliate or sublet the Leased Premises covering more than 34% of the rentable area of the Improvements, in aggregate; (e) assign the Lease as collateral security or mortgage or otherwise encumber its leasehold interest; (f) make any Alterations, except as permitted under the Reimbursement Agreement; (g) make any Supervised Alterations; or (h) except as provided in Section 5, terminate or agree with Lessor to terminate the Lease. Until the Loan and the Loan Obligations are indefeasibly paid in full, Section 15.5 of the Lease shall not be effective unless GECC has consented to the related leasehold mortgage.

     4. Until the Loan and the Loan Obligations are indefeasibly paid in full or instructed otherwise by GECC in writing, Lessee shall make all future Rent and any other payments under the Lease directly to (a) until the Notes are paid in full, Trustee and (b) after the Notes are paid in full, GECC. Until the Loan and the Loan Obligations are indefeasibly paid in full, Lessor hereby irrevocably directs Lessee to make such payments directly to Trustee or GECC, as applicable, or as otherwise directed by GECC and agrees that Lessee shall not be liable to Lessor for any

Chanhassen, MN

3

payments actually paid to Trustee or GECC or as otherwise directed to GECC pursuant to this Section 4.

     5. If a casualty or a Taking occurs, and in connection therewith Tenant has the right to terminate the Lease pursuant to either Section 9.4 or Section 10.1 thereof, Tenant may not exercise such termination right unless, simultaneously therewith, Tenant pays to Landlord, as additional Rent, an amount equal to 49% of the sum of the outstanding principal amount of the Loan, interest accrued on the Loan through the date of such payment and all other Loan Obligations that are due and owing. This Section 5 modifies Sections 9.4 and 10.1 of the Lease. Accordingly, it is the intent of the parties that this Agreement, rather than the Lease, control with respect to all matters concerning Lessee’s rights to terminate the Lease upon the occurrence of any casualty or Taking.

     6. No determination of Fair Market Value or Fair Rental Value shall be effective unless GECC has given its written approval of such determination. No consent of Lessor under the Lease will be effective without GECC’s prior written consent. In any case under the Lease which requires that Lessor’s consent not be unreasonably withheld, it will be reasonable for Lessor to withhold its consent if GECC has not consented thereto in writing.

     7. The Lease and all right, title and interest of Lessee in, to and under the Lease (including, without limitation, all options or rights of first refusal to purchase the Leased Premises) are now, and shall at all times continue to be, unconditionally subject and subordinate in each and every respect, to the Security Instrument and to any and all renewals, modifications, extensions, substitutions, replacements and/or consolidations of the Security Instrument. For so long as the Security Instrument is a lien on the Leased Premises, Lessee shall not mortgage or otherwise encumber its leasehold interest or subordinate the estate of Lessee in the Lease to any other mortgage or deed of trust or any other security instrument.

     8. No provision of this Agreement may be changed, waived, discharged, or terminated except by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors and permitted assigns. Upon recorded satisfaction of the Security Instrument, this Agreement shall become null and void and be of no further effect.

     9. To the extent that the Lease shall entitle Lessee to notice of any mortgage, this Agreement shall constitute such notice to Lessee with respect to the Security Instrument, and Lessee hereby waives notice of any and all renewals, modifications, extensions, substitutions, replacements and/or consolidations of the Security Instrument. The term First Mortgagee or “mortgagee,” as used in the Lease, shall be deemed to include GECC, its successors and assigns, including anyone who shall have succeeded to Lessor’s interest by, through or under foreclosure of the Security Instrument or deed in lieu of such foreclosure. The term First Mortgage, “mortgage,” or any similar term, shall be deemed to include the Security Instrument to be recorded contemporaneously herewith.

     10. This Agreement shall be construed under the laws of the State of Minnesota applicable to contracts made and to be performed therein (excluding its choice-of-law

Chanhassen, MN

4

principles). For purposes of determining the parties’ respective rights and obligations in connection with any Event of Default, this Agreement will be considered a part of the Lease.

     11. This Agreement may be executed in any number of counterparts all of which taken together shall constitute one and the same instrument, and any of the parties or signatories hereto may execute this Agreement by signing any such counterpart.

     12. To the extent of any conflict between the provisions of any Loan Document (as defined in the Reimbursement Agreement) and the Lease which govern the application and disbursement of insurance and condemnation proceeds, the payment of Taxes, impounds or impositions, the repair and maintenance of the Property, maintenance of insurance with respect to the Property, the provisions of such Loan Document shall control. Notwithstanding anything in the Lease to the contrary, Lessee may not terminate the Lease because of damage to or condemnation of the Leased Premises except as permitted pursuant to Section 5 of this Agreement.

