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

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
(Do not check if a smaller reporting company) Smaller reporting company o

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 October 20, 2008 was 39,712,101 common shares.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2008 (unaudited) and December 31, 2007		3
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2008 and 2007 (unaudited)		4
Consolidated Statements of Cash Flows for the Nine Months Ended September 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		19
Item 4. Controls and Procedures		19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		20
Item 1A. Risk Factors		20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		20
Item 3. Defaults Upon Senior Securities		20
Item 4. Submission of Matters to a Vote of Security Holders		20
Item 5. Other Information		20
Item 6. Exhibits		21
SIGNATURES		22
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 31.1
EXHIBIT 31.2
EX-32

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)

	September 30,			December 31,
	2008			2007
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	7,119		$	5,354
Accounts receivable, net		5,318			4,475
Inventories		14,739			14,324
Prepaid expenses and other current assets		15,510			15,963
Deferred membership origination costs		19,280			16,205
Deferred income taxes		2,126			1,188
Income tax receivable		—			5,814
Total current assets		64,092			63,323
PROPERTY AND EQUIPMENT, net		1,451,641			1,259,271
RESTRICTED CASH		9,285			6,767
DEFERRED MEMBERSHIP ORIGINATION COSTS		14,895			14,367
OTHER ASSETS		56,012			42,805
TOTAL ASSETS	$	1,595,925		$	1,386,533
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	10,222		$	9,568
Accounts payable		15,921			12,872
Construction accounts payable		86,744			59,261
Accrued expenses		55,430			47,052
Deferred revenue		37,146			34,851
Total current liabilities		205,463			163,604
LONG-TERM DEBT, net of current portion		636,898			555,037
DEFERRED RENT LIABILITY		26,906			25,526
DEFERRED INCOME TAXES		48,931			38,607
DEFERRED REVENUE		15,415			17,529
OTHER LIABILITIES		21,888			13,673
Total liabilities		955,501			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; 39,708,302 and 39,137,947 shares issued and outstanding, respectively		794			783
Additional paid-in capital		383,470			373,910
Retained earnings		258,696			199,890
Accumulated other comprehensive loss		(2,536	)		(2,026	)
Total shareholders’ equity		640,424			572,557
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,595,925		$	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 Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
REVENUE:
Membership dues	$	131,232		$	111,744		$	377,001		$	318,939
Enrollment fees		6,818			6,501			19,991			18,565
In-center revenue		56,151			47,517			167,385			137,305
Total center revenue		194,201			165,762			564,377			474,809
Other revenue		4,608			3,688			11,290			9,879
Total revenue		198,809			169,450			575,667			484,688
OPERATING EXPENSES:
Center operations		116,300			97,626			337,139			281,153
Advertising and marketing		7,287			5,359			23,608			18,167
General and administrative		9,453			9,750			30,707			30,931
Other operating		4,926			4,255			13,696			11,371
Depreciation and amortization		18,720			14,917			52,500			43,282
Total operating expenses		156,686			131,907			457,650			384,904
Income from operations		42,123			37,543			118,017			99,784
OTHER INCOME (EXPENSE):
Interest expense, net of interest income of $30, $169, $119 and $324, respectively		(7,185	)		(7,135	)		(21,301	)		(19,032	)
Equity in earnings of affiliate		336			316			985			917
Total other income (expense)		(6,849	)		(6,819	)		(20,316	)		(18,115	)
INCOME BEFORE INCOME TAXES		35,274			30,724			97,701			81,669
PROVISION FOR INCOME TAXES		13,700			12,374			38,895			32,700
NET INCOME	$	21,574		$	18,350		$	58,806		$	48,969
BASIC EARNINGS PER COMMON SHARE	$	0.55		$	0.49		$	1.51		$	1.32
DILUTED EARNINGS PER COMMON SHARE	$	0.55		$	0.48		$	1.49		$	1.30
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC		39,025			37,630			38,946			37,061
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED		39,370			38,309			39,350			37,651

See notes to unaudited consolidated financial statements.

4

LIFE TIME FITNESS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	For the Nine Months Ended
	September 30,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	58,806		$	48,969
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		52,500			43,282
Deferred income taxes		8,094			4,856
Provision for doubtful accounts		15			105
Loss on disposal of property and equipment, net		1,159			281
Amortization of deferred financing costs		1,078			628
Share-based compensation		5,989			5,671
Excess tax benefit from stock option exercises		(38	)		(4,501	)
Equity in earnings of affiliate		(985	)		(917	)
Changes in operating assets and liabilities		16,840			8,953
Other		54			17
Net cash provided by operating activities		143,512			107,344
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (excluding non-cash purchases supplementally noted below)		(360,551	)		(310,478	)
Proceeds from sale of property and equipment		161,885			4,664
Proceeds from property insurance settlements		317			48
Increase in other assets		(6,443	)		(6,568	)
Increase in restricted cash		(2,518	)		(2,253	)
Net cash used in investing activities		(207,310	)		(314,587	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings		39,188			105,000
Repayments of long-term borrowings		(13,043	)		(9,279	)
Proceeds from revolving credit facility, net		42,500			2,800
Increase in deferred financing costs		(6,113	)		(2,008	)
Proceeds from common stock offering, net of underwriting discount and offering costs		—			92,510
Excess tax benefit from stock option exercises		38			4,501
Proceeds from stock option exercises		2,993			7,612
Net cash provided by financing activities		65,563			201,136
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		1,765			(6,107	)
CASH AND CASH EQUIVALENTS — Beginning of period		5,354			6,880
CASH AND CASH EQUIVALENTS — End of period	$	7,119		$	773
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest, net of capitalized interest of $7,491 and $5,792, respectively	$	19,555		$	17,845
Cash payments for income taxes	$	18,839		$	24,982
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Purchases of property and equipment financed through capital lease obligations	$	12,294		$	—
Purchases of property and equipment in accounts payable	$	28,909		$	2,548
Non-cash share-based compensation capitalized to projects under development	$	552		$	522

See notes to unaudited consolidated financial statements.

5

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 September 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 1,006,570 shares were outstanding, and a total of 810,466 restricted shares had been granted, of which 593,119 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 nine months ended September 30, 2008 and 2007, was as follows:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2008		2007		2008		2007
Share-based compensation expense related to stock options	$	533	$	705	$	1,852	$	2,406
Share-based compensation expense related to restricted shares		1,531		1,120		4,039		3,174
Share-based compensation expense related to ESPP		30		30		98		91
Total share-based compensation expense	$	2,094	$	1,855	$	5,989	$	5,671

6

The following table summarizes the stock option transactions for the nine months ended September 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		(179,853	)	$	16.69
Canceled		(21,844	)	$	32.46
Outstanding at September 30, 2008		1,006,570		$	21.73		5.9	$	9,601
Vested or Expected to Vest at September 30, 2008		982,873		$	21.58		5.8	$	9,524
Exercisable at September 30, 2008		767,208		$	19.78		5.7	$	8,819

No options were granted during the nine months ended September 30, 2008. The weighted average grant date fair value of stock options granted during the nine months ended September 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 nine months ended September 30, 2008 and 2007 was $3.7 million and $16.2 million, respectively. As of September 30, 2008, there was $1.6 million of unrecognized compensation expense related to stock options that is expected to be recognized over a weighted average period of 0.6 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 Nine Months
	Ended September 30,				Ended September 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 $3.0 million and $7.6 million for the nine months ended September 30, 2008, and 2007, respectively. The actual income tax benefit realized from stock option exercises totals $0.1 million and $4.5 million, respectively, for those same periods.

7

The following table summarizes the unvested restricted shares activity for the nine months ended September 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		404,638			26.46-35.77
Canceled		(14,136	)		26.46-51.15
Vested		(99,728	)		24.75-53.95
Outstanding at September 30, 2008		593,119		$	26.46-53.95

During the nine months ended September 30, 2008 and 2007, we issued 404,638 and 147,176 shares of restricted stock, respectively, with an aggregate fair value of $11.1 million and $7.2 million, respectively. The grant date fair market value of restricted shares that vested during the nine months ended September 30, 2008 was $4.5 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 first nine months of 2008, we repurchased 36,209 shares for approximately $1.3 million. As of September 30, 2008, there were 442,656 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 price was greater than the average market price of the common share were 75,552 and 0 for the nine months ended September 30, 2008 and 2007, respectively.

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

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2008		2007		2008		2007
Net income	$	21,574	$	18,350	$	58,806	$	48,969
Weighted average number of common shares outstanding — basic		39,025		37,630		38,946		37,061
Effect of dilutive stock options		215		538		215		472
Effect of dilutive restricted stock awards		130		141		189		118
Weighted average number of common shares outstanding — diluted		39,370		38,309		39,350		37,651
Basic earnings per common share	$	0.55	$	0.49	$	1.51	$	1.32
Diluted earnings per common share	$	0.55	$	0.48	$	1.49	$	1.30

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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 products and services into one reportable segment as none of the centers or other ancillary products or services 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 products and services 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 nine months ended September 30, 2008 and 2007:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2008		2007		2008		2007
Membership dues	$	131,232	$	111,744	$	377,001	$	318,939
Enrollment fees		6,818		6,501		19,991		18,565
Personal training		25,944		22,027		81,093		64,803
Other in-center		30,207		25,490		86,292		72,502
Other		4,608		3,688		11,290		9,879
Total revenue	$	198,809	$	169,450	$	575,667	$	484,688

5. Supplementary Cash Flow Information

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

	For the Nine Months
	Ended September 30,
	2008			2007
Accounts receivable	$	(858	)	$	(1,241	)
Income tax receivable		5,852			1,843
Inventories		(415	)		(3,964	)
Prepaid expenses and other current assets		2,273			(2,619	)
Deferred membership origination costs		(3,603	)		(5,663	)
Accounts payable		(4,637	)		6,189
Accrued expenses		8,757			7,539
Deferred revenue		181			6,595
Deferred rent		1,380			(165	)
Other liabilities		7,910			439
Changes in operating assets and liabilities	$	16,840		$	8,953

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.

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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 prospectively on January 1, 2009.

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.

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.

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

10

periods than in the past. Of the eleven new centers we have opened or plan to open in 2008, 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, the assumption of operations of one leased facility in 2007 and the six facilities we sold and leased back in 2008, is that our center operating margins may be lower than they have been historically, particularly as newly opened centers build membership. We expect both the addition of pre-opening expenses and the lower revenue volumes characteristic of newly-opened centers, as well as the occupancy costs for the eight leased centers and the lease costs for facilities which we financed through sale leaseback transactions, to affect our center operating margins at these centers and on a consolidated basis. As the economy continues to slow, we also expect increased member attrition and lower in-center revenue per membership, which may result in lower total revenue and operating profit in affected centers. 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.

As of June 30, 2008, we had planned to open eleven current model centers in 2009. As a result of the tight credit market and the slowing in the current economic environment, we decided to reduce the number of planned openings in 2009 from eleven to six centers. If we see the credit markets improve and we are able to secure additional capital, we will consider opening additional centers.

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 change in 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. During 2008, our attrition rate increased, driven primarily by inactive members leaving earlier than in the past.

We have three primary sources of revenue. First, our largest source of revenue is membership dues (65.5% of total revenue for the nine months ended September 30, 2008) and enrollment fees (3.4% of total revenue for the nine months ended September 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 and third quarters 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 (29.1% of total revenue for the nine months ended September 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 (2.0% of total revenue for the nine months ended September 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 from our Highland Park, Minnesota office building.

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.

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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 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 higher location costs and higher costs for the new 3-story centers opened in 2008. 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 Nine
	Months Ended						Months Ended
	September 30,						September 30,
	2008			2007			2008			2007
Revenue
Center revenue
Membership dues		66.0	%		66.0	%		65.5	%		65.8	%
Enrollment fees		3.5			3.8			3.4			3.8
In-center revenue		28.2			28.0			29.1			28.4
Total center revenue		97.7			97.8			98.0			98.0
Other revenue		2.3			2.2			2.0			2.0
Total revenue		100.0			100.0			100.0			100.0
Operating expenses
Center operations		58.4			57.6			58.6			58.0
Advertising and marketing		3.7			3.2			4.1			3.8
General and administrative		4.8			5.8			5.3			6.4
Other operating		2.5			2.5			2.4			2.3
Depreciation and amortization		9.4			8.8			9.1			8.9
Total operating expenses		78.8			77.9			79.5			79.4
Income from operations		21.2			22.1			20.5			20.6
Other income (expense)
Interest expense, net		(3.6	)		(4.2	)		(3.7	)		(3.9	)
Equity in earnings of affiliate		0.2			0.2			0.2			0.2
Total other income (expense)		(3.4	)		(4.0	)		(3.5	)		(3.7	)
Income before income taxes		17.8			18.1			17.0			16.9
Provision for income taxes		6.9			7.3			6.8			6.8
Net income		10.9	%		10.8	%		10.2	%		10.1	%
Other financial and operating data
Average center revenue per membership	$	358		$	345		$	1,082		$	1,016
Average in-center revenue per membership	$	104		$	99		$	321		$	294
Centers open at end of period		77			67			77			67
Number of memberships at end of period		557,164			492,410			557,164			492,410
Total center square footage at end of period (1)		7,645,989			6,499,549			7,645,989			6,499,549

(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 and indoor/outdoor tennis elements.

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

Total revenue. Total revenue increased $29.3 million, or 17.3%, to $198.8 million for the three months ended September 30, 2008, from $169.5 million for the three months ended September 30, 2007.

Total center revenue grew $28.4 million, or 17.2%, to $194.2 million for the three months ended September 30, 2008, from $165.8 million for the three months ended September 30, 2007. Comparable center revenue increased 3.9% for the three months ended September 30, 2008 compared to the three months ended September 30, 2007. Of the $28.4 million increase in total center revenue,

• 68.5% was from membership dues, which increased $19.5 million, or 17.4%, due to increased memberships at new centers, junior membership programs and increased sales of value-added memberships. Our number of memberships increased 13.2% to 557,164 at September 30, 2008 from 492,410 at September 30, 2007. The membership growth of 13.2% was down from membership growth of 15.1% from September 30, 2007 over September 30, 2006, primarily due to the second anniversary of our acquisition of seven leased centers in July 2006, and the effects of a slower economy in the fourth quarter of 2007 and the first nine months of 2008.

• 30.4% was from in-center revenue, which increased $8.6 million primarily as a result of our members’ 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 $99 for the three months ended September 30, 2007 to $104 for the three months ended September 30, 2008. Overall, in-center revenue growth slowed from 11.4% the first half of 2008 to 4.8% in the third quarter driven primarily by reduced consumer spending on in-center services in the current slower economy.

• 1.1% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line basis over 33 months for the second and third quarters of 2008 and 36 months for the first quarter of 2008 and prior periods. Enrollment fees increased $0.3 million for the three months ended September 30, 2008 to $6.8 million. In 2008, we lowered our enrollment fees to stimulate new membership demand.

Other revenue increased $0.9 million, or 24.9%, to $4.6 million for the three months ended September 30, 2008, which was primarily due to increased advertising revenue from our media business.

Center operations expenses. Center operations expenses totaled $116.3 million, or 59.9% of total center revenue (or 58.4% of total revenue), for the three months ended September 30, 2008 compared to $97.6 million, or 58.9% of total center revenue (or 57.6% of total revenue), for the three months ended September 30, 2007. This $18.7 million increase primarily consisted of $10.5 million in additional payroll-related costs to support increased memberships at new centers and increases in membership acquisition costs, an increase of $3.9 million in occupancy-related costs, including utilities, real estate taxes, rent on leased centers and an increase in expenses to support in-center products and services.

Advertising and marketing expenses. Advertising and marketing expenses were $7.3 million, or 3.7% of total revenue, for the three months ended September 30, 2008, compared to $5.4 million, or 3.2% of total revenue, for the three months ended September 30, 2007. These expenses increased primarily due to broader advertising for existing and new centers and those centers engaging in presale activities to stimulate new membership demand.

General and administrative expenses. General and administrative expenses were $9.5 million, or 4.8% of total revenue, for the three months ended September 30, 2008, compared to $9.8 million, or 5.8% of total revenue, for the three months ended September 30, 2007. This decrease as a percentage of revenue 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 $4.9 million for the three months ended September 30, 2008, compared to $4.3 million for the three months ended September 30, 2007. This increase is primarily a result of losses on the disposition of property and equipment.

Depreciation and amortization. Depreciation and amortization was $18.7 million for the three months ended September 30, 2008, compared to $14.9 million for the three months ended September 30, 2007. This $3.8 million increase was due primarily to depreciation on our new centers and new headquarters opened in 2007 and the first nine months of 2008 and the completed remodels of our leased centers acquired in July 2006.

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Interest expense, net. Interest expense, net of interest income, was $7.2 million for the three months ended September 30, 2008, compared to $7.1 million for the three months ended September 30, 2007. This $0.1 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 $13.7 million for the three months ended September 30, 2008, compared to $12.4 million for the three months ended September 30, 2007. This $1.3 million increase was due to an increase in income before income taxes of $4.6 million which was partially offset by a decrease in effective tax rate during the third quarter of 2007 compared to the same period of 2008.

Net income. As a result of the factors described above, net income was $21.6 million, or 10.9% of total revenue, for the three months ended September 30, 2008, compared to $18.4 million, or 10.8% of total revenue, for the three months ended September 30, 2007.

Nine Months Ended September 30, 2008, Compared to Nine Months Ended September 30, 2007

Total revenue. Total revenue increased $91.0 million, or 18.8%, to $575.7 million for the nine months ended September 30, 2008, from $484.7 million for the nine months ended September 30, 2007.

Total center revenue grew $89.6 million, or 18.9%, to $564.4 million for the nine months ended September 30, 2008, from $474.8 million for the nine months ended September 30, 2007. Comparable center revenue increased 3.8% for the nine months ended September 30, 2008 compared to the nine months ended September 30, 2007. Of the $89.6 million increase in total center revenue,

• 64.8% was from membership dues, which increased $58.1 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 13.2% to 557,164 at September 30, 2008 from 492,410 at September 30, 2007. The membership growth of 13.2% was down from membership growth of 15.1% from September 30, 2007 over September 30, 2006, primarily due to the second anniversary of our 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 nine months of 2008.

• 33.6% was from in-center revenue, which increased $30.1 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 $294 for the nine months ended September 30, 2007 to $321 for the nine months ended September 30, 2008.

• 1.6% was from enrollment fees, which are deferred until a center opens and recognized on a straight-line basis over 33 months for the second and third quarters of 2008 and 36 months for the first quarter of 2008 and prior periods. Enrollment fees increased $1.4 million for the nine months ended September 30, 2008 to $20.0 million. In 2008, we lowered our enrollment fees to stimulate new membership demand.

Other revenue increased $1.4 million, or 14.3%, to $11.3 million for the nine months ended September 30, 2008, which was primarily due to increased advertising revenue from our media business.

Center operations expenses. Center operations expenses totaled $337.1 million, or 59.7% of total center revenue (or 58.6% of total revenue), for the nine months ended September 30, 2008 compared to $281.2 million, or 59.2% of total center revenue (or 58.0% of total revenue), for the nine months ended September 30, 2007. This $55.9 million increase primarily consisted of $30.9 million in additional payroll-related costs to support increased memberships at new centers and increases in membership acquisition costs, an increase of $12.6 million in occupancy-related costs, including utilities, real estate taxes, rent on leased centers and an increase in expenses to support in-center products and services.

Advertising and marketing expenses. Advertising and marketing expenses were $23.6 million, or 4.1% of total revenue, for the nine months ended September 30, 2008, compared to $18.2 million, or 3.8% of total revenue, for the nine months ended September 30, 2007. These expenses increased primarily due to broader advertising for existing and new centers and those centers engaging in presale activities to stimulate new membership demand.

General and administrative expenses. General and administrative expenses were $30.7 million, or 5.3% of total revenue, for the nine months ended September 30, 2008, compared to $30.9 million, or 6.4% of total revenue,

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for the nine months ended September 30, 2007. These expenses decreased as a percentage of revenue 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 $13.7 million for the nine months ended September 30, 2008, compared to $11.4 million for the nine months ended September 30, 2007. This increase is primarily a result of losses on the disposition of property and equipment.

Depreciation and amortization. Depreciation and amortization was $52.5 million for the nine months ended September 30, 2008, compared to $43.3 million for the nine months ended September 30, 2007. This $9.2 million increase was due primarily to depreciation on our new centers and new headquarters opened in 2007 and the first nine months of 2008 and the completed remodels of our leased centers acquired in July 2006.

Interest expense, net. Interest expense, net of interest income, was $21.3 million for the nine months ended September 30, 2008, compared to $19.0 million for the nine months ended September 30, 2007. This $2.3 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 $38.9 million for the nine months ended September 30, 2008, compared to $32.7 million for the nine months ended September 30, 2007. This $6.2 million increase was due to an increase in income before income taxes of $16.0 million.

Net income. As a result of the factors described above, net income was $58.8 million, or 10.2% of total revenue, for the nine months ended September 30, 2008, compared to $49.0 million, or 10.1% of total revenue, for the nine months ended September 30, 2007.

Liquidity and Capital Resources

Liquidity

Historically, we have satisfied our liquidity needs through various debt and sale leaseback 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. We plan to fund our revised center growth plan for 2009 primarily with cash flows from operations and available debt from our revolving credit facility; however, we will continue to pursue appropriately-priced long-term financing, mainly in the forms of mortgages and sale-leasebacks. 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 September 30, 2008, we had total cash and cash equivalents of $7.1 million and $9.3 million of restricted cash that serves as collateral for certain of our debt arrangements. We also had $105.1 million available under the existing terms of our revolving credit facility as of
September 30, 2008.

Net cash provided by operating activities was $143.5 million for the nine months ended September 30, 2008 compared to $107.3 million for the nine months ended September 30, 2007, driven primarily by a $9.8 million, or 20.1%, improvement in net income, an increase in depreciation expense of $9.2 million, an increase in deferred income taxes of $3.2 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. We expect the average cost of new centers constructed in 2008 to be approximately $35 million.

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Net cash used in investing activities was $207.3 million for the nine months ended September 30, 2008, compared to $314.6 million for the nine months ended September 30, 2007. The decrease of $107.3 million was primarily due to the proceeds from the sale leaseback of six facilities, partially offset by capital expenditures for the construction of new centers and updates to our existing centers.

Our capital expenditures were as follows (in thousands):

	For the Nine Months
	Ended September 30,
	2008		2007
Cash purchases of property and equipment	$	360,551	$	310,478
Non-cash purchases of property and equipment financed through capital lease obligations		12,294		—
Non-cash purchases of property and equipment in accounts payable		28,909		2,548
Non-cash share-based compensation capitalized to projects under development		552		522
Total capital expenditures	$	402,306	$	313,548

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

	For the Nine Months
	Ended September 30,
	2008		2007
New center land, building and construction on clubs opened or to be opened through the current calendar year	$	211,380	$	145,852
New center land, building and construction on clubs planned to be opened in the next calendar year		71,863		91,963
New center land, building and construction on clubs planned to be opened two years out		31,836		11,236
Acquisitions, updating existing centers and corporate infrastructure		87,227		64,497
Total capital expenditures	$	402,306	$	313,548

At October 15, 2008, we had purchased or leased the real property for the 11 new centers that we plan to open in 2008, nine of which had already opened. In addition, we had purchased the real property for five and entered into a ground lease for one of the six centers we plan to open in 2009, and we had purchased or leased real property for the development for four of the six centers that we plan to open in 2010. Construction in progress, including land purchased for future development totaled $279.2 million at September 30, 2008 and $210.8 million at September 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 $80 to $100 million in the remaining three months of 2008. Of this approximately $80 to $100 million, we expect to incur approximately $70 to $85 million for new center construction and approximately $10 to $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 and our revolving credit facility. In addition, we will continue to pursue appropriately-priced long-term financing, mainly in the forms of mortgages and sale leaseback transactions.

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Financing Activities

Net cash provided by financing activities was $65.6 million for the nine months ended September 30, 2008, compared to $201.1 million for the nine months ended September 30, 2007. The decrease of $135.5 million was primarily due to the $105.0 million financing received in January 2007 and the $92.5 million of proceeds from the common stock offering in August 2007, partially offset by greater proceeds from our revolving credit facility in 2008.

Revolving Credit Facility

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.

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 if one or more lenders commit the additional $130.0 million. As of September 30, 2008, $355.3 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 nine months ended September 30, 2008 was 4.4% and $364.1 million, respectively. The weighted average interest rate and debt outstanding under the revolving credit facility for the nine months ended September 30, 2007 was 6.8% and $217.6 million, respectively.

Variable Rate Demand Notes

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 were 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. 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.

Sale Leaseback Transactions

On August 21, 2008, we, along with a wholly owned subsidiary, entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Senior Housing Properties Trust (the “Purchaser”) providing for the sale of certain properties to Purchaser in a sale leaseback transaction. The properties are located in Alpharetta, Georgia, Allen, Texas, Omaha, Nebraska and Romeoville, Illinois (the “Properties”), and were sold to Purchaser for $100.0 million. Pursuant to the terms of a Lease Agreement (the “Lease”) between our subsidiary and SNH LTF Properties LLC (“SNH”), the subsidiary will lease the Properties from SNH. The lease has a total term of 50 years, including an initial term of 20 years and six consecutive renewal terms of five years each. Renewal options may only be exercised for all the Properties combined, and must be exercised no less than 12 months before the lease term ends. The initial rent will be approximately $9.1 million per year, increased after every

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fifth year during the initial term and the first two renewal options, if exercised, by an amount equal to 10% of the rent paid in the calendar year immediately before the effective date of the rent increase. During the last four renewal terms, rent will be the greater of (i) 110% of the rent paid in the calendar month immediately before the renewal term commences or (ii) fair market rent, as mutually agreed by the parties or determined by a mutually agreed upon independent third party appraiser. The lease is a “triple net” lease requiring our subsidiary to maintain the Properties and to pay all operating expenses including real estate taxes and insurance for the benefit of Purchaser. Pursuant to the terms of a Guaranty Agreement, we have guaranteed our subsidiary’s obligations under the Lease. We, or a substitute guarantor, must maintain a tangible net worth of at least $200.0 million.

On September 26, 2008, a wholly owned subsidiary sold certain properties to LT FIT (AZ-MD) LLC, an affiliate of W.P. Carey & Co., LLC (“Purchaser”). The properties are located in Scottsdale, Arizona and Columbia, Maryland (the “Properties”), and were sold to Purchaser for approximately $60.5 million. Pursuant to the terms of a Lease Agreement (the “Lease”) between our subsidiary and Purchaser, our subsidiary will Lease the Properties from Purchaser. The Lease has a total term of 40 years, including an initial term of 20 years and four consecutive automatic renewal terms of five years each. Renewal options may only be exercised for all the Properties combined, and are automatically exercised if notice is not provided to Purchaser 18 months before the lease term ends. The initial rent will be approximately $5.7 million per year, increased after every year during the initial term and each year of any renewal option, if exercised, by an amount equal to 2% of the rent paid in the calendar year immediately before the effective date of the rent increase. The Lease is an “absolute net” lease requiring our subsidiary to maintain the Properties and to pay all operating expenses including real estate taxes and insurance for the benefit of Purchaser. Pursuant to the terms of a Guaranty and Suretyship Agreement, we have guaranteed the subsidiary’s obligations under the Lease.

Debt Covenants

We are in compliance in all material respects with all restrictive and financial covenants under our various credit facilities as of September 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 September 30, 2008 and December 31, 2007, our floating rate indebtedness was approximately $264.5 million and $187.8 million, respectively. If long-term floating interest rates were to have increased by 100 basis points during the nine months ended September 30, 2008, our interest costs would have increased by approximately $1.9 million. If short-term interest rates were to have increased by 100 basis points during the nine months ended September 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 September 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 Third 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)
July 1 - 31, 2008		466	$	29.83		466		442,656
August 1 - 31, 2008		—		—		—		442,656
September 1 - 30, 2008		—		—		—		442,656
Total		466	$	29.83		466		442,656

(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.

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

Not applicable.

ITEM 5. OTHER INFORMATION

On November 10, 2008, we entered into an Omnibus Amendment with Teachers Insurance and Annuity Association of America (TIAA) with respect to the terms of the mortgages that secure our obligations to TIAA. Pursuant to the terms of the Omnibus Amendment, the equity interest requirement applicable to our Chief Executive Officer was amended such that he must, at all times during the loan, retain at least 1.8 million shares of our common stock (subject to appropriate adjustment for stock splits and similar readjustments), which shares on and after November 30, 2008 must be owned unencumbered, and the equity interest requirement applicable to our other employees was amended such that our employees must, in the aggregate, hold shares or options representing at least 3% of our outstanding common stock.