     13. In the event suit or action is instituted to enforce or interpret this Agreement, the prevailing party shall be entitled to recover all expenses reasonably incurred at, before or after trial and on appeal, whether or not taxable as costs, or in any bankruptcy proceeding, including, without limitation, attorneys’ fees, witness fees (expert and otherwise), deposition costs, copying charges and other expenses.

     14. Lessee hereby agrees that if GECC elects at any time to have the Lease superior to its Security Instrument and gives notice of its election to Lessee, then the Lease shall be superior to the lien of any such and all renewals, modifications, extensions, substitutions, replacements and/or consolidations thereof, whether the Lease is dated or recorded before or after the Security Instrument. If GECC shall become the owner of the Leased Premises, or if the Leased Premises shall be sold by reason of foreclosure or other proceedings brought to enforce the Security Instrument, or if the Leased Premises shall be transferred by deed in lieu of foreclosure, then at GECC’s sole option (a) the Lease shall continue in full force and effect as a direct lease agreement between Lessee and the then owner of the Leased Premises (including GECC or the grantee under any deed given as a result of any foreclosure or in lieu of foreclosure), upon and subject to all of the terms, covenants and conditions of the Lease for the balance of the term thereof remaining and any extensions or renewals thereof which may be effected in accordance with any option therefor in the Lease, and (b) Lessee shall attorn to GECC or any other such owner as its Lessor, said attornment to be effective and self-operative without the execution of any further instruments. From and after GECC’s or other such owner’s succession to the interest of Lessor under the Lease, Lessee shall have the same remedies against GECC or such other owner for the breach of any covenant contained in the Lease that Lessee might have had under the Lease against Lessor, except that neither GECC nor any other such owner shall be:

     (a) liable for any act or omission of, or for the performance of any obligation of, any prior lessor (including Lessor), including without limitation any obligation to repair, restore or expand any part of the Leased Premises;

Chanhassen, MN

5

     (b) subject to any offsets or defenses which Lessee might have against any prior lessor (including Lessor);

     (c) bound by any prepayment of rent or additional rent which Lessee might have paid for more than the current month or by payment of any security deposits to any prior lessor (including Lessor), except such security deposits as have actually been received by GECC or such other owner;

     (d) bound by any amendment or modification of the Lease or by any waiver or forbearance on the part of any prior lessor (including Lessor) made or given without the written consent of GECC or any subsequent holder of the Security Instrument;

     (e) bound by any representations or warranties of Lessor under the Lease;

     (f) bound by Sections 9.4, 10.1, 15.3, 15.4, 15.5 or 30.1 or Article 27 of the Lease.

     15. Except as otherwise provided in this paragraph, GECC shall not be bound by any nondisturbance provisions of the Lease. In such case, GECC or such other owner shall not be required to recognize the rights of Lessee under the Lease, and the rights of Lessee thereunder (including any options thereunder) shall at the sole election of and upon notice by GECC or such other owner cease and terminate upon acquisition of title to or upon possession of the Leased Premises by GECC, or such owner or their respective successors and assigns, including any purchaser at a foreclosure sale. However, if at any time after the date of this Agreement, (a) Lessee ceases to be a Life Time Affiliate (other than pursuant to a Change of Control (as defined in the Reimbursement Agreement) that creates an “event of default” under Reimbursement Agreement) or (b) Lessor or Lessee transfer their respective interests in any portion of the Leased Premises or the Lease pursuant to a transfer that is (i) expressly permitted or not prohibited (and does not create an “event of default”) under this Agreement, the Lease, or the Reimbursement Agreement or (ii) otherwise approved by GECC, and as a result of (a) or (b), the entities holding the respective interests of lessor and lessee under the Lease become unaffiliated, then provided no Event of Default exists, GECC shall comply with the nondisturbance provisions of the Lease, provided however, that if there exists any circumstance that with the passage of time or the giving of notice (or both) would constitute an Event of Default under the Lease, GECC shall only be obligated to proceed in accordance with this paragraph to the extent that Lessee cures such Event of Default within the cure period established therefor under the Lease.

     16. Lessee hereby waives any rights it may have to an award for a taking by eminent domain, except to the extent that the award (a) compensates Lessee for moving expenses, business interruption or taking of Tenant’s Property (other than Lessee’s leasehold interest), (b) is awarded separately in the eminent domain proceeding and (c) does not reduce the amount of Lessor’s award in the eminent domain proceeding.