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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 September 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	Purchase and Sale Agreement by and among Life Time Fitness, Inc. and LTF Real Estate Company, Inc., as Seller, and Senior Housing Properties Trust, as Purchaser, dated as of August 21, 2008	Filed Electronically
10.2	Lease Agreement dated as of August 21, 2008 by and among SNH LTF Properties LLC, as Landlord, and LTF Real Estate Company, Inc., as Tenant	Filed Electronically
10.3	Guaranty Agreement dated as of August 21, 2008 by Life Time Fitness, Inc. for the benefit of SNH LTF Properties LLC	Filed Electronically
10.4	Lease Agreement between LT FIT (AZ-MD) LLC (an affiliate of W.P. Carey & Col, LLC), as Landlord, and LTF Real Estate Company, Inc., as Tenant dated September 26, 2008	Filed Electronically
10.5	Guaranty and Suretyship Agreement dated as of September 26, 2008 made by Life Time Fitness, Inc. to LT FIT (AZ-MD) LLC	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

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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 November 10, 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)

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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 September 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	Purchase and Sale Agreement by and among Life Time Fitness, Inc. and LTF Real Estate Company, Inc., as Seller, and Senior Housing Properties Trust, as Purchaser, dated as of August 21, 2008	Filed Electronically
10.2	Lease Agreement dated as of August 21, 2008 by and among SNH LTF Properties LLC, as Landlord, and LTF Real Estate Company, Inc., as Tenant	Filed Electronically
10.3	Guaranty Agreement dated as of August 21, 2008 by Life Time Fitness, Inc. for the benefit of SNH LTF Properties LLC	Filed Electronically
10.4	Lease Agreement between LT FIT (AZ-MD) LLC (an affiliate of W.P. Carey & Col, LLC), as Landlord, and LTF Real Estate Company, Inc., as Tenant dated September 26, 2008	Filed Electronically
10.5	Guaranty and Suretyship Agreement dated as of September 26, 2008 made by Life Time Fitness, Inc. to LT FIT (AZ-MD) LLC	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

23

EX-10.1

Exhibit 10.1

PURCHASE AND SALE AGREEMENT

by and among

LIFE TIME FITNESS, INC. and
LTF REAL ESTATE COMPANY, INC.,
jointly and severally, as Seller,

and

SENIOR HOUSING PROPERTIES TRUST,
as Purchaser

August 21, 2008

SECTION 1. DEFINITIONS			2
	1.1	Agreement	2
	1.2	Assets	2
	1.3	Business Day	2
	1.4	Closing	3
	1.5	Closing Date	3
	1.6	Documents	3
	1.7	FF&E	3
	1.8	Guarantor	3
	1.9	Guaranty	3
	1.10	Improvements	3
	1.11	Intangible Property	3
	1.12	Lease	4
	1.13	Permitted Encumbrances	4
	1.14	Properties	4
	1.15	Purchase Price	4
	1.16	Purchaser	4
	1.17	Real Property	4
	1.18	SEC	4
	1.19	Seller	4
	1.20	Seller’s Personal Property	4
	1.21	Surveys	5
	1.22	Tenant	5
	1.23	Title Commitments	5
	1.24	Title Company	5
	1.25	Title Policies	5
SECTION 2. PURCHASE AND SALE; CLOSING			5
	2.1	Purchase and Sale	5
	2.2	Closing	5
	2.3	Purchase Price	6
SECTION 3. TITLE, DILIGENCE MATERIALS, ETC.			6
	3.1	Title and Survey Matters	6
	3.2	Other Diligence Materials	6
SECTION 4. CONDITIONS TO PURCHASER’S OBLIGATION TO CLOSE			6
	4.1	Closing Documents	7
	4.2	Title Policies and Surveys	8
	4.3	Opinion of Counsel	8
SECTION 5. CONDITIONS TO SELLER’S OBLIGATION TO CLOSE			8

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	5.1	Purchase Price	8
	5.2	Closing Documents	8
SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER			8
	6.1	Status and Authority of the Seller	8
	6.2	Action of the Seller	9
	6.3	No Violations of Agreements	9
	6.4	Litigation	9
	6.5	Existing Leases, Occupancy Agreements, Etc.	9
	6.6	Utilities, Etc.	9
	6.7	Compliance With Law	10
	6.8	Not A Foreign Person	10
	6.9	Hazardous Substances	10
	6.10	Insurance	11
	6.11	Financial Statements, Etc.	11
	6.12	Disclosure	11
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER			12
	7.1	Status and Authority of the Purchaser	12
	7.2	Action of the Purchaser	12
	7.3	No Violations of Agreements	12
	7.4	Litigation	12
SECTION 8. APPORTIONMENTS			13
	8.1	Real Property Apportionments	13
	8.2	Closing Costs	13
	8.3	Survival	13
SECTION 9. MISCELLANEOUS			13
	9.1	Agreement to Indemnify	13
	9.2	Publicity	14
	9.3	Notices	14
	9.4	Waivers, Etc.	15
	9.5	Assignment; Successors and Assigns	16
	9.6	Severability	16
	9.7	Counterparts, Etc.	16
	9.8	Governing Law	16
	9.9	Waiver of Right to Trial by Jury	17
	9.10	Performance on Business Days	17
	9.11	Attorneys’ Fees	17
	9.12	Section and Other Headings	17
	9.13	Time of Essence	17
	9.14	Nonliability of Trustees	18

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PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE AGREEMENT is made as of August 21, 2008, by and among LIFE TIME FITNESS INC., a Minnesota corporation (“Life Time”), LTF REAL ESTATE COMPANY, INC. (the “Tenant”, and jointly and severally with Life Time, the “Seller”), and SENIOR HOUSING PROPERTIES TRUST, a Maryland real estate investment trust (the “Purchaser”).

WITNESSETH:

     WHEREAS, the Seller is the owner of the Properties (all capitalized terms used and not otherwise defined herein having the meanings ascribed to such terms in Section 1); and

     WHEREAS, the Purchaser desires to purchase the Properties, as more fully set forth below; and

     WHEREAS, the Seller is willing to sell all of the Properties to the Purchaser, subject to and upon the terms and conditions hereinafter set forth;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the Seller and the Purchaser hereby agree as follows:

SECTION 1. DEFINITIONS

     Capitalized terms used in this Agreement shall have the meanings set forth below or in the Section of this Agreement referred to below:

     1.1 “Agreement” shall mean this Purchase and Sale Agreement, together with Exhibits A through C attached hereto, as it and they may be amended from time to time as herein provided.

     1.2 “Assets” shall mean, with respect to any Property, collectively, all of the Real Property, the Improvements, the FF&E, the Documents and the Intangible Property owned by the Seller in connection with or relating to such Property.

     1.3 “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which banking institutions in The Commonwealth of Massachusetts are authorized by law or executive action to close.

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     1.4 “Closing” shall have the meaning given such term in Section 2.2.

     1.5 “Closing Date” shall have the meaning given such term in Section 2.2.

     1.6 “Documents” shall mean, with respect to any Property (as opposed to the business conducted at the Properties), all handbooks, documents and other instruments relating to the maintenance, management or operation of such Property, but specifically excluding all items included within the category of the Seller’s Personal Property or relating to Seller’s Personal Property.

     1.7 “FF&E” shall mean, with respect to any Property, all appliances, machinery, devices, fixtures, appurtenances, equipment, furnishings and articles of tangible personal property of every kind and nature whatsoever (other than motor vehicles) owned by the Seller and located in or at, or used in connection with the ownership, operation or maintenance of such Property (as opposed to the business from time to time conducted at such Property) ,but specifically excluding all items included within the category of the Seller’s Personal Property.

     1.8 “Guarantor” shall have the meaning given such term in the Lease.

     1.9 “Guaranty” shall have the meaning given such term in the Lease.

     1.10 “Improvements” shall mean all buildings, fixtures, walls (other than demountable walls and partitions), fences, landscaping and other structures and other improvements of every kind including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site), parking areas and roadways appurtenant to such buildings and structures presently situated upon the Real Property.

     1.11 “Intangible Property” shall mean, with respect to any Property, all transferable or assignable permits, certificates of occupancy, operating permits, sign permits, development rights and approvals, certificates, licenses, warranties and guarantees (including, without limitation, contractual warranties and guaranties), and all other transferable intangible property, miscellaneous rights, benefits and privileges of any kind or character with respect to such Property, but specifically excluding all items included within the category of the Seller’s Personal Property.

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     1.12 “Lease” shall mean that certain Lease Agreement, of even date herewith, by and between the Purchaser, as landlord, and Tenant, as tenant.

     1.13 “Permitted Encumbrances” shall mean, with respect to any Property, (a) liens for taxes, assessments and governmental charges with respect to such Property not yet due and payable or due and payable but not yet delinquent; (b) the exceptions to title appearing in the Title Policy with respect to such Property; and (c) all matters shown on the Survey with respect to such Property.

     1.14 “Properties” shall mean, collectively, all of the Assets relating to the properties identified on Exhibit A, the legal descriptions of which are set forth in Exhibits B-1 through B-4.

     1.15 “Purchase Price” shall mean the sum of One Hundred Million Dollars ($100,000,000), subject to adjustment pursuant to Section 8.

     1.16 “Purchaser” shall have the meaning given such term in the first paragraph of this Agreement.

     1.17 “Real Property” shall mean, with respect to any Property, the real property described in the applicable Exhibit B-1 through B-4, together with all easements, rights of way, privileges, licenses and appurtenances which the Seller may own with respect thereto.

     1.18 “SEC” shall mean the Securities and Exchange Commission.

     1.19 “Seller” shall have the meaning given such term in the first paragraph of this Agreement.

     1.20 “Seller’s Personal Property” shall mean (a) all items of personal property, equipment and trade fixtures (so long as the same are not necessary for the operation of the Improvements and the Properties as opposed to the business from time to time conducted at the Properties) located in or on the Properties, and whether or however attached to the Improvements, at any time that are necessary or incidental to the business from time to time conducted at the Properties, including, without limitation, exercise/fitness equipment, kitchen equipment and furnishings, work stations, portable or movable partitions, receptionist desks, computer installations (including computers, computer hardware, raised flooring designated solely for the computer system, freestanding supplemental air conditioning or cooling systems therefor), communications systems and equipment, financial services equipment (such as ATM’s), credenzas, safes, bulletin boards,

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book shelves and file cabinets; (b) all furniture, inventory, machinery (so long as the same are not necessary for the operation of the Improvements and the Properties as opposed to the business from time to time conducted at the Properties), racking, shelving, and other personal property; (c) all personal property, equipment or trade fixtures which is either not owned by the Purchaser, the Seller or any of their respective Affiliated Persons (as such term is defined in the Lease), or is on consignment to the Seller or any of its Affiliated Persons, including any personal property owned by the Seller’s employees or invitees (other than Affiliated Persons of the Seller); (d) all signs and other forms of business identification; (e) all operating and other permits, licenses and approvals, warranties, guaranties indemnities and similar rights (so long as the same are not necessary for the operation of the Improvements and the Properties as opposed to the business from time to time conducted at the Properties), and (f) all other items of personal property (so long as the same are not necessary for the operation of the Improvements and the Properties as opposed to the business from time to time conducted at the Properties).

     1.21 “Surveys” shall have the meaning given such term in Section 3.1.

     1.22 “Tenant” shall have the meaning given such term in the first paragraph of this Agreement and shall mean the tenant under the Lease.

     1.23 “Title Commitments” shall have the meaning given such term in Section 3.1.

     1.24 “Title Company” shall mean First American Title Insurance Company, whose office is located at 1900 Midwest Plaza, Minneapolis, Minnesota 55402.

     1.25 “Title Policies” shall have the meaning given such term in Section 4.2.

SECTION 2. PURCHASE AND SALE; CLOSING

     2.1 Purchase and Sale. In consideration of the mutual covenants herein contained, the Purchaser hereby agrees to purchase from the Seller, and the Seller hereby agrees to sell, all of the Seller’s right, title and interest in and to the Properties for the Purchase Price, subject to and in accordance with the terms and conditions of this Agreement.

     2.2 Closing. The purchase and sale of the Properties shall be consummated at a closing (the “Closing”) to be held at the offices of Sullivan & Worcester LLP, One Post Office Square, Boston, Massachusetts 02109 (or through the offices of an escrow agent reasonably satisfactory to the parties without requiring

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the physical presence of the Purchaser or the Seller at the Closing), or at such other location as the Seller and the Purchaser may agree, at 10:00 a.m., local time, on the date (the “Closing Date”) that is the later to occur of (a) [July ___, 2008] and (b) the date as of which all conditions precedent to the Closing herein set forth have either been satisfied or waived by the party in whose favor such conditions run.

     2.3 Purchase Price. The Purchase Price, subject to adjustment as provided in Article 8, shall be paid by the Purchaser to or at the direction of the Seller at the Closing, in immediately available federal funds by wire transfer to an account or accounts to be designated by the Seller.

SECTION 3. TITLE, DILIGENCE MATERIALS, ETC.

     3.1 Title and Survey Matters.

     (a) Prior to the execution of this Agreement, the Seller shall have delivered, or cause to have been delivered, to the Purchaser a preliminary title commitment, having an effective date within thirty (30) days of this Agreement, for an ALTA extended owner’s policy of title insurance with respect to each of the Properties, together with complete and legible copies of all instruments and documents referred to as exceptions to title (collectively, the “Title Commitments”).

     (b) Prior to the execution of this Agreement, the Seller shall have arranged for the preparation of an ALTA survey with respect to each of the Properties (collectively, the “Surveys”), by a licensed surveyor in the jurisdiction in which each such Property is located, which (i) contains an accurate legal description of such Property, (ii) shows the exact location, dimension and description (including applicable recording information) of all utilities, easements, encroachments and other physical matters affecting such Property, the number of striped parking spaces located thereon and all applicable building set-back lines, (iii) states whether such Property is located within a 100-year flood plain and (iv) includes a certification in the form attached hereto as Exhibit C or as modified with the consent of the Purchaser.

     3.2 Other Diligence Materials. The Seller shall have provided the Purchaser and its representatives with copies, as are in the possession or control of the Seller, of other diligence materials pertaining to the Properties as reasonably requested by the Purchaser.

SECTION 4. CONDITIONS TO PURCHASER’S OBLIGATION TO CLOSE

     The obligation of the Purchaser to acquire each of the Properties on the Closing Date shall be subject to the

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satisfaction of the following conditions precedent on and as of such Closing Date:

     4.1 Closing Documents. The Seller shall have delivered to the Purchaser:

     (a) A good and sufficient limited or special warranty deed with covenants against grantor’s acts, or its local equivalent, in proper statutory form for recording, duly executed and acknowledged by the Seller, conveying good and marketable title to each of the Properties, free from all liens and encumbrances other than the Permitted Encumbrances;

     (b) An assignment by the Seller and an assumption by the Purchaser, in form and substance reasonably satisfactory to the Seller and the Purchaser, duly executed and acknowledged by the Seller and the Purchaser, of all of the Seller’s right, title and interest, if any, in, to and under all licenses, permits and agreements affecting the Properties (as opposed to the business from time to time conducted at the Properties, all to the extent transferable, and excluding any leases, permits and agreements which are necessary to remain with Seller during the term of the Lease to operate the Properties;

     (c) One or more bill(s) of sale and assignment agreement(s), in form and substance reasonably satisfactory to the Seller and the Purchaser, with respect to all of the FF&E, the Documents and Intangible Property;

     (d) To the extent the same are in the Seller’s possession or control, original, fully executed copies of all FF&E, Documents and Intangible Property;

     (e) An affidavit as of the Closing Date, in respect of Section 1445 of the Internal Revenue Code of 1986, as amended, sufficient to provide one exemption under subdivision (b) thereof for the Seller;

     (f) The Lease, the LTF Guaranty (as such term is defined in the Lease), and all other documents and instruments required to be delivered pursuant to the Lease, duly executed and acknowledged by the Tenant and/or other applicable party thereto;

     (g) Certified copies of all charter documents, applicable corporate resolutions and certificates of incumbency with respect to the Seller, the Tenant and the Guarantor; and

     (h) Such other conveyance documents, certificates, deeds, affidavits and other instruments as the Purchaser or the Title Company may reasonably require to effectuate the transactions contemplated by this Agreement, including, without limitation,

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parties in possession and mechanics’ lien affidavits and gap indemnities.

     4.2 Title Policies and Surveys. (a) The Title Company shall be prepared, subject only to payment of the applicable premium and endorsement fees and delivery of all conveyance documents in recordable form, to issue a title insurance policy (collectively, the “Title Policies”) to the Purchaser with respect to each of the Properties, in form and substance satisfactory to the Purchaser, together with such affirmative coverages as the Purchaser may reasonably require.

     (b) The Purchaser shall have received a Survey with respect to each of the Properties, such Survey to be consistent with the requirements of Section 3.1.

     4.3 Opinion of Counsel. The Purchaser shall have received a written opinion from counsel to the Seller, which counsel shall be reasonably acceptable to the Purchaser, in form and substance reasonably satisfactory to the Purchaser, regarding the organization and authority of the Seller, Tenant, and each Guarantor.

SECTION 5. CONDITIONS TO SELLER’S OBLIGATION TO CLOSE

     The obligation of the Seller to convey the Properties on the Closing Date to the Purchaser is subject to the satisfaction of the following conditions precedent on and as of the Closing Date:

     5.1 Purchase Price. The Purchaser shall have delivered to the Seller the Purchase Price as provided in Section 2.3.

     5.2 Closing Documents. The Purchaser shall have delivered to the Seller:

     (a) Duly executed and acknowledged counterparts of the documents described in Section 4.1, where applicable; and

     (b) Certified copies of all charter documents, applicable resolutions and certificates of incumbency with respect to the Purchaser.

SECTION 6. REPRESENTATIONS AND WARRANTIES OF SELLER

     To induce the Purchaser to enter into this Agreement, the Seller, with respect to all Properties, represents and warrants to the Purchaser as follows:

     6.1 Status and Authority of the Seller. The Seller is a corporation duly organized, validly existing and in good

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standing under the laws of its state of incorporation or formation, and has all requisite power and authority under the laws of such state and its respective charter documents to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. It has duly qualified to transact business in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where failure to do so could not reasonably be expected to have a material adverse effect.

     6.2 Action of the Seller. The Seller has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and upon the execution and delivery of any document to be delivered by it on or prior to the Closing Date, such document shall constitute its valid and binding obligation and agreement, enforceable against the Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

     6.3 No Violations of Agreements. Neither the execution, delivery or performance of this Agreement, nor compliance with the terms and provisions hereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the Properties pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which it is bound.

     6.4 Litigation. To the Seller’s knowledge, it has not received any written notice of and, to its knowledge, no action or proceeding is pending or threatened and no investigation looking toward such an action or proceeding has begun, which (a) questions the validity of this Agreement or any action taken or to be taken pursuant hereto, (b) will result in any material adverse change in the business, operation, affairs or condition of any of the Properties, or (c) will result in or subject any of the Properties to a material liability, involves condemnation or eminent domain proceedings against any part of any of the Properties.

     6.5 Existing Leases, Occupancy Agreements, Etc. The Seller has not entered into any contract or agreement with respect to the occupancy of the Properties, or any portion thereof, which will be binding on the Purchaser after the Closing.

     6.6 Utilities, Etc. To the Seller’s knowledge, all utilities and services necessary for the use and operation of

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the Properties (including, without limitation, road access, gas, water, electricity and telephone) are available thereto. To the Seller’s knowledge, no fact, condition or proceeding exists which would result in the termination or impairment of the furnishing of such utilities to the Properties.

     6.7 Compliance With Law. The Seller has not received written notice that (a) any of the Properties or the current use and operation thereof violate any material federal, state, municipal and other governmental statutes, ordinances, by-laws, rules, regulations or any other legal requirements, including, without limitation, those relating to construction, occupancy, zoning, adequacy of parking, environmental protection, occupational health and safety and fire safety applicable thereto; and (b) there is not currently in effect any material license, permit or other authorization necessary for the current use, occupancy and operation of any of the Properties. The Seller has not received written notice of any threatened request, application, proceeding, plan, study or effort which would (x) materially adversely affect the present use or zoning of any of the Properties, (y) jeopardize the status of any material license, permit or other authorization necessary for the current use, occupancy or operation of any of the Properties, or (z) modify or realign any adjacent street or highway in a material and adverse way.

     6.8 Not A Foreign Person. The Seller is not a “foreign person” within the meaning of Section 1445 of the United States Internal Revenue Code of 1986, as amended, and the treasury regulations promulgated thereunder.

     6.9 Hazardous Substances.

     (a) Except as described in any environmental report delivered to the Purchaser prior to the date of this Agreement, the Seller has not received written notice that the Seller nor any tenant or other occupant or user of any of the Properties, or any portion thereof, has stored or disposed of (or engaged in the business of storing or disposing of) or has released or caused the release of any hazardous waste, contaminants, oil, radioactive or other material on, under or off of any of the Properties, or any portion thereof, the removal of which is required or the maintenance of which is prohibited or penalized by any applicable Federal, state or local statutes, laws, ordinances, rules or regulations, and the Seller has not received written notice that any of the Properties is contaminated with any such hazardous waste, contaminants, oil, radioactive or other materials, except any such materials maintained in accordance with applicable law.

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     (b) To the Seller’s knowledge Seller has all environmental and pollution control equipment necessary for (i) compliance in all material respects with all environmental laws, rules, regulations and ordinances, including the current and prospective requirements thereof (including, without limitation, all applicable environmental permits) and (ii) operation of the Properties as presently conducted.

     (c) To the Seller’s knowledge, the Seller has not been named as a potentially responsible party in connection with any off-site locations to which any hazardous waste, contaminants, oil, radioactive or other material have been sent by or on behalf of the Seller for disposal, storage, recycling, or processing and none of the off-site locations where such waste and materials have been stored, treated, recycled, disposed of or released, has been nominated or identified as a facility that is subject to an existing or potential claim under any environmental laws, rules, regulations or ordinances, or for violation or revocation of any of its storage, transfer, recycling or disposal permits.

     6.10 Insurance. To the Seller’s knowledge, Seller has not received any written notice from any insurance carrier of defects or inadequacies in any of the Properties which, if uncorrected, would result in a termination of insurance coverage or a material increase in the premiums charged therefor.

     6.11 Financial Statements, Etc. The financial statements, operating statistics and other financial information previously delivered by the Seller to the Purchaser fairly present the financial condition of the Seller, the Tenant and the Properties in accordance with generally accepted accounting principles consistently applied and there has been no material adverse change from the date thereof through the date hereof.

     6.12 Disclosure. To the Seller’s knowledge, there is no fact or condition which materially and adversely affects the business or condition of any of its Properties which has not been set forth in this Agreement or in the other documents, certificates or statements furnished to the Purchaser in connection with the transactions contemplated hereby.

     As used herein, the words “knowledge”, “Seller’s knowledge”, “ to the best of the Seller’s knowledge”, or a similar phrase shall refer only to the actual, current knowledge, and not constructive or implied knowledge, of John Heller and Eric Buss, provided that the foregoing individuals shall have no personal liability in connection herewith. The representations and warranties made in this Agreement by the Seller is made as of the date hereof and shall be deemed remade by the Seller as of the Closing Date with the same force and

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effect as if made on, and as of, such date. All representations and warranties made in this Agreement by the Seller shall survive the Closing.

SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER

     To induce the Seller to enter in this Agreement, the Purchaser represents and warrants to the Seller as follows:

     7.1 Status and Authority of the Purchaser. The Purchaser is a Maryland real estate investment trust duly organized, validly existing and in good standing under the laws of the State of Maryland, and has all requisite power and authority under the laws of such state and under its charter documents to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. The Purchaser has duly qualified and is in good standing as a trust or unincorporated business association in each jurisdiction in which the nature of the business conducted by it requires such qualification, except where the failure to do so could not reasonably be expected to have a material adverse effect.

     7.2 Action of the Purchaser. The Purchaser has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and upon the execution and delivery of any document to be delivered by the Purchaser on or prior to the Closing Date such document shall constitute the valid and binding obligation and agreement of the Purchaser, enforceable against the Purchaser in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

     7.3 No Violations of Agreements. Neither the execution, delivery or performance of this Agreement by the Purchaser, nor compliance with the terms and provisions hereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of the Purchaser pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which the Purchaser is bound.

     7.4 Litigation. No investigation, action or proceeding is pending and, to the Purchaser’s knowledge, no action or proceeding is threatened and no investigation looking toward such an action or proceeding has begun, which questions the validity of this Agreement or any action taken or to be taken pursuant hereto.

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     The representations and warranties made in this Agreement by the Purchaser shall be continuing and shall be deemed remade by the Purchaser as of the Closing Date with the same force and effect as if made on, and as of, such date. The Purchaser’s liability with respect to all representations and warranties made in this Agreement by the Purchaser shall survive the Closing.

SECTION 8. APPORTIONMENTS

     8.1 Real Property Apportionments. There shall be no apportionments of any items of income or expense with respect to the Properties on the Closing Date, it being acknowledged and agreed that the Seller or its affiliates shall be responsible for the payment of all such items as the owner of the Properties prior to the Closing Date and as the tenant under the Lease on and after the Closing Date.

     8.2 Closing Costs. The Seller shall pay all of the costs and expenses of closing and diligence in connection with the transactions contemplated hereby, including, but not limited to (i) all recording, sales and transfer fees and taxes, escrow fees, title insurance costs (including base premiums and costs for endorsements), for the owner’s policies and survey costs, market studies and appraisals, engineering studies and zoning reports, and (ii) all attorneys’ fees and costs in connection with this transaction, including, but not limited to, the Purchaser’s attorneys’ fees and expenses and local counsel fees and expenses. The Seller shall in all events pay all such amounts, and reimburse the Purchaser for any amounts incurred by the Purchaser on account thereof, regardless of whether the Closing shall occur hereunder and, in connection therewith, the Seller shall indemnify, defend and hold the Purchaser harmless from and against any and all loss, cost, damage or expense in connection therewith.

     8.3 Survival. The obligations of the parties under this Section 8 shall survive the Closing or termination this Agreement.

SECTION 9. MISCELLANEOUS

     9.1 Agreement to Indemnify. Subject to any express provisions of this Agreement to the contrary, the Seller shall indemnify and hold harmless the Purchaser from and against any and all obligations, claims, losses, damages, liabilities, and expenses (including, without limitation, reasonable attorneys’ and accountants’ fees and disbursements) arising out of (a) events, contractual obligations, acts or omissions of the Seller that occurred in connection with the ownership or operation of

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any Property prior to the Closing or (b) any damage to property of others or injury to or death of any person or any claims for any debts or obligations occurring on or about or in connection with any Property or any portion thereof at any time or times prior to the Closing. The provisions of this Section 9.1 shall survive the Closing and the termination of this Agreement.

     9.2 Publicity. Except as required by law or SEC regulation, the Seller shall not make any public statements or press releases with respect to this Agreement and the transactions contemplated hereby without the Purchaser’s prior written consent. Any use of the Purchaser’s name by the Seller, or the Seller’s name by the Purchaser, shall require the prior written approval of the Purchaser or Seller, as the case may be, which may be withheld in the Purchaser’s or Seller’s, as the case may be, sole discretion.

     9.3 Notices. (a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).

     (b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

     (c) All such notices shall be addressed,

     If to the Seller, to:

LTF Real Estate Company, Inc.
2902 Corporate Place
Chanhassen, Minnesota 55317
Attn: Mr. John Heller
[Telecopier No. (952) 947-0099]

Life Time Fitness, Inc.
2902 Corporate Place
Chanhassen, Minnesota 55317
Attn: Mr. Eric J. Buss

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[Telecopier No. (952) 947-0099]

     with a copy to:

Faegre & Benson LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota, 55402
Attn: Scott Anderegg and Sandra Dobbles
[Telecopier No. (612) 766-1600]

If to the Purchaser, to:

Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[Telecopier No. (617) 796-8349]

     with a copy to:

Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Nancy S. Grodberg, Esq.
[Telecopier No. (617) 338-2880]

     (d) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

     9.4 Waivers, Etc. Any waiver of any term or condition of this Agreement, or of the breach of any covenant, representation or warranty contained herein, in any one instance, shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of such term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty, nor shall any failure at any time or times to enforce or require performance of any provision hereof operate as a waiver of or affect in any manner such party’s right at a later time to enforce or require performance of such provision or any other provision hereof. This Agreement may not be amended, nor shall any waiver, change, modification, consent or discharge be effected, except by an instrument in writing executed by or on behalf of the party against whom enforcement of any amendment, waiver, change, modification, consent or discharge is sought.

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     9.5 Assignment; Successors and Assigns. This Agreement and all rights and obligations hereunder shall not be assignable by any party without the written consent of the other, except that (x) the Purchaser may assign this Agreement to any one or more entities wholly owned, directly or indirectly, by the Purchaser; provided, however, that, in the event this Agreement shall be assigned to any one or more entities wholly owned, directly or indirectly, by the Purchaser, the Purchaser named herein shall remain liable for the obligations of the “Purchaser” hereunder. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns. This Agreement is not intended and shall not be construed to create any rights in or to be enforceable in any part by any other persons.

     9.6 Severability. If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.

     9.7 Counterparts, Etc. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.

     9.8 Governing Law. This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (i) where this Agreement is executed or delivered; or (ii) where any

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payment or other performance required by this Agreement is made or required to be made; or (iii) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than Massachusetts; or (vii) any combination of the foregoing.

     To the maximum extent permitted by applicable law, any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement shall be brought and prosecuted in such court or courts located in The Commonwealth of Massachusetts as is provided by law; and the parties consent to the jurisdiction of said court or courts located in the State of Delaware and to service of process by registered mail, return receipt requested, or by any other manner provided by law.

     9.9 Waiver of Right to Trial by Jury. Each party hereto hereby irrevocably and unconditionally waives all right to trial by jury in any action, suit, proceeding, or counterclaim that relates to or arises out of this Agreement or the acts or failure to act of or by any other party in the enforcement of any of the terms or provisions of this Agreement or by any other party in the performance of any of the terms and provisions of this Agreement.

     9.10 Performance on Business Days. In the event the date on which performance or payment of any obligation of a party required hereunder is other than a Business Day, the time for payment or performance shall automatically be extended to the first Business Day following such date.

     9.11 Attorneys’ Fees. If any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, the prevailing party therein shall be entitled to receive from the other party the prevailing party’s costs and expenses, including reasonable attorneys’ fees incurred in connection therewith, in preparation therefor and on appeal therefore, which amounts shall be included in any judgment therein.

     9.12 Section and Other Headings. The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

     9.13 Time of Essence. Time shall be of the essence with respect to the performance of each and every covenant and obligation, and the giving of all notices, under this Agreement.

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     9.14 Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING THE PURCHASER, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME “SENIOR HOUSING PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE PURCHASER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE PURCHASER. ALL PERSONS DEALING WITH THE PURCHASER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE PURCHASER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

[SIGNATURES ON FOLLOWING PAGES]

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as a sealed instrument as of the date first above written.

SELLER:
LIFE TIME FITNESS, INC., a Minnesota corporation
By:	/s/ Eric J. Buss
	Eric J. Buss
	Secretary

LTF REAL ESTATE COMPANY, INC., a Minnesota corporation
By:	/s/ Eric J. Buss
	Eric J. Buss
	Secretary

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PURCHASER:
SENIOR HOUSING PROPERTIES TRUST, a Maryland real estate investment trust
By:	/s/ David J. Hegarty
	David J. Hegarty
	President

Exhibit A

The Properties

Alpharetta, Georgia

Property located at 855 North Point Parkway, Alpharetta, Georgia

Romeoville, Illinois

Property located at 1220 Lakeview Drive, Romeoville, Illinois

Allen, Texas

Property located at 971 State Highway 121, Allen, Texas

Omaha, Nebraska

Property located at 17007 Elm Plaza, Omaha, Nebraska

Exhibits B-1 through B-4

Legal Descriptions of Properties

[See attached copies.]