     17. Any option or right of first refusal that Lessee may have to purchase the Leased Premises shall not apply to a sale by foreclosure or a deed in lieu of foreclosure and shall automatically be void and of no further force and effect following such sale by foreclosure or a

Chanhassen, MN

6

deed in lieu of foreclosure. Lessee shall execute promptly whatever documents GECC may request from time to time in order to confirm the foregoing.

     18. If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

     19. Any and all notices, elections, demands, or requests permitted or required to be made under this Agreement shall be in writing, signed by the party giving such notice, election, demand or request, and shall be delivered personally, or sent by registered, certified or Express United States mail, postage prepaid, or by Federal Express or similar service requiring a receipt, to the other party at the address stated above, or to such other party and at such other address within the United States of America as any party may designate in writing as provided herein. All such notices, requests, demands and other communications shall be deemed to have been given on (a) the date received if personally delivered, (b) when deposited in the mail if delivered by mail, or (c) the date sent if sent by overnight courier.

     20. LESSEE, LESSOR AND GECC HEREBY KNOWINGLY, VOLUNTARILY AND INTELLIGENTLY WAIVE ANY AND ALL RIGHTS THAT EACH PARTY MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR THE STATE OF MINNESOTA, TO A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY RELATED TRANSACTIONS. IT IS INTENDED THAT THIS WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS, CLAIMS AND/OR COUNTERCLAIMS IN ANY SUCH ACTION OR PROCEEDING.

     LESSEE, LESSOR AND GECC UNDERSTAND THAT THIS WAIVER IS A WAIVER OF A CONSTITUTIONAL SAFEGUARD, AND EACH PARTY INDIVIDUALLY BELIEVES THAT THERE ARE SUFFICIENT ALTERNATE PROCEDURAL AND SUBSTANTIVE SAFEGUARDS, INCLUDING, A TRIAL BY AN IMPARTIAL JUDGE, THAT ADEQUATELY OFFSET THE WAIVER CONTAINED HEREIN.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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7

     IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE, AMONG OTHER THINGS, IT AFFECTS THE PRIORITY OF YOUR LEASE AND BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN AGREEMENT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

     IN WITNESS WHEREOF the undersigned parties have executed this Agreement under seal as of the day and year first above written.

LESSEE:
LTF CLUB OPERATIONS COMPANY, INC., a Minnesota corporation
By
Name:	Eric J. Buss
Title:	Secretary

STATE OF MINNESOTA	)
	) ss.
COUNTY OF HENNEPIN	)

     This instrument was acknowledged before me on June                     , 2008 by Eric J. Buss, as Secretary of LTF Club Operations Company, Inc.

Notary Public

My commission expires:

[EXECUTION PAGE OF LESSEE TO SUBORDINATION, ATTORNMENT
AND LESSEE-LESSOR ESTOPPEL AGREEMENT]

Chanhassen, MN

GECC:

GENERAL ELECTRIC CAPITAL CORPORATION,
a Delaware corporation

By

Name

Title

STATE OF MINNESOTA	)
	)  ss
COUNTY OF HENNEPIN	)

Personally appeared before me,                                                             , a Notary Public,                                                             , with whom I am personally acquainted (or proved to me on the basis of satisfactory evidence), who, upon oath, acknowledged that he/she executed the within instrument for the purposes therein contained, and who further acknowledged that he/she is a Risk Analyst for General Electric Capital Corporation, a Delaware corporation, and is authorized to execute this instrument on behalf of said corporation.

WITNESS my hand, at office, this                      day of                                         , 2008.

	Notary Public, State of
`	My Commission Expires:

[EXECUTION PAGE OF GECC TO SUBORDINATION, ATTORNMENT
AND LESSEE-LESSOR ESTOPPEL AGREEMENT]

Chanhassen, MN

     Lessor joins in the execution of this document for the purpose of acknowledging and confirming the matters herein set forth.

LESSOR:
LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company
By
Name:	Eric J. Buss
Title:	Secretary

STATE OF MINNESOTA	)
	)  ss.
COUNTY OF HENNEPIN	)

     This instrument was acknowledged before me on June                     , 2008 by Eric J. Buss, as Secretary of LTF Real Estate VRDN I, LLC.

Notary Public

My commission expires:

Prepared by, recording requested by
and after recording, return to:

Andrew P. Romshek
Kutak Rock LLP
The Omaha Building
1650 Farnam Street
Omaha, NE 68102-2186

[EXECUTION PAGE OF LESSOR TO SUBORDINATION, ATTORNMENT
AND LESSEE-LESSOR ESTOPPEL AGREEMENT]

Chanhassen, MN

EXHIBIT A

LEGAL DESCRIPTION

Parcel 1: Lot 2, Block 1, LIFE TIME FITNESS 2ND ADDITION, according to the recorded plat thereof, Carver County, Minnesota.