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Exhibit B-1

Legal Description of Alpharetta, Georgia Property

All That Tract or Parcel of Land lying and being in Land Lot 1189 and 1260, 2nd District, 2nd Section, the City of Alpharetta, Fulton County, Georgia, being more particularly described as follows:

To Find The True Point of Beginning commence at the point of intersection of the West right-of-way of North Point Parkway, having a varying right-of-way and a chamfer to Tradewinds Parkway, and The True Point of Beginning. Thence, southwesterly, along said chamfer, South 43 degrees 48 minutes 19 seconds West, a distance of 30.77 feet to a point, said point being located on the North right-of-way of Tradewinds Parkway, having a varying right-of-way; thence, northwesterly, along said right-of-way, North 89 degrees 58 minutes 03 seconds West, a distance of 27.96 feet to a point; thence, South 86 degrees 59 minutes 20 seconds West, a distance of 182.62 feet to a point; thence, along an arc of curve to the right (which has a radius of 470.00 feet, a central angle of 28 degrees 31 minutes 50 seconds and a chord distance of 231.63 feet, along a bearing of North 78 degrees 44 minutes 45 seconds West), an arc distance of 234.04 feet to a point; thence, North 64 degrees 28 minutes 50 seconds West, a distance of 150.27 feet to a point; thence, along an arc of curve to the left (which has a radius of 547.50 feet, a central angle of 13 degrees 21 minutes 28 seconds and a chord distance of 127.35 feet, along a bearing of North 71 degrees 09 minutes 34 seconds West), an arc distance of 127.64 feet to a point; thence, North 77 degrees 50 minutes 18 seconds West, a distance of 55.22 feet to a point, said point being the beginning of a chamfer; thence, leaving said Tradewinds Parkway right-of-way, northwesterly, along said chamfer, North 34 degrees 40 minutes 03 seconds West, a distance of 29.17 feet to a point, said point being the intersection of said chamfer and the Southeast right-of-way of Morris Road, having a varying right-of-way; thence, northeasterly, along said Morris Road right-of-way, along an arc of curve to the right (which has a radius of 965.00 feet, a central angle of 17 degrees 49 minutes 56 seconds and a chord distance of 299.13 feet, along a bearing of North 17 degrees 58 minutes 20 seconds East), an arc distance of 300.34 feet to a point; thence, along an arc of curve to the right (which has a radius of 1,330.00 feet, a central angle of 14 degrees 47 minutes 15 seconds and a chord distance of 342.31 feet, along a bearing of North 34 degrees 16 minutes 56 seconds East), an arc

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distance of 343.26 feet to a point; thence, along an arc of curve to the right (which has a radius of 930.00 feet, a central angle of 06 degrees 52 minutes 25 seconds and a chord distance of 111.50 feet, along a bearing of North 45 degrees 06 minutes 47 seconds East), an arc distance of 111.57 feet to a point; thence, North 57 degrees 55 minutes 19 seconds East, a distance of 179.02 feet to a point; thence, along an arc of curve to the right (which has a radius of 918.00 feet, a central angle of 01 degrees 21 minutes 59 seconds and a chord distance of 21.89 feet, along a bearing of North 60 degrees 19 minutes 35 seconds East), an arc distance of 21.89 feet to a point; thence, North 61 degrees 00 minutes 35 seconds East, a distance of 26.18 feet to a point, said point being the beginning of a chamfer; thence, leaving said Morris Road right-of-way, southeasterly, along said chamfer, South 73 degrees 59 minutes 25 seconds East, a distance of 28.28 feet to an iron pin found, said iron pin being located on the Northwest right-of-way of the Old Morris Road, having a 60 foot right-of-way; thence, southeasterly, along said Old Morris Road right-of-way, South 28 degrees 59 minutes 25 seconds East, a distance of 2.74 feet to a point; thence, along an arc of curve to the right (which has a radius of 1,801.12 feet, a central angle of 09 degrees 09 minutes 47 seconds and a chord distance of 287.74 feet, along a bearing of South 24 degrees 24 minutes 32 seconds East), an arc distance of 288.05 feet to an iron pin found; thence, along an arc of curve to the left (which has a radius of 252.11 feet, a central angle of 36 degrees 33 minutes 54 seconds and a chord distance of 158.17 feet, along a bearing of South 44 degrees 13 minutes 30 seconds East), an arc distance of 160.89 feet to an iron pin found; thence, South 62 degrees 30 minutes 26 seconds East, a distance of 20.00 feet to an iron pin found, said iron pin being located at the beginning of a chamfer; thence, leaving said Old Morris Road right-of-way, southeasterly, along said chamfer, South 41 degrees 24 minutes 56 seconds East, a distance of 20.00 feet to an iron pin found, said iron pin being located at the intersection of said chamfer and the Northwest right-of-way of North Point Parkway, having a varying right-of-way; thence, southwesterly, along said North Point Parkway right-of-way, along an arc of curve to the left (which has a radius of 686.62 feet, a central angle of 27 degrees 10 minutes 46 seconds and a chord distance of 322.67 feet, along a bearing of South 10 degrees 33 minutes 40 seconds West), an arc distance of 325.71 feet to an iron pin set; thence, South 86 degrees 58 minutes 17 seconds West, a distance of 10.00 feet to an iron pin set; thence, South 02 degrees 27 minutes 41 seconds East, a distance of 192.30 feet to a point, and The True Point of Beginning.

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Exhibit B-2

Legal Description of Romeoville, Illinois Property

Lot 1 in Final Plat of Resubdivision of Lot 3 in Windham Lakes 22nd Resubdivision, being a Resubdivision in Windham Lakes Resubdivision No. 22, being a Resubdivision of Lot 12 in Windham Lakes Resubdivision Number 3, a Subdivision of part of the West Half of Section 29, Township 37 North, Range 10 East of the Third Principal Meridian, according to the Plat thereof recorded April 17, 2001 as Document No. R2001-43185, in Will County, Illinois.

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Exhibit B-3

Legal Description of Allen, Texas Property

Being 12.941 acre tract of land situated in the Francis Dosser Survey, Abstract Number 280, Collin County, Texas, in the City of Allen, being a portion of the tract of land described as Tract B in the deed to Blue Star Allen, L.P. recorded in Volume 5638, Page 5196, Deed Records of Collin County, Texas, a portion of the tract of land described as Tract A in the Deed to Blue Star Allen Land, L.P. recorded in Volume 5638, Page 5127, Deed Records of Collin County, Texas, and also being all of Lot 1, Block A, StarCreek Commercial an Addition to the City of Allen as recorded in Cabinet Q, Page 511, Plat Records of Collin County, Texas; said 12.941 acre tract of land being more particularly described as follows:

Beginning at a 1/4 inch iron rod found in the easterly line of the tract of land described in the Deed to Wines Family Irrevocable Trust recorded in Volume 2774, Page 647, Deed Records of Collin County, Texas, near the approximate centerline of County Road Number 150 (an undefined width right-of-way) for the southwesterly corner of said Tract B; Thence with the easterly line of said Wines Family Irrevocable Trust Tract and the approximate centerline of County Road Number 150, North 00 degrees 30 minutes 41 seconds West at a distance of 258.24 feet passing a 1/2 inch iron rod with a cap stamped “DAA” found for the common westerly corner of said Tract B and said Tract A, in all a total distance of 671.18 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence departing the easterly line of said Wines Family Irrevocable Trust Tract, North 64 degrees 36 minutes 21 seconds East a distance of 644.45 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 80 degrees 23 minutes 39 seconds East a distance of 148.19 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence North 64 degrees 36 minutes 21 seconds East a distance of 60.02 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 25 degrees 23 minutes 39 seconds East a distance of 123.43 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 23 degrees 17 minutes 34 seconds East a distance of 150.00 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 25 degrees 23 minutes 39 seconds East a distance of 21.21 feet passing the common line of said Tract A and said Tract B, in all

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a total distance of 200.00 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 19 degrees 36 minutes 21 seconds West a distance of 35.36 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 64 degrees 36 minutes 21 seconds West a distance of 200.00 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 60 degrees 47 minutes 00 seconds West a distance of 150.00 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 64 degrees 36 minutes 21 seconds West a distance of 293.85 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for the point of curvature of a curve to the left having a radius of 1,560.00 feet; Thence southwesterly along said curve through a central angle of 13 degrees 43 minutes 09 seconds an arc distance of 373.53 feet with a chord bearing of South 57 degrees 44 minutes 47 seconds West and a chord distance of 372.64 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner in the northerly line of the tract of land described in the Deed to Bryan Bush recorded in Volume 1598, Page 373, Deed Records of Collin County, Texas, also being the southerly line of the aforementioned Tract B; Thence with the common line of said Tract B and said Bush Tract, South 88 degrees 51 minutes 41 seconds West a distance of 70.51 feet to the point of beginning; Containing a computed area of 12.941 acres (563,705 square feet) of land.

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Exhibit B-4

Legal Description of Omaha, Nebraska Property

Lot 2, Legacy Replat 12, a subdivision in Douglas County, Nebraska.

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Exhibit C

Form of Surveyor’s Certificate

SURVEYOR’S CERTIFICATE

TO:  Senior Housing Properties Trust,
and its assignees or nominees
400 Centre Street
Newton, MA 02458

RE:  Survey Entitled “________________________” dated _________ ___, 2008, prepared by ____________

     The undersigned hereby certifies that the above-referenced survey was prepared from an actual on-the-ground instrument survey of the subject premises; that the same accurately shows the location of the boundaries of the subject premises and the location of all streets, highways, alleys and public ways crossing or abutting said premises; that the dimensions of the improvements and the locations thereof with respect to the boundaries are accurately shown as the same were situated on      (date)                ,                ; that there are no encroachments by improvements appurtenant to adjoining premises upon the subject premises, nor from the subject premises, unless shown thereon; that all buildings and structures, if any, lie wholly within all applicable building restriction lines as provided by the City of _________, if any, and do not violate any restriction or other recorded agreements set forth in the title insurance commitment for the subject premises dated ______ ___, ______, issued to you by _________ Title Insurance Company, Commitment No. ____________ (the “Title Commitment”); that all easements and rights of way which are appurtenant to or burden the subject premises are: (i) referred to in the Title Commitment or (ii) apparent from a visual inspection are delineated thereon, and are located other than through the existing building shown hereon;

     The total number of striped parking spaces on the subject property is ______, including ______ designated handicap spaces

     Said described property is located within an area having a Zone Designation _________ by the Federal Emergency Management Agency (FEMA), on Flood Insurance Rate Map No. _______________, with a

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date of identification of ____________, for Community No. ____________, in _________ County, State of __________________ , which is the current Flood Insurance Rate Map for the community in which said premises is situated. The property [does/does not] lie in a flood hazard zone.

     The property [does/does not] lie within any area subject to regulation by Federal, state or municipal authority as inland or coastal wetlands, beach, estuary or the like.

     Access to and egress from the subject premises and the improvements and structures thereon to _________ Street, a public way, are provided by the means indicated thereon.

     Visible above ground evidence of municipal water, storm sewer facilities and telephone, gas and electric services of public utilities are available in the locations indicated thereon.

     The undersigned hereby certifies that the square footage of each parcel delineated on the above-referenced survey is as set forth thereon, that all such parcels are contiguous without any strips, gaps or gores existing between any of said parcels, and that said parcels, when combined, form and create one complete and uninterrupted parcel without any strips, gaps or gores.

     This map or plat and the survey on which it is based were made in accordance with laws regulating surveying in the State of ____________, and with the “Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys,” jointly established and adopted by ALTA and ACSM in 2005 and includes Items 1, 2, 3, 4, 6, 7(a)(b1)(c), 8, 9, 10, 11(a), 14 and 15 in Table A contained therein. Pursuant to the Accuracy Standards as adopted by ALTA, NSPS, and ACSM and in effect on the date of this certification, undersigned further certifies that proper field procedures, instrumentation, and adequate survey personnel were employed in order to achieve results comparable to those outlined in the “Minimum Angle, Distance, and Closure Requirements for Survey Measurements Which Control Land Boundaries for ALTA/ACSM Land Title Surveys.”

Dated: _________ ___, 2008

Registered Land Surveyor 

#________________
[Surveyor’s Seal] 

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EX-10.2

Exhibit 10.2

LEASE AGREEMENT,

dated as of August 21, 2008,

by and among

SNH LTF PROPERTIES LLC,

as Landlord,

and

LTF REAL ESTATE COMPANY, INC.,

as Tenant

Table of Contents

			Page
ARTICLE 1 DEFINITIONS				1
	1.1	Acquiring Guarantor		1
	1.2	Additional Charges		1
	1.3	Affiliated Person		2
	1.4	Agreement		2
	1.5	Applicable Laws		2
	1.6	Award		2
	1.7	Business Day		3
	1.8	Capital Addition		3
	1.9	Capital Expenditure		3
	1.10	Change in Control		3
	1.11	Claims		3
	1.12	Code		3
	1.13	Commencement Date		4
	1.14	Condemnation		4
	1.15	Condemnor		4
	1.16	Date of Taking		4
	1.17	Default		4
	1.18	Disbursement Rate		4
	1.19	Easement Agreement		4
	1.20	Encumbrance		4
	1.21	Entity		5
	1.22	Environment		5
	1.23	Environmental Obligation		5
	1.24	Environmental Notice		5
	1.25	Equity Interest		5
	1.26	Event of Default		5
	1.27	Extended Terms		5
	1.28	Facility Mortgage		5
	1.29	Facility Mortgagee		5
	1.30	Fair Market Value		5
	1.31	Financial Officer’s Certificate		6
	1.32	Financials		6
	1.33	Fiscal Year		6
	1.34	Fitness Center		6
	1.35	Fixed Term		6
	1.36	Fixtures		6
	1.37	FMV Rent		6
	1.38	GAAP		7
	1.39	Government Agencies		7
	1.40	Guarantor		7
	1.41	Guaranty		7
	1.42	Hazardous Substances		7
	1.43	Immediate Family		8
	1.44	Impositions		9
	1.45	Insurance Requirements		10
	1.46	Interest Rate		10
	1.47	Land		10

i

Table of Contents
(continued)

			Page
	1.48	Landlord		10
	1.49	Landlord Default		10
	1.50	Landlord Liens		10
	1.51	Lease Year		11
	1.52	Leased Improvements		11
	1.53	Leased Intangible Property		11
	1.54	Leased Personal Property		11
	1.55	Leased Property		11
	1.56	Legal Requirements		11
	1.57	Lien		11
	1.58	LTF		12
	1.59	LTF Guaranty		12
	1.60	Management Agreement		12
	1.61	Manager		12
	1.62	Minimum Rent		12
	1.63	Notice		12
	1.64	Offer		12
	1.65	Officer’s Certificate		12
	1.66	Overdue Rate		12
	1.67	Parent		12
	1.68	Permitted Encumbrances		13
	1.69	Permitted Use		13
	1.70	Person		13
	1.71	Property		13
	1.72	Qualified Appraiser		13
	1.73	Rent		13
	1.74	Rent Adjustment Rate		13
	1.75	SEC		13
	1.76	Security Deposit		13
	1.77	State		14
	1.78	Subsidiary		14
	1.79	Substitute Property		14
	1.80	Substitution Date		14
	1.81	Successor Landlord		14
	1.82	Tangible Net Worth		14
	1.83	Tenant		14
	1.84	Tenant’s Personal Property		15
	1.85	Term		15
	1.86	Unsuitable for Its Permitted Use		15
	1.87	Work		16
ARTICLE 2 LEASED PROPERTY AND TERM				16
	2.1	Leased Property		16
	2.2	Condition of Leased Property		17
	2.3	Fixed Term		18
	2.4	Extended Terms		18
	2.5	Substitution of Properties; Sale of Non-Economic Property, Etc.		19
ARTICLE 3 RENT				24

ii

Table of Contents
(continued)