Torrens Property-Certificate of Title No. 33647.0

Parcel 2: Non-exclusive easements as contained in the Declaration of Cross Access, Parking, Sanitary Sewer, Storm Water and Water Easements dated February 18, 2008, recorded March 19, 2008, as Document No. 166225.

Chanhassen, MN

EX-10.12

Exhibit 10.12

SUBORDINATION, ATTORNMENT
AND LESSEE-LESSOR ESTOPPEL AGREEMENT

(6800 West 138^th Street, Overland Park, KS)

     THIS SUBORDINATION, ATTORNMENT AND LESSEE-LESSOR ESTOPPEL AGREEMENT (this “Agreement”) is entered into as of June 1, 2008, by and among LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company, whose address is 2902 Corporate Place, Chanhassen, MN 55317 (“Lessor”), LTF CLUB OPERATIONS COMPANY, INC., a Minnesota corporation, whose address is 2902 Corporate Place, Chanhassen, MN 55317 (“Lessee”), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, whose address is Suite 470, 8400 Normandale Lake Boulevard, Minneapolis, Minnesota 55437 (“GECC”).

RECITALS:

     A. Lessee is the present lessee, and Lessor is the current lessor, under that certain Lease Agreement dated as of June ___, 2008 (as amended with the consent of GECC, the “Lease”) between Lessor, as lessor, and Lessee, as lessee, demising all or a portion of the premises in Overland Park, Johnson County, Kansas, commonly known as 6800 West 138^th Street, Overland Park, KS, and more particularly described on Exhibit A attached hereto (the “Leased Premises”). Capitalized terms used herein but not defined herein shall have the

Overland Park, KS

meanings ascribed to such terms in the Lease unless otherwise specified herein, in each case, without giving effect to any amendment or supplement to the Lease not consented to by GECC.

     B. Lessee acknowledges that the Lease has been or will be assigned by Lessor to GECC as security for the obligations under the Reimbursement Agreement dated as of June 1, 2008 (the “Reimbursement Agreement”) among Lessor, GECC and GE Government Finance, Inc., which obligations are secured by, among other things, a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing (the “Security Instrument”) to be recorded contemporaneously herewith covering the Leased Premises.

     C. A condition precedent to GECC’s entering into the Reimbursement Agreement is that Lessor obtain this Agreement from Lessee in order to confirm certain matters and to subordinate the Lease and Lessee’s interest in the Leased Premises to the lien of the Security Instrument.

     NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1. Lessee represents and warrants to GECC as follows:

     (a) Lessee has accepted possession and is in occupancy of the Leased Premises pursuant to the terms of the Lease, and the Lease is in full force and effect.

     (b) The improvements and space required to be furnished according to the Lease have been completed in all respects, all amounts owing from Lessor to Lessee in connection with delivery and construction of the Leased Premises (including, without limitation, tenant improvement costs, liquidated damages and charges for construction delays) have been paid and Lessee hereby waives any and all rights and remedies which Lessee may have against Lessor (including, without limitation, any right to terminate the Lease) as a result of any breach by Lessor of any of its obligations under the Lease relating to the delivery, construction or initial condition of the Leased Premises.

     (c) Lessor has done everything that it promised to do in order to induce Lessee to enter into the Lease. All conditions to the commencement of the Lease have been satisfied. There are no concessions or inducements which have been promised by Lessor or any other party to Lessee other than as set forth in the Lease.

     (d) The Lease as described above has not been modified, altered or amended.

     (e) There are no offsets or credits against rentals, nor have rentals been prepaid under the Lease.

     (f) Rental commenced to accrue on June ___, 2008 (the “Commencement Date”), current Basic Rent equals the sum of 51% of the Loan Obligations and there is currently no outstanding unpaid rent. The primary Lease term (the “Initial Term”) commenced on the Commencement Date and expires on July 31, 2023.

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2

     (g) Lessee has no notice of a currently effective assignment, hypothecation or pledge of rents on the Lease to any party other than GECC and the lender (if any) whose loan is being repaid upon closing.

     (h) The Lease does not contain, and Lessee does not have, an outstanding option to extend or renew the term of the Lease except as follows: two extension options of five years each.

     (i) Lessee has no claim to or interest in the Leased Premises, legal or equitable, or any contract or option therefor other than as a lessee under the Lease. The Lease does not contain, and Lessee does not otherwise have, an outstanding option to purchase the Leased Premises, other than a first offer right contained in Article 27 of the Lease pursuant to which Lessee has the right of first offer to purchase the Leased Premises.

     (j) Sufficient parking facilities for Lessee’s purposes under the Lease are located on the Leased Premises.