			Page
	3.1	Rent		24
	3.2	Late Payment of Rent, Etc.		29
	3.3	Net Lease		29
	3.4	No Termination, Abatement, Etc.		29
ARTICLE 4 USE OF THE LEASED PROPERTY				30
	4.1	Permitted Use		30
	4.2	Compliance with Legal/Insurance Requirements, Etc.		31
	4.3	Environmental Matters		32
ARTICLE 5 MAINTENANCE AND REPAIRS				34
	5.1	Maintenance and Repair		34
	5.2	Tenant’s Personal Property		36
	5.3	Yield Up		36
	5.4	Management Agreement		37
ARTICLE 6 IMPROVEMENTS, ETC.				38
	6.1	Improvements to the Leased Property		38
	6.2	Salvage		39
ARTICLE 7 LIENS				39
	7.1	Liens		39
	7.2	Subordination of Landlord’s Lien		39
ARTICLE 8 PERMITTED CONTESTS				40
ARTICLE 9 INSURANCE AND INDEMNIFICATION				41
	9.1	General Insurance Requirements		41
	9.2	Waiver of Claims and Subrogation		45
	9.3	Miscellaneous		45
	9.4	No Separate Insurance		46
	9.5	Indemnification of Landlord		46
ARTICLE 10 CASUALTY				47
	10.1	Insurance Proceeds		47
	10.2	Damage or Destruction		47
	10.3	Damage Near End of Term		49
	10.4	Tenant’s Property		50
	10.5	Restoration of Tenant’s Property		50
	10.6	No Abatement of Rent		50
	10.7	Waiver		50
ARTICLE 11 CONDEMNATION				50
	11.1	Total Condemnation, Etc.		50
	11.2	Partial Condemnation		50
	11.3	No Abatement of Rent		52
	11.4	Temporary Condemnation		52
	11.5	Allocation of Award		52
ARTICLE 12 DEFAULTS AND REMEDIES				53
	12.1	Events of Default		53
	12.2	Remedies		56
	12.3	Tenant’s Waiver		57
	12.4	Application of Funds		57
	12.5	Landlord’s Right to Cure Tenant’s Default		58
ARTICLE 13 HOLDING OVER				58
ARTICLE 14 LANDLORD DEFAULT				58

iii

Table of Contents
(continued)

			Page
ARTICLE 15 PURCHASE RIGHTS				59
ARTICLE 16 SUBLETTING AND ASSIGNMENT				60
	16.1	Subletting and Assignment		60
	16.2	Required Sublease Provisions		63
	16.3	Permitted Sublease		64
	16.4	Sublease Limitation		65
ARTICLE 17 ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS				65
	17.1	Estoppel Certificates		65
	17.2	LTF Financial Statements		65
	17.3	Other Financial Statements		67
	17.4	General		68
ARTICLE 18 LANDLORD’S RIGHT TO INSPECT				69
ARTICLE 19 EASEMENTS				69
	19.1	Grant of Easements		69
	19.2	Exercise of Rights by Tenant		70
	19.3	Permitted Encumbrances		70
ARTICLE 20 RIGHT OF FIRST OFFER				70
	20.1	Right of First Offer		70
	20.2	Attornment		71
	20.3	General		71
ARTICLE 21 REPRESENTATIONS AND WARRANTIES				72
	21.1	Representations of Tenant		72
	21.2	Representations of Landlord		73
ARTICLE 22 FACILITY MORTGAGES				74
	22.1	Landlord May Grant Liens		75
	22.2	Subordination of Lease		75
	22.3	Notice to Mortgagee and Superior Landlord		77
ARTICLE 23 ADDITIONAL COVENANTS OF TENANT				77
	23.1	Prompt Payment of Indebtedness		77
	23.2	Conduct of Business		77
	23.3	Maintenance of Accounts and Records		78
	23.4	Notice of Litigation, Etc.		78
	23.5	Liens and Encumbrances		78
ARTICLE 24 MISCELLANEOUS				78
	24.1	Limitation on Payment of Rent		78
	24.2	No Waiver		79
	24.3	Remedies Cumulative		79
	24.4	Severability		79
	24.5	Acceptance of Surrender		79
	24.6	No Merger of Title		80
	24.7	Conveyance by Landlord		80
	24.8	Quiet Enjoyment		80
	24.9	No Recordation		80
	24.10	Notices		81
	24.11	Construction		82
	24.12	Counterparts; Headings		83
	24.13	Applicable Law, Etc.		83
	24.14	Right to Make Agreement		83
	24.15	Attorneys’ Fees		84

iv

LEASE AGREEMENT

     THIS LEASE AGREEMENT is entered into as of August 21, 2008, by and between SNH LTF PROPERTIES LLC, a Maryland limited liability company, as landlord, and (ii) LTF REAL ESTATE COMPANY, INC., a Minnesota corporation, as tenant (“Tenant”).

WITNESSETH:

     WHEREAS, Landlord owns fee simple title to the four (4) Properties (this and other capitalized terms used and not otherwise defined herein having the meanings ascribed to such terms in Article 1) described on Exhibits A-1 — A-4; and

     WHEREAS, Landlord wishes to lease the Properties to Tenant and Tenant wishes to lease the Properties from Landlord, all subject to and upon the terms and conditions herein set forth;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

ARTICLE 1

DEFINITIONS

     For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article shall have the meanings assigned to them in this Article and include the plural as well as the singular, (b) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP, (c) all references in this Agreement to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement, and (d) the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.

     1.1 “Acquiring Guarantor” shall mean any successor in interest to any Guarantor, which shall be deemed to include, without limitation, any successor in interest to a Guarantor resulting from any direct or indirect Change in Control of such Guarantor.

     1.2 “Additional Charges” shall have the meaning given such term in Section 3.1.2.

     1.3 “Affiliated Person” shall mean, with respect to any Person, (a) in the case of any such Person which is a partnership, any partner in such partnership, (b) in the case of any such Person which is a limited liability company, any member of such company, (c) any other Person which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or more of the Persons referred to in the preceding clauses (a) and (b), (d) any other Person who is an officer, director, trustee or employee of, or partner in or member of, such Person or any Person referred to in the preceding clauses (a), (b) and (c), and (e) any other Person who is a member of the Immediate Family of such Person or of any Person referred to in the preceding clauses (a) through (d).

     1.4 “Agreement” shall mean this Lease Agreement, including Exhibits A-1 through A-4 hereto, as it and they may be amended from time to time as herein provided.

     1.5 “Applicable Laws” shall mean all applicable laws, statutes, regulations, rules, ordinances, codes, licenses, permits and orders, from time to time in existence, of all courts of competent jurisdiction and Government Agencies, and all applicable judicial and administrative and regulatory decrees, judgments and orders, including common law rulings and determinations, relating to injury to, or the protection of, real or personal property or human health or the Environment, including, without limitation, all valid and lawful requirements of courts and other Government Agencies pertaining to reporting, licensing, permitting, investigation, remediation and removal of underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or emissions, discharges, releases or threatened releases of Hazardous Substances, chemical substances, pesticides, petroleum or petroleum products, pollutants, contaminants or hazardous or toxic substances, materials or wastes whether solid, liquid or gaseous in nature, into the Environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature.

     1.6 “Award” shall mean all compensation, sums or other value awarded, paid or received by virtue of a total or partial Condemnation of any of the Leased Property (after deduction of

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all reasonable legal fees and other reasonable costs and expenses, including, without limitation, expert witness fees, incurred by Landlord, in connection with obtaining any such award).

     1.7 “Business Day” shall mean any day other than Saturday, Sunday, or any other day on which banking institutions in The Commonwealth of Massachusetts are authorized by law or executive action to close.

     1.8 “Capital Addition” shall mean, with respect to any Property, any renovation, repair or improvement to such Property, the cost of which constitutes a Capital Expenditure.

     1.9 “Capital Expenditure” shall mean any expenditure treated as capital in nature in accordance with GAAP.

     1.10 “Change in Control” shall mean, with respect to any Person, (a) the acquisition by any other Person, or two or more other Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the SEC) of 50% or more, or rights, options or warrants to acquire 50% or more, of the outstanding shares of voting stock of Tenant or any Guarantor, as the case may be, or (b) the merger or consolidation of (A) Tenant or any Guarantor, as the case may be, with or into any other Person (other than the merger or consolidation of any Person into Tenant or such Guarantor that does not result in a Change in Control of Tenant or such Guarantor under clause (a) of this definition) or (B) any Subsidiary of any Guarantor, the Equity Interests of which, (or assets of which, if owned by such Guarantor) if not retained by such Guarantor, would result in a reduction of the Tangible Net Worth of such Guarantor to less than the Required Net Worth, with or into any Person (other than a consolidation or merger with or into a wholly-owned, direct or indirect subsidiary of such Guarantor); excluding, however, any such acquisition effected through the trading of shares conducted in the ordinary course on any applicable stock exchange on which such shares may be listed.

     1.11 “Claims” shall have the meaning given such term in Article 8.

     1.12 “Code” shall mean the Internal Revenue Code of 1986 and, to the extent applicable, the Treasury Regulations promulgated thereunder, each as from time to time amended.

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     1.13 “Commencement Date” shall mean the date of this Agreement.

     1.14 “Condemnation” shall mean, with respect to any Property, (a) the exercise of any governmental power with respect to such Property, whether by legal proceedings or otherwise, by a Condemnor of its power of condemnation, (b) a voluntary sale or transfer of such Property by Landlord to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending, or (c) a taking or voluntary conveyance of all or part of such Property, or any interest therein, or right accruing thereto or use thereof, as the result or in settlement of any condemnation or other eminent domain proceeding affecting such Property, whether or not the same shall have actually been commenced.

     1.15 “Condemnor” shall mean any public or quasi-public Person, having the power of Condemnation.

     1.16 “Date of Taking” shall mean, with respect to any Property, the date the Condemnor has the right to possession of such Property, or any portion thereof, in connection with a Condemnation.

     1.17 “Default” shall mean any event or condition which with the giving of notice and/or lapse of time would ripen into an Event of Default.

     1.18 “Disbursement Rate” shall mean an annual rate of interest, as of the date of determination, equal to the greater of (i) the Interest Rate and (ii) the per annum rate for fifteen (15) year U.S. Treasury Obligations as published in The Wall Street Journal plus four hundred fifty (450) basis points; provided, however, that in no event shall the Disbursement Rate exceed eleven and one half percent (11.5%).

     1.19 “Easement Agreement” shall mean any conditions, covenants and restrictions, easements, declarations, licenses and other agreements which are Permitted Encumbrances and such other agreements as may be granted in accordance with Section 19.1.

     1.20 “Encumbrance” shall have the meaning given such term in Section 22.1.

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     1.21 “Entity” shall mean any corporation, general or limited partnership, limited liability company or partnership, stock company or association, joint venture, association, company, trust, bank, trust company, land trust, business trust, cooperative, any government or agency, authority or political subdivision thereof or any other entity.

     1.22 “Environment” shall mean soil, surface waters, ground waters, land, stream, sediments, surface or subsurface strata and ambient air.

     1.23 “Environmental Obligation” shall have the meaning given such term in Section 4.3.1.

     1.24 “Environmental Notice” shall have the meaning given such term in Section 4.3.1.

     1.25 “Equity Interest” shall mean any and all shares, interests, participations, rights or other equivalents (whether or not voting) of corporate stock, membership interests of any limited liability company, partnership interests of any partnership and any other equity security or ownership interest in a Person.

     1.26 “Event of Default” shall have the meaning given such term in Section 12.1.

     1.27 “Extended Terms” shall have the meaning given such term in Section 2.4.

     1.28 “Facility Mortgage” shall mean any Encumbrance placed upon the Leased Property, or any portion thereof, in accordance with Article 22.

     1.29 “Facility Mortgagee” shall mean the holder of any Facility Mortgage.

     1.30 “Fair Market Value” shall mean, with respect to any Property, the price that a willing buyer not compelled to buy would pay a willing seller not compelled to sell for such Property, (a) assuming the same is unencumbered by this Lease, (b) assuming such seller shall pay the closing costs generally paid by a seller of real property in the state in which such property is located and that such buyer shall pay closing costs generally paid by a buyer of real property in the state in which such property is located, and (b) not taking into account any

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reduction in value resulting from any indebtedness to which such property is subject.

     1.31 “Financial Officer’s Certificate” shall mean, as to any Person, a certificate of the chief executive officer, chief financial officer or chief accounting officer (or such officers’ authorized designee) of such Person, duly authorized, accompanying the financial statements required to be delivered by such Person pursuant to Section 17.2, in which such officer shall certify (a) that such statements have been properly prepared in accordance with GAAP and are true, correct and complete in all material respects and fairly present the consolidated financial condition of such Person at and as of the dates thereof and the results of its and their operations for the periods covered thereby, and (b), in the event that the certifying party is an officer of Tenant and the certificate is being given in such capacity, certify that no Event of Default has occurred and is continuing hereunder.

     1.32 “Financials” shall mean, for any Fiscal Year or fiscal quarter of any Person, annual audited and quarterly unaudited financial statements, as the case may be, of such Person prepared on a consolidated basis, including such Person’s consolidated balance sheet and the related statements of income and cash flows, all in reasonable detail, and setting forth in comparative form the corresponding figures for the corresponding period in the preceding Fiscal Year, and prepared in accordance with GAAP throughout the periods reflected.

     1.33 “Fiscal Year” shall mean the calendar year or such other annual period designated by Tenant and approved by Landlord.

     1.34 “Fitness Center” shall mean, with respect to any Property, collectively, the athletic club/fitness center/wellness center from time to time operated on such Property.

     1.35 “Fixed Term” shall have the meaning given such term in Section 2.3.

     1.36 “Fixtures” shall have the meaning given such term in Section 2.1(d).

     1.37 “FMV Rent” shall mean the minimum base rental that a willing tenant not compelled to rent would pay a willing

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landlord not compelled to lease for the use and occupancy of the Leased Property (including all Capital Additions, but specifically excluding, without limitation, (A) Capital Additions consisting of one or more additional structures annexed to any portion of the Leased Improvements with respect to any Property, or the material expansion of the Leased Improvements, which are constructed and paid for by Tenant during the Term in order to improve materially the quality of the Fitness Center located at such Property and which addition or expansion is not otherwise required by the terms of this Lease, and (B) the payment by Tenant of Additional Charges as contemplated by this Agreement) on the terms and conditions of this Agreement for the term in question, and determined in accordance with the provisions of Section 3.1.1(c).

     1.38 “GAAP” shall mean generally accepted accounting principles consistently applied.

     1.39 “Government Agencies” shall mean any court, agency, authority, board (including, without limitation, environmental protection, planning and zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi-governmental unit of the United States or any State or any county or any political subdivision of any of the foregoing, whether now or hereafter in existence, having jurisdiction over Tenant or the Leased Property or any portion thereof or any Fitness Center operated thereon.

     1.40 “Guarantor” shall mean LTF, and each and every other Acquiring Guarantor and each such Guarantor’s permitted successors and assigns, expressly excluding, however, any such Guarantor released from its liabilities and obligations under its Guaranty pursuant to the terms of Section 16.1.

     1.41 “Guaranty” shall mean the LTF Guaranty, and each and every other guaranty agreement executed by a Guarantor in favor of Landlord pursuant to which Tenant’s obligations under this Agreement are guaranteed, together with all modifications, amendments and supplements thereto.

     1.42 “Hazardous Substances” shall mean any substance:

     (a) the presence of which requires or may hereafter require notification, investigation or remediation under any federal, state or local statute, regulation, rule, ordinance, order, action or policy; or

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     (b) which is or becomes defined as a “hazardous waste”, “hazardous material” or “hazardous substance” or “pollutant” or “contaminant” under any present or future federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.) and the regulations promulgated thereunder; or

     (c) which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, any state of the United States, or any political subdivision thereof; or

     (d) the presence of which on the Leased Property, or any portion thereof, causes or materially threatens to cause an unlawful nuisance upon the Leased Property, or any portion thereof, or to adjacent properties or poses or materially threatens to pose a hazard to the Leased Property, or any portion thereof, or to the health or safety of persons on or about the Leased Property, or any portion thereof; or

     (e) without limitation, which contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic compounds; or

     (f) without limitation, which contains polychlorinated biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or

     (g) without limitation, which contains or emits radioactive particles, waves or material.

     1.43 “Immediate Family” shall mean, with respect to any individual, such individual’s spouse, parents, brothers, sisters, children (natural or adopted), stepchildren, grandchildren, grandparents, parents-in-law, brothers-in-law, sisters-in-law, nephews and nieces.

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     1.44 “Impositions” shall mean, collectively, all taxes (including, without limitation, all taxes imposed under the laws of any State, as such laws may be amended from time to time, and all ad valorem, sales and use, or similar taxes as the same relate to or are imposed upon Landlord, Tenant or the business conducted upon the Leased Property), assessments (including, without limitation, all assessments for public improvements or benefit, whether or not commenced or completed, or due and payable, prior to the date hereof), water, sewer or other rents and charges, excises, tax levies, fees (including, without limitation, license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general or special, ordinary or extraordinary, or foreseen or unforeseen, of every character in respect of the Leased Property or the business conducted thereon by Tenant (including all interest and penalties thereon due to any failure in payment by Tenant), which at any time prior to, during or in respect of the Term hereof may be assessed or imposed on or in respect of or be a lien upon (a) Landlord’s interest in the Leased Property, (b) the Leased Property or any part thereof or any rent therefrom or any estate, right, title or interest therein, (c) any occupancy, operation, use or possession of, or sales from, or activity conducted on, or in connection with the Leased Property or the leasing or use of the Leased Property or any part thereof by Tenant or (d) as a result of the sale, exchange or other disposition of the Leased Property (including, without limitation, any Substitute Property) by LTF, Tenant or any of their Affiliated Persons, to Landlord, including, without limitation, any bulk sales, excise or like tax; provided, however, that nothing contained herein shall be construed to require Tenant to pay and the term “Impositions” shall not include (i) any tax based on net income, excess profits or other similar tax imposed on Landlord and based on Landlord’s net income or net worth, (ii) any net revenue tax of Landlord, (iii) any transfer fee, capital gains tax or other tax imposed with respect to the sale, exchange or other disposition by Landlord of the Leased Property or the proceeds thereof, (iv) any single business, gross receipts tax, transaction privilege, rent or similar taxes as the same relate to or are imposed upon Landlord, (v) any interest or penalties imposed on Landlord as a result of the failure of Landlord to file any return or report timely and in the form prescribed by law or to pay any tax or imposition, except to the extent such failure is a result of a breach by Tenant of its obligations pursuant to Section 3.1.2, (vi) any impositions imposed on Landlord that are a result of

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Landlord not being considered a “United States person” as defined in Section 7701(a)(30) of the Code, (vii) any impositions that are enacted or adopted by their express terms as a substitute for any tax that would not have been payable by Tenant pursuant to the terms of this Agreement, (viii) any impositions imposed as a result of a breach of covenant or representation by Landlord in any agreement governing Landlord’s conduct or operation or as a result of the negligence or willful misconduct of Landlord or (ix) any estate, inheritance, succession, gift or similar tax imposed on Landlord.

     1.45 “Insurance Requirements” shall mean all terms of any insurance policy required by this Agreement and all requirements of the issuer of any such policy and all orders, rules and regulations and any other requirements of the National Board of Fire Underwriters (or any other body exercising similar functions) binding upon Landlord, Tenant, any Manager or the Leased Property.

     1.46 “Interest Rate” shall mean nine percent (9%) per annum.

     1.47 “Land” shall have the meaning given such term in Section 2.1(a).

     1.48 “Landlord” shall have the meaning given such term in the preambles to this Agreement and shall also include its permitted successors and assigns.

     1.49 “Landlord Default” shall have the meaning given such term in Article 14.

     1.50 “Landlord Liens” shall mean liens on or against the Leased Property or any payment of Rent (a) which result from any act of, grant by, agreement of, or any claim against, Landlord or any owner of a direct or indirect interest in the Leased Property, or which result from any violation by Landlord of any terms of this Agreement, or (b) which result from liens in favor of any taxing authority by reason of any tax owed by Landlord or any fee owner of a direct or indirect interest in the Leased Property; provided, however, that “Landlord Lien” shall not include any lien resulting from any tax for which Tenant is obligated to pay or indemnify Landlord against until such time as Tenant shall have already paid to or on behalf of Landlord the tax or the required indemnity with respect to the same or any action taken by Landlord at Tenant’s request.

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     1.51 “Lease Year” shall mean any Fiscal Year or portion thereof during the Term.

     1.52 “Leased Improvements” shall have the meaning given such term in Section 2.1(b).

     1.53 “Leased Intangible Property” shall mean, with respect to the Leased Property, all transferable or assignable (a) permits, certificates of occupancy, operating permits, sign permits, development rights and approvals granted by any public body or by any private party pursuant to a recorded instrument relating to the Leased Property, (b) certificates, licenses, warranties and guarantees owned or held by Landlord, and (c) any and all reserved and other rights relating to the Leased Property and the documents and agreements creating or otherwise pertaining to the Leased Property.

     1.54 “Leased Personal Property” shall have the meaning given such term in Section 2.1(e).

     1.55 “Leased Property” shall have the meaning given such term in Section 2.1.

     1.56 “Legal Requirements” shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Leased Property or the maintenance, construction, alteration or operation thereof, whether now or hereafter enacted or in existence, including, without limitation, (a) all permits, licenses, authorizations, certificates of need, authorizations and regulations necessary to operate any Property for its Permitted Use, and (b) all covenants, agreements, restrictions and encumbrances contained in any instruments at any time in force affecting any Property, including those which may (i) require material repairs, modifications or alterations in or to any Property or (ii) in any way materially and adversely affect the use and enjoyment thereof, but excluding any requirements arising as a result of Landlord’s status as a real estate investment trust.

     1.57 “Lien” shall mean any mortgage, security interest, pledge, collateral assignment, or other encumbrance, lien or charge of any kind, or any transfer of property or assets for the purpose of subjecting the same to the payment of indebtedness or performance of any other obligation in priority to payment of its general creditors.

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     1.58 “LTF” shall mean Life Time Fitness, Inc., a Minnesota corporation, and its permitted successors and assigns.

     1.59 “LTF Guaranty” shall mean that certain Guaranty of Lease Agreement, dated as of the date hereof, from LTF to Landlord guaranteeing the payment and performance by Tenant of all of Tenant’s obligations under this Agreement.

     1.60 “Management Agreement” shall mean, with respect to any Property, any operating or management agreement from time to time entered into by Tenant with respect to such Property in accordance with the provisions of this Agreement, together with all amendments, modifications and supplements thereto.

     1.61 “Manager” shall mean, with respect to any Property, the operator or manager under any Management Agreement from time to time in effect with respect to such Property, and its permitted successors and assigns.

     1.62 “Minimum Rent” shall mean shall mean Nine Million Ninety Thousand Nine Hundred Nine and 12/100 Dollars ($9,090,909.12) per annum, subject to adjustment as hereinafter provided.

     1.63 “Notice” shall mean a notice given in accordance with Section 24.10.

     1.64 “Offer” shall have the meaning given such term in Section 2.5.

     1.65 “Officer’s Certificate” shall mean a certificate signed by an officer or other duly authorized individual of the certifying Entity duly authorized by the board of directors or other governing body of the certifying Entity.

     1.66 “Overdue Rate” shall mean, on any date, a per annum rate of interest equal to the lesser of fifteen percent (15%) and the maximum rate then permitted under applicable law.

     1.67 “Parent” shall mean, with respect to any Person, any Person which owns directly, or indirectly through one or more Subsidiaries or Affiliated Persons, fifty percent (50%) or more of the voting or beneficial interest in, or otherwise has the right or power (whether by contract, through ownership of securities or otherwise) to control, such Person.

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     1.68 “Permitted Encumbrances” shall mean, with respect to any Property, all rights, restrictions, and easements of record set forth on Schedule B to the applicable owner’s title insurance policy issued to Landlord with respect to such Property, plus any other encumbrances as may have been granted or caused by Landlord or otherwise consented to in writing by Landlord from time to time.

     1.69 “Permitted Use” shall mean, with respect to any Property, any use of such Property permitted pursuant to Section 4.1.1.

     1.70 “Person” shall mean any individual or Entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so admits.

     1.71 “Property” shall have the meaning given such term in Section 2.1.

     1.72 “Qualified Appraiser” shall mean any disinterested person who is a member in good standing of the American Institute of Real Estate Appraisers or the American Society of Real Estate Counselors (or the successor to either of such organizations) and who has had not less than ten (10) years’ experience in appraising and valuing health clubs/fitness centers/wellness centers of the size, type and nature of the Leased Property.

     1.73 “Rent” shall mean, collectively, the Minimum Rent and Additional Charges.

     1.74 “Rent Adjustment Rate” shall mean an annual rate equal to the lesser of (x) seven percent (7%) and (y) the sum of the per annum rate for ten (10) year U.S. Treasury Obligations as published in The Wall Street Journal as of the date of the sale or rejection (or deemed rejection) of an Offer pursuant to Section 2.5, plus one hundred (100) basis points.

     1.75 “SEC” shall mean the Securities and Exchange Commission.

     1.76 “Security Deposit” shall have the meaning given such term in Section 16.1.

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     1.77 “State” shall mean, with respect to any Property, the state, commonwealth or district in which such Property is located.

     1.78 “Subsidiary” shall mean, with respect to any Person, any Entity (a) in which such Person owns directly, or indirectly, the shares of stock, equity interest or other beneficial interest having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such Entity, or (b) which such Person otherwise has the right or power to control (whether by contract, through ownership of securities or otherwise).

     1.79 “Substitute Property” shall have the meaning given such term in Section 2.5.

     1.80 “Substitution Date” shall have the meaning given such term in Section 2.5.

     1.81 “Successor Landlord” shall have the meaning given such term in Section 22.2.

     1.82 “Tangible Net Worth” shall mean, with respect to any Person (determined on a consolidated basis), the excess of total assets over total liabilities, total assets and total liabilities each to be determined in accordance with GAAP, excluding, however, from the determination of total assets: (a) goodwill, organizational expenses, research and development expenses, trademarks, trade names, copyrights, patents, patent applications, licenses and rights in any thereof, and other similar intangibles; (b) all deferred charges or unamortized debt discount and expense; (c) all reserves carried and not deducted from assets; (d) treasury stock and capital stock, obligations or other securities of, or capital contributions to, or investments in, any Subsidiary; (e) securities which are not readily marketable; (f) any write-up in the book value of any asset resulting from a revaluation thereof subsequent to the Commencement Date; (g) deferred gain; and (h) any items not included in clauses (a) through (g) above that are treated as intangibles in conformity with GAAP.

     1.83 “Tenant” shall have the meaning given such term in the preambles to this Agreement and shall also include its permitted successors and assigns.

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     1.84 “Tenant’s Personal Property” shall mean (a) all items of personal property, equipment and trade fixtures (so long as the same are not necessary for the operation of the Improvements and the Property as opposed to the business from time to time conducted at the Property) located in or on the Leased Property, and whether or however attached to the Leased Improvements, at any time that are necessary or incidental to the business from time to time conducted at the Leased Property, including, without limitation, exercise/fitness equipment, kitchen equipment and furnishings, work stations, portable or movable partitions, receptionist desks, computer installations (including computers, computer hardware, raised flooring designated solely for the computer system, freestanding supplemental air conditioning or cooling systems therefor), communications systems and equipment, financial services equipment (such as ATM’s), credenzas, safes, bulletin boards, book shelves and file cabinets; (b) all furniture, inventory, machinery (so long as the same are not necessary for the operation of the Improvements and the Property as opposed to the business from time to time conducted at the Property), racking, shelving, and other personal property; (c) all personal property, equipment or trade fixtures which is either not owned by Landlord, Tenant or any of their respective Affiliated Persons, or is on consignment to Tenant or any of its Affiliated Persons, including any personal property owned by Tenant’s, subtenant’s, employees or invitees (other than Affiliated Persons of Tenant); (d) all signs and other forms of business identification; (e) all operating and other permits, licenses and approvals, warranties, guaranties indemnities and similar rights (so long as the same are not necessary for the operation of the Improvements and the Property as opposed to the business from time to time conducted at the Property), and (f) all other items of personal property (so long as the same are not necessary for the operation of the Improvements and the Property as opposed to the business from time to time conducted at the Property).

     1.85 “Term” shall mean, collectively, the Fixed Term and the Extended Terms, to the extent properly exercised pursuant to the provisions of Section 2.4, unless sooner terminated pursuant to the provisions of this Agreement.

     1.86 “Unsuitable for Its Permitted Use” shall mean, with respect to any Property, a state or condition of such Property such that (a) following any damage or destruction involving such Property, such Property cannot be operated on a commercially

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practicable basis for its Permitted Use and it cannot reasonably be expected to be restored to substantially the same condition as existed immediately before such damage or destruction, and as otherwise required by Section 10.2.4, within twelve (12) months following such damage or destruction or such longer period of time as to which business interruption insurance is available to cover Rent and other costs related to the applicable Property following such damage or destruction, or (b) as the result of a partial taking by Condemnation, such Property cannot be operated, in the good faith judgment of Tenant, on a commercially practicable basis for its Permitted Use.

     1.87 “Work” shall have the meaning given such term in Section 10.2.4.

ARTICLE 2

LEASED PROPERTY AND TERM

     2.1 Leased Property. Upon and subject to the terms and conditions hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord all of Landlord’s right, title and interest in and to all of the following (each of items (a) through (g) below which, as of the Commencement Date, relates to any single Fitness Center, a “Property” and, collectively, the “Leased Property”):

     (a) those certain tracts, pieces and parcels of land, as more particularly described in Exhibits A-1 through A-4, attached hereto and made a part hereof (the “Land”);

     (b) all buildings, structures and other improvements of every kind including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site), parking areas and roadways appurtenant to such buildings and structures presently situated upon the Land (collectively, the “Leased Improvements”);

     (c) all easements, rights and appurtenances relating to the Land and the Leased Improvements;

     (d) all equipment, machinery, fixtures, and other items of property, now or hereafter permanently affixed to or incorporated into the Leased Improvements, including, without limitation, all furnaces, boilers, heaters,

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electrical equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste disposal, air-cooling and air-conditioning systems and apparatus, sprinkler systems and fire and theft protection equipment, all of which, to the maximum extent permitted by law, are hereby deemed by the parties hereto to constitute real estate, together with all replacements, modifications, alterations and additions thereto, but specifically excluding all items included within the category of Tenant’s Personal Property (collectively, the “Fixtures”);

     (e) all machinery, equipment, furnishings, moveable walls or partitions, or other personal property of any kind or description necessary for the operation of the Improvements at the Property as opposed to the business from time to time conducted at the Property, and located on or in the Leased Improvements, and all modifications, replacements, alterations and additions to such personal property, except items, if any, included within the category of Fixtures, but specifically excluding all items included within the category of Tenant’s Personal Property (collectively, the “Leased Personal Property”);

     (f) all of the Leased Intangible Property but specifically excluding all items included within the category of Tenant’s Personal Property; and

     (g) any and all leases of space in the Leased Improvements, if any.

     2.2 Condition of Leased Property. Tenant acknowledges receipt and delivery of possession of the Leased Property and Tenant accepts the Leased Property in its “as is” condition, subject to the rights of parties in possession, the existing state of title, including all covenants, conditions, restrictions, reservations, mineral leases, easements and other matters of record or that are visible or apparent on the Leased Property, all applicable Legal Requirements, the lien of any financing instruments, mortgages and deeds of trust existing prior to the Commencement Date or permitted by the terms of this Agreement, and such other matters which would be disclosed by an inspection of the Leased Property and the record title thereto or by an accurate survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT RELYING ON

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ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD’S AGENTS OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. To the maximum extent permitted by law, however, Landlord hereby assigns to Tenant all of Landlord’s rights to proceed against any predecessor in interest or insurer for breaches of warranties or representations or for latent defects in the Leased Property. Landlord shall fully cooperate with Tenant in the prosecution of any such claims, in Landlord’s or Tenant’s name, all at Tenant’s sole cost and expense. Tenant shall indemnify, defend, and hold harmless Landlord from and against any loss, cost, damage or liability (including reasonable attorneys’ fees) incurred by Landlord in connection with such cooperation.