     (k) Lessor is not in default of any of its obligations under the Lease, and, to the best of Lessee’s knowledge, no event has occurred which, with notice, the passage of time or both, would constitute a default in any of Lessor’s obligations under the Lease.

     (l) Lessee has not paid Lessor a security or similar type deposit.

     2. Lessee shall promptly provide GECC at its address first shown above with a written notice of any default on the part of the Lessor under the Lease. Except in accordance with Section 5 below, Lessee agrees that it shall not terminate the Lease or withhold Rent, nor invoke any of its remedies under the Lease or any other remedies available to Lessee at law or in equity without the prior written consent of GECC.

     3. Without the prior written consent of GECC, Lessee shall not (a) modify or in any manner alter the terms of the Lease; (b) pay the rent or any other sums becoming due under the terms of the Lease more than one month in advance; (c) accept Lessor’s waiver of or release from the performance of any obligation under the Lease; (d) assign the Lease to any entity that is not a Life Time Affiliate or sublet the Leased Premises covering more than 34% of the rentable area of the Improvements, in aggregate; (e) assign the Lease as collateral security or mortgage or otherwise encumber its leasehold interest; (f) make any Alterations, except as permitted under the Reimbursement Agreement; (g) make any Supervised Alterations; or (h) except as provided in Section 5, terminate or agree with Lessor to terminate the Lease. Until the Loan and the Loan Obligations are indefeasibly paid in full, Section 15.5 of the Lease shall not be effective unless GECC has consented to the related leasehold mortgage.

     4. Until the Loan and the Loan Obligations are indefeasibly paid in full or instructed otherwise by GECC in writing, Lessee shall make all future Rent and any other payments under the Lease directly to (a) until the Notes are paid in full, Trustee and (b) after the Notes are paid in full, GECC. Until the Loan and the Loan Obligations are indefeasibly paid in full, Lessor hereby irrevocably directs Lessee to make such payments directly to Trustee or GECC, as applicable, or as otherwise directed by GECC and agrees that Lessee shall not be liable to Lessor for any

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3

payments actually paid to Trustee or GECC or as otherwise directed to GECC pursuant to this Section 4.

     5. If a casualty or a Taking occurs, and in connection therewith Tenant has the right to terminate the Lease pursuant to either Section 9.4 or Section 10.1 thereof, Tenant may not exercise such termination right unless, simultaneously therewith, Tenant pays to Landlord, as additional Rent, an amount equal to 51% of the sum of the outstanding principal amount of the Loan, interest accrued on the Loan through the date of such payment and all other Loan Obligations that are due and owing. This Section 5 modifies Sections 9.4 and 10.1 of the Lease. Accordingly, it is the intent of the parties that this Agreement, rather than the Lease, control with respect to all matters concerning Lessee’s rights to terminate the Lease upon the occurrence of any casualty or Taking.

     6. No determination of Fair Market Value or Fair Rental Value shall be effective unless GECC has given its written approval of such determination. No consent of Lessor under the Lease will be effective without GECC’s prior written consent. In any case under the Lease which requires that Lessor’s consent not be unreasonably withheld, it will be reasonable for Lessor to withhold its consent if GECC has not consented thereto in writing.

     7. The Lease and all right, title and interest of Lessee in, to and under the Lease (including, without limitation, all options or rights of first refusal to purchase the Leased Premises) are now, and shall at all times continue to be, unconditionally subject and subordinate in each and every respect, to the Security Instrument and to any and all renewals, modifications, extensions, substitutions, replacements and/or consolidations of the Security Instrument. For so long as the Security Instrument is a lien on the Leased Premises, Lessee shall not mortgage or otherwise encumber its leasehold interest or subordinate the estate of Lessee in the Lease to any other mortgage or deed of trust or any other security instrument.

     8. No provision of this Agreement may be changed, waived, discharged, or terminated except by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors and permitted assigns. Upon recorded satisfaction of the Security Instrument, this Agreement shall become null and void and be of no further effect.

     9. To the extent that the Lease shall entitle Lessee to notice of any mortgage, this Agreement shall constitute such notice to Lessee with respect to the Security Instrument, and Lessee hereby waives notice of any and all renewals, modifications, extensions, substitutions, replacements and/or consolidations of the Security Instrument. The term First Mortgagee or “mortgagee,” as used in the Lease, shall be deemed to include GECC, its successors and assigns, including anyone who shall have succeeded to Lessor’s interest by, through or under foreclosure of the Security Instrument or deed in lieu of such foreclosure. The term First Mortgage, “mortgage,” or any similar term, shall be deemed to include the Security Instrument to be recorded contemporaneously herewith.

     10. This Agreement shall be construed under the laws of the State of Kansas applicable to contracts made and to be performed therein (excluding its choice-of-law

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4

principles). For purposes of determining the parties’ respective rights and obligations in connection with any Event of Default, this Agreement will be considered a part of the Lease.

     11. This Agreement may be executed in any number of counterparts all of which taken together shall constitute one and the same instrument, and any of the parties or signatories hereto may execute this Agreement by signing any such counterpart.

     12. To the extent of any conflict between the provisions of any Loan Document (as defined in the Reimbursement Agreement) and the Lease which govern the application and disbursement of insurance and condemnation proceeds, the payment of Taxes, impounds or impositions, the repair and maintenance of the Property, maintenance of insurance with respect to the Property, the provisions of such Loan Document shall control. Notwithstanding anything in the Lease to the contrary, Lessee may not terminate the Lease because of damage to or condemnation of the Leased Premises except as permitted pursuant to Section 5 of this Agreement.

     13. In the event suit or action is instituted to enforce or interpret this Agreement, the prevailing party shall be entitled to recover all expenses reasonably incurred at, before or after trial and on appeal, whether or not taxable as costs, or in any bankruptcy proceeding, including, without limitation, attorneys’ fees, witness fees (expert and otherwise), deposition costs, copying charges and other expenses.

     14. Lessee hereby agrees that if GECC elects at any time to have the Lease superior to its Security Instrument and gives notice of its election to Lessee, then the Lease shall be superior to the lien of any such and all renewals, modifications, extensions, substitutions, replacements and/or consolidations thereof, whether the Lease is dated or recorded before or after the Security Instrument. If GECC shall become the owner of the Leased Premises, or if the Leased Premises shall be sold by reason of foreclosure or other proceedings brought to enforce the Security Instrument, or if the Leased Premises shall be transferred by deed in lieu of foreclosure, then at GECC’s sole option (a) the Lease shall continue in full force and effect as a direct lease agreement between Lessee and the then owner of the Leased Premises (including GECC or the grantee under any deed given as a result of any foreclosure or in lieu of foreclosure), upon and subject to all of the terms, covenants and conditions of the Lease for the balance of the term thereof remaining and any extensions or renewals thereof which may be effected in accordance with any option therefor in the Lease, and (b) Lessee shall attorn to GECC or any other such owner as its Lessor, said attornment to be effective and self-operative without the execution of any further instruments. From and after GECC’s or other such owner’s succession to the interest of Lessor under the Lease, Lessee shall have the same remedies against GECC or such other owner for the breach of any covenant contained in the Lease that Lessee might have had under the Lease against Lessor, except that neither GECC nor any other such owner shall be:

     (a) liable for any act or omission of, or for the performance of any obligation of, any prior lessor (including Lessor), including without limitation any obligation to repair, restore or expand any part of the Leased Premises;

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5

     (b) subject to any offsets or defenses which Lessee might have against any prior lessor (including Lessor);

     (c) bound by any prepayment of rent or additional rent which Lessee might have paid for more than the current month or by payment of any security deposits to any prior lessor (including Lessor), except such security deposits as have actually been received by GECC or such other owner;

     (d) bound by any amendment or modification of the Lease or by any waiver or forbearance on the part of any prior lessor (including Lessor) made or given without the written consent of GECC or any subsequent holder of the Security Instrument;

     (e) bound by any representations or warranties of Lessor under the Lease;

     (f) bound by Sections 9.4, 10.1, 15.3, 15.4, 15.5 or 30.1 or Article 27 of the Lease.

     15. Except as otherwise provided in this paragraph, GECC shall not be bound by any nondisturbance provisions of the Lease. In such case, GECC or such other owner shall not be required to recognize the rights of Lessee under the Lease, and the rights of Lessee thereunder (including any options thereunder) shall at the sole election of and upon notice by GECC or such other owner cease and terminate upon acquisition of title to or upon possession of the Leased Premises by GECC, or such owner or their respective successors and assigns, including any purchaser at a foreclosure sale. However, if at any time after the date of this Agreement, (a) Lessee ceases to be a Life Time Affiliate (other than pursuant to a Change of Control (as defined in the Reimbursement Agreement) that creates an “event of default” under Reimbursement Agreement) or (b) Lessor or Lessee transfer their respective interests in any portion of the Leased Premises or the Lease pursuant to a transfer that is (i) expressly permitted or not prohibited (and does not create an “event of default”) under this Agreement, the Lease, or the Reimbursement Agreement or (ii) otherwise approved by GECC, and as a result of (a) or (b), the entities holding the respective interests of lessor and lessee under the Lease become unaffiliated, then provided no Event of Default exists, GECC shall comply with the nondisturbance provisions of the Lease, provided however, that if there exists any circumstance that with the passage of time or the giving of notice (or both) would constitute an Event of Default under the Lease, GECC shall only be obligated to proceed in accordance with this paragraph to the extent that Lessee cures such Event of Default within the cure period established therefor under the Lease.

     16. Lessee hereby waives any rights it may have to an award for a taking by eminent domain, except to the extent that the award (a) compensates Lessee for moving expenses, business interruption or taking of Tenant’s Property (other than Lessee’s leasehold interest), (b) is awarded separately in the eminent domain proceeding and (c) does not reduce the amount of Lessor’s award in the eminent domain proceeding.

     17. Any option or right of first refusal that Lessee may have to purchase the Leased Premises shall not apply to a sale by foreclosure or a deed in lieu of foreclosure and shall automatically be void and of no further force and effect following such sale by foreclosure or a

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6

deed in lieu of foreclosure. Lessee shall execute promptly whatever documents GECC may request from time to time in order to confirm the foregoing.

     18. If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provisions to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

     19. Any and all notices, elections, demands, or requests permitted or required to be made under this Agreement shall be in writing, signed by the party giving such notice, election, demand or request, and shall be delivered personally, or sent by registered, certified or Express United States mail, postage prepaid, or by Federal Express or similar service requiring a receipt, to the other party at the address stated above, or to such other party and at such other address within the United States of America as any party may designate in writing as provided herein. All such notices, requests, demands and other communications shall be deemed to have been given on (a) the date received if personally delivered, (b) when deposited in the mail if delivered by mail, or (c) the date sent if sent by overnight courier.

     20. LESSEE, LESSOR AND GECC HEREBY KNOWINGLY, VOLUNTARILY AND INTELLIGENTLY WAIVE ANY AND ALL RIGHTS THAT EACH PARTY MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE UNITED STATES OF AMERICA OR THE STATE OF KANSAS, TO A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY RELATED TRANSACTIONS. IT IS INTENDED THAT THIS WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS, CLAIMS AND/OR COUNTERCLAIMS IN ANY SUCH ACTION OR PROCEEDING.

     LESSEE, LESSOR AND GECC UNDERSTAND THAT THIS WAIVER IS A WAIVER OF A CONSTITUTIONAL SAFEGUARD, AND EACH PARTY INDIVIDUALLY BELIEVES THAT THERE ARE SUFFICIENT ALTERNATE PROCEDURAL AND SUBSTANTIVE SAFEGUARDS, INCLUDING, A TRIAL BY AN IMPARTIAL JUDGE, THAT ADEQUATELY OFFSET THE WAIVER CONTAINED HEREIN.

     21. NOTICE: The following provisions are included in compliance with K.S.A. Sections 16-117 and 16-118. THIS WRITTEN AGREEMENT IS THE FINAL EXPRESSION OF THE SUBORDINATION, ATTORNMENT AND LESSEE-LESSOR ESTOPPEL AGREEMENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT BETWEEN THE LESSOR AND LEESSEE. THE FOLLOWING SPACE (WHICH LESSOR AND LESSEE AGREE IS SUFFICIENT SPACE) IS PROVIDED FOR THE PLACEMENT OF NONSTANDARD TERMS, IF ANY (IF THERE ARE NO NONSTANDARD TERMS TO BE ADDED, STATE “NONE”):

NONE

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7

     LESSOR AND LEESSEE HEREBY AFFIRM THAT THERE IS NO UNWRITTEN ORAL CREDIT AGREEMENT BETWEEN LESSOR AND LESSEE WITH RESPECT TO THE SUBJECT MATTER OF THIS WRITTEN SUBORDINATION, ATTORNMENT AND LESSEE-LESSOR ESTOPPEL AGREEMENT.

  Initialed for Lessor   Initialed for Lessee

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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8

     IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE, AMONG OTHER THINGS, IT AFFECTS THE PRIORITY OF YOUR LEASE AND BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN AGREEMENT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.

     IN WITNESS WHEREOF the undersigned parties have executed this Agreement under seal as of the day and year first above written.

LESSEE:

LTF CLUB OPERATIONS COMPANY, INC.,
a Minnesota corporation

By
Name:	Eric J. Buss
Title:	Secretary

     STATE OF MINNESOTA  )

                ) ss.

     COUNTY OF HENNEPIN  )

     This instrument was acknowledged before me on June ___, 2008 by Eric J. Buss, as Secretary of LTF Club Operations Company, Inc.

Notary Public

My commission expires: 

[EXECUTION PAGE OF LESSEE TO SUBORDINATION, ATTORNMENT
AND LESSEE-LESSOR ESTOPPEL AGREEMENT]

Overland Park, KS

GECC:

GENERAL ELECTRIC CAPITAL CORPORATION,
a Delaware corporation

By

Name

Title

     STATE OF MINNESOTA  )

                ) ss

     COUNTY OF HENNEPIN  )

Personally appeared before me,                                                            , a Notary Public,                                                             , with whom I am personally acquainted (or proved to me on the basis of satisfactory evidence), who, upon oath, acknowledged that he/she executed the within instrument for the purposes therein contained, and who further acknowledged that he/she is a Risk Analyst for General Electric Capital Corporation, a Delaware corporation, and is authorized to execute this instrument on behalf of said corporation.

WITNESS my hand, at office, this ___day of                     , 2008.

Notary Public, State of

My Commission Expires:

[EXECUTION PAGE OF GECC TO SUBORDINATION, ATTORNMENT
AND LESSEE-LESSOR ESTOPPEL AGREEMENT]

Overland Park, KS

     Lessor joins in the execution of this document for the purpose of acknowledging and confirming the matters herein set forth.

LESSOR:

LTF REAL ESTATE VRDN I, LLC,
a Delaware limited liability company

By
Name:	Eric J. Buss
Title:	Secretary

     STATE OF MINNESOTA  )

                ) ss.

     COUNTY OF HENNEPIN  )

     This instrument was acknowledged before me on June ___, 2008 by Eric J. Buss, as Secretary of LTF Real Estate VRDN I, LLC.

Notary Public

My commission expires:

Prepared by, recording requested by
and after recording, return to:

Andrew P. Romshek
Kutak Rock LLP
The Omaha Building
1650 Farnam Street
Omaha, NE 68102-2186

[EXECUTION PAGE OF LESSOR TO SUBORDINATION, ATTORNMENT
AND LESSEE-LESSOR ESTOPPEL AGREEMENT]

Overland Park, KS

EXHIBIT A

LEGAL DESCRIPTION

PARCEL 1:

LOT 16, CORBIN PARK, SECOND PLAT, A SUBDIVISION OF LAND IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS, EXCEPT ANY PART TAKEN, USED OR DEDICATED FOR ROADS OR PUBLIC RIGHT OF WAYS.

PARCEL 2:

NON-EXCLUSIVE EASEMENTS FOR THE BENEFIT OF PARCEL 1 FOR ACCESS AS DESCRIBED IN SECTION 4, PARAGRAPH A, UTILITY AND STORM SEWER AS DESCRIBED IN SECTION 4, PARAGRAPH C, DRAINAGE AS DESCRIBED IN SECTION 4, PARAGRAPH D, AND FOR ACCESS EASEMENTS FOR MONUMENT SIGNAGE AS DESCRIBED IN SECTION 4, PARAGRAPH B AS CREATED IN AN EASEMENT AGREEMENT DATED NOVEMBER 18, 2005, FILED DECEMBER 2, 2005 IN BOOK 200512, AT PAGE 000955 OVER, UNDER AND ACROSS THE LAND DESCRIBED ON EXHIBITS D AND F THEREIN, EXCEPT ANY PART THEREOF THAT LIES WITHIN THE BOUNDARIES OF LOT 16, CORBIN PARK, SECOND PLAT, A SUBDIVISION IN THE CITY OF OVERLAND PARK, JOHNSON COUNTY, KANSAS. SUBJECT TO THE TERMS, PROVISIONS, LIMITATIONS AND CONDITIONS AS SET FORTH IN SAID INSTRUMENT.

Overland Park, KS

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Bahram Akradi, Chief Executive Officer, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Life Time Fitness, Inc.;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

     4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and we have:

     a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

     5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

     a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: August 1, 2008

/s/ Bahram Akradi  

Bahram Akradi  

Chairman of the Board of Directors and Chief Executive Officer 

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Michael R. Robinson, Executive Vice President and Chief Financial Officer, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Life Time Fitness, Inc.;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

     4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and we have:

     a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     c) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

     5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

     a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: August 1, 2008

/s/ Michael R. Robinson  

Michael R. Robinson  

Executive Vice President and Chief Financial Officer 

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     Each of the undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

(1)	this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)	the information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Life Time Fitness, Inc.

Dated: August 1, 2008

/s/ Bahram Akradi  

Bahram Akradi  

Chairman of the Board of Directors and Chief Executive Officer 

/s/ Michael R. Robinson  

Michael R. Robinson  

Executive Vice President and Chief Financial Officer