     2.3 Fixed Term. The initial term of this Agreement (the “Fixed Term”) shall commence on the Commencement Date and shall expire on August 31, 2028.

     2.4 Extended Terms. Provided that no Event of Default shall have occurred and be continuing, Tenant shall have the right to extend the Term for six (6) consecutive renewal terms of five (5) years each (each, an “Extended Term” and collectively, the “Extended Terms”).

     Each Extended Term shall commence on the day succeeding the expiration of the Fixed Term or the preceding Extended Term, as the case may be. All of the terms, covenants and provisions of this Agreement shall apply to each such Extended Term, except that (a) Tenant shall have no right to extend the Term beyond the expiration of the sixth (6^th) Extended Term and (b) Minimum Rent during the first Fiscal Year of the third (3^rd), fourth (4^th), fifth (5^th) and sixth (6^th) Extended Terms shall be adjusted in accordance with Section 3.1.1(b). Provided that this Agreement shall not have been terminated pursuant to any provision hereof, the Term shall be automatically extended for an Extended Term, unless Tenant shall give Landlord Notice not later than twelve months prior to the scheduled expiration of the then-current Term that Tenant elects not to so extend the Term of this Agreement, it being understood and agreed that time

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shall be of the essence with respect to the giving of such Notice. If Tenant shall give Notice that it elects not to extend the Term in accordance with this Section 2.4, this Agreement shall automatically terminate at the end of the then-current Term, and Tenant shall have no further option to extend the Term of this Agreement. Otherwise, the extension of this Agreement shall be automatically effected without the execution of any additional documents; it being understood and agreed, however, that Tenant and Landlord shall execute such documents and agreements as either party shall reasonably require to evidence the same.

     2.5 Substitution of Properties; Sale of Non-Economic Property, Etc.

     (a) Substitution of Properties. Subject to the terms of this Section 2.5, provided that (i) no Default or Event of Default shall have occurred and be continuing, and (ii) not less than one (1) year shall remain in the Term, Tenant shall have the right, upon not less than thirty (30) days prior written notice to Landlord, to elect to substitute one or more properties (collectively, the “Substitute Properties” or individually, “Substitute Property”) for such Property on the date specified in such notice (the “Substitution Date”). Such notice shall include (a) an Officer’s Certificate, setting forth in reasonable detail the reason(s) for the substitution and the proposed Substitution Date, and (b) designate one or more Substitute Properties for each Property to be substituted for which each such Substitute Property has a Fair Market Value not less than the Fair Market Value of the Property being replaced at the time of such proposed substitution.

     (b) Substitution Procedures.

(i)	If Tenant shall initiate a substitution pursuant to Section 2.5(a) or 2.5(b), Landlord shall have a period of thirty (30) days within which to review the designated property or properties and such additional information to determine if it conforms to the requirements of Sections 2.5(a), 2.5(b) and 2.5(c).
(ii)	Landlord shall not be obligated to substitute a property as set forth in this Section 2.5 unless (i) Landlord shall determine the Fair Market

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Value of the Substitute Property is not less than the Fair Market Value of the Property proposed to be replaced immediately before such substitution and (ii) the delivery of an opinion of counsel for Landlord confirming that (w) the substitution of the Substitute Property for such Property will qualify as an exchange solely of property of a like-kind under Section 1031 of the Code, in which, generally, except for “boot”, no gain or loss will be recognized by Landlord, (x) the substitution will not result in ordinary recapture income to Landlord pursuant to Section 1250(d)(4) of the Code or any other provision of the Code, (y) the substitution will result in income, if any, to Landlord of a type described in Section 856(c)(2) or (3) of the Code and will not result in the tax imposed under Section 857(b)(6) of the Code, and (z) the substitution, together with all other substitutions made or requested by Tenant, during the relevant time period, will not jeopardize the qualification of Landlord as a real estate investment trust under Sections 856-860 of the Code. Landlord shall use reasonable efforts to obtain such opinion.

(iii) The Rent under this Agreement shall not be affected by any substitution.

     (c) If Tenant elects to substitute one or more Substitute Properties for a Property, the Substitute Property shall become a Property hereunder on the Substitution Date as of which Tenant shall have delivered to Landlord all of the following:

(i)	Current appraisals or other evidence satisfactory to Landlord, in its reasonable discretion, as to the then current Fair Market Value and the projected residual values of such Substitute Property and the Property as to which such substitution is being made;
(ii)	All available revenue data relating to the Substitute Property for the period from the date of opening for business of the Fitness Center on such Substitute Property to the date of Tenant’s

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most recent Fiscal Year end, or for the most recent three (3) years, whichever is less;

(iii)	An Officer’s Certificate certifying that (A) the Substitute Property has been accepted by Tenant for all purposes of this Agreement and there has been no unrepaired material damage to the improvements located thereon, nor is any Condemnation pending or threatened with respect thereto; (B) all appropriate permits, licenses and certificates (including, but not limited to, a permanent, unconditional certificate of occupancy and all licenses, permits and approvals) which are necessary to permit the use of the Substitute Property in accordance with the provisions of this Agreement have been obtained and are in full force and effect; (C) under applicable zoning and land use laws, ordinances, rules and regulations, the Substitute Property may be used for the purposes contemplated by this Agreement and all necessary subdivision approvals, if any, have been obtained; (D) there are no mechanics’ or materialmen’s liens outstanding or threatened to the knowledge of Tenant against the Substitute Property arising out of or in connection with the construction of the improvements thereon, other than those being contested by Tenant pursuant to Article 8; (E) to the best knowledge of Tenant, there exists no Default or Event of Default, and no defense, offset or claim with respect to any sums payable by Tenant hereunder; and (F) any exceptions to Landlord’s title to the Substitute Property shall not materially interfere with the intended use of the Substitute Property by Tenant;
(iv)	A limited warranty deed or local equivalent (together with a landlord estoppel certificate in form and substance satisfactory to Landlord in its sole discretion) conveying to Landlord title to the Substitute Property free and clear of any liens or encumbrances, except those approved by Landlord;
(v)	An amendment duly executed, acknowledged and delivered by Tenant, in form and substance

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satisfactory to Landlord, amending this Agreement to correct the legal description of the Land and make such other changes herein as may be necessary or appropriate under the circumstances;

(vi)	Counterparts of a standard owner’s policy of title insurance covering the Substitute Property (or a valid, binding, unconditional commitment therefor), dated as of the Substitution Date, in current form and including mechanics’ and materialmen’s lien coverage, issued to Landlord by a title insurance company and in the form reasonably satisfactory to Landlord, which policy shall (A) insure (x) Landlord’s fee title estate to the Substitute Property, subject to no liens or encumbrances except those approved by Landlord and (y) that any restrictions affecting the Substitute Property have not been violated; (B) be in an amount at least equal to the Fair Market Value of the Substitute Property; and (C) contain such affirmative coverage endorsements as Landlord shall reasonably request;
(vii)	Such third party diligence, including, without limitation, environmental assessment reports, zoning and building evaluations and other investigations and materials pertaining to the Property (including, without limitation, all roofs, electric, mechanical and structural elements, and HVAC systems) as Landlord may reasonably require;
(viii)	Certificates of insurance with respect to the Substitute Property fulfilling the requirements of Article 9;
(ix)	Payment by Tenant of all reasonable costs and expenses paid or incurred by Landlord in connection with the substitution and conveyance of the Substitute Property and the Property being replaced, including, but not limited to, (A) reasonable fees and expenses of counsel, (B) all printing expenses, (C) the amount of filing, registration and recording taxes and fees of federal, state, county and other municipal authorities, agencies and other governmental

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bodies, including, without limitation, all registries of deeds, (D) the cost of preparing and recording, if appropriate, a release of such Property from the lien of any mortgage (but not any amounts, costs or charges payable under any such mortgage), (E) brokers’ fees and commissions, (F) documentary stamp and transfer taxes and any bulk sales, excise or like tax, (G) title insurance charges and premiums, and (H) escrow fees; and

(x) Such other certificates, documents, opinions of counsel and other instruments as may be reasonably required by Landlord.

     On the conveyance to Landlord of the Substitute Property on the Substitution Date, Landlord shall convey the Property being replaced to Tenant by special warranty deed (free and clear of all liens and encumbrances other than Permitted Encumbrances) and otherwise in its “as is” condition, without representation or warranty other than those contained in the special warranty deed, but in no event shall any such representation or warranty extend to any matter arising as a result of the acts or deeds of Tenant, and all obligations and liabilities of Tenant with respect to such Property that are intended, by the terms hereof, to survive a termination of this Agreement, shall survive such conveyance and replacement of such Property with a Substitute Property.

     It is expressly understood and agreed that, notwithstanding anything to the contrary contained herein, in no event shall the number of Properties substituted hereunder exceed two (2) during the Term hereof.

     (d) Sale of Non-Economic Property. Subject to the terms of this Section 2.5(d), provided that no Event of Default shall have occurred and be continuing, Tenant shall have the right, during the Term, to identify one (1), but not more than one (1), Property that, in Tenant’s reasonable determination, is no longer economic or suitable for Tenant’s continued use and occupancy of its business operations for the Permitted Use, by giving Landlord Notice thereof, which Notice shall set forth in reasonable detail the reasons therefor. Thereafter, Tenant may market such Non-Economic Property for sale to a third party. If Tenant receives a bona fide offer (an “Offer”) to purchase such

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Property from a Person having the financial capacity to implement the terms of such Offer which Offer Tenant intends to accept, Tenant shall give Landlord Notice thereof, which Notice shall include a copy of the Offer executed by such third party. In the event that Landlord shall fail to accept or reject such Offer within thirty (30) days after receipt of such Notice, such Offer shall be deemed to be rejected by Landlord. If Landlord shall accept such Offer, then, effective as of the date of such sale, this Agreement shall terminate with respect to such Property, and the Minimum Rent shall be reduced by an amount equal to the product of the net proceeds of sale received by Landlord multiplied by the Rent Adjustment Rate. If Landlord shall reject (or be deemed to have rejected) such Offer, then, effective as of the proposed date of such sale, this Agreement shall terminate with respect to such Property, and the Minimum Rent shall be reduced by an amount equal to the product of the projected net proceeds determined by reference to such Offer multiplied by the Rent Adjustment Rate. For purposes of this Section 2.5(d), “net proceeds” shall be the gross sale proceeds minus any closing costs, brokerage commissions and other customary closing adjustments.

ARTICLE 3

RENT

     3.1 Rent. Tenant shall pay, in lawful money of the United States of America which shall be legal tender for the payment of public and private debts, without offset, abatement, demand or deduction (unless otherwise expressly provided in this Agreement), Minimum Rent to Landlord and Additional Charges to the party to whom such Additional Charges are payable, during the Term. All payments to Landlord shall be made by wire transfer of immediately available federal funds or by other means acceptable to Landlord in its sole discretion.

     3.1.1 Minimum Rent.

     (a) Payments. Upon execution of this Agreement, Tenant shall pay the Minimum Rent for the period beginning on the Commencement Date and ending October 31, 2008. Thereafter, Minimum Rent shall be paid in equal quarterly installments in advance on the 25^th day of October, 2008 and thereafter on the 25^th day of each January, April, July and

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October during the Term (each, a “Payment Date”). The installment due each October 25^th shall be attributable to the period November 1—January 31, the installment due on each January 25^th shall be attributable to the period February 1-April 30, the installment due each April 25^th shall be attributable to the period March 1-May 31 and the installment due on each May 25^th shall be attributable to the period June 1-September 30. Minimum Rent for any partial quarter shall be prorated on a per diem basis.

     (b) Increases in Minimum Rent. Minimum Rent shall be adjusted (i) every fifth (5^th) year during the Fixed Term and during the first (1^st) and second (2^nd) Extended Terms, to an amount equal to one hundred and ten percent (110%) of the Minimum Rent for the Fiscal Year preceding such adjustment, and (ii) during the third (3^rd), fourth (4^th), fifth (5^th) and sixth (6^th) Extended Terms to the greater of (1) the Minimum Rent payable for such Extended Term determined as though such Extended Term were a continuation of the Fixed or Extended Term in accordance with Section 3.1.1(b)(i), and (2) the FMV Rent determined as of the commencement of the third (3^rd), fourth (4^th), fifth (5^th) or sixth (6^th) Extended Term, as applicable.

     (c) Extended Term Rent. FMV Rent shall be determined by agreement between Landlord and Tenant or, failing agreement by the commencement date of the applicable Extended Term, Landlord and Tenant shall each select a Qualified Appraiser within five (5) days of the commencement date of such Extended Term and send Notice thereof to the other. If either party shall fail to select a Qualified Appraiser within such five (5) day period, such party shall be deemed to have accepted the FMV Rent determined by the other party’s Qualified Appraiser. If Landlord and Tenant shall each select a Qualified Appraiser and send Notice thereof to the other within such five (5) day period, but the two appraisers shall fail to agree upon the FMV Rent within thirty (30) days of their appointment, then either Landlord or Tenant, on behalf of both, may then request the American Arbitration Association to select a third Qualified Appraiser, in which event the two appraisers shall submit their appraisals to the third appraiser in writing, and such third appraiser shall determine which of the two appraisals is the FMV Rent. The costs (other than Landlord’s counsel fees) incurred in connection with such appraisal process shall be borne by

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Tenant and shall be included as part of the Additional Charges.

     If FMV Rent shall not have been determined as of the commencement date of any Extended Term, Tenant shall thereafter, on an interim basis, pay Minimum Rent in an amount determined as though such Extended Term were a continuation of the Fixed Term or Extended Term, as the case may be, with the Minimum Rent to be increased for such Extended Term in accordance with Section 3.1.1(b). Upon the determination of the FMV Rent, (1) Minimum Rent shall be readjusted in accordance with the provisions of Section 3.1.1(b), (2) such readjustment shall be retroactively applied to the commencement date of such Extended Term, and (3) Tenant shall pay to Landlord, in addition to the Minimum Rent due on such date pursuant to the terms of this Agreement, any outstanding Minimum Rent due as a result of such readjustment.

     (d) Adjustments of Minimum Rent Following Disbursements Under Sections 10.2.3 and 11.2. Effective on the date of each disbursement to pay for the cost of any repairs, maintenance, renovations or replacements pursuant to Sections 10.2.3 and 11.2, the annual Minimum Rent shall be increased by a per annum amount equal to the Disbursement Rate times the amount so disbursed. If any such disbursement is made on a day other the Payment Date for the succeeding quarter hereunder, Tenant shall pay to Landlord on the Payment Date following such disbursement (in addition to the amount of Minimum Rent payable with respect to such payment quarter, as adjusted pursuant to this paragraph (d)) the amount by which Minimum Rent for the preceding payment quarter, as adjusted for such disbursement on a per diem basis, exceeded the amount of Minimum Rent paid by Tenant for such preceding payment quarter.

     (e) Adjustments of Minimum Rent Following Partial Lease Termination. If this Agreement shall terminate with respect to any Property but less than all of the Leased Property, subject to Section 2.5, Minimum Rent shall be reduced by the affected Property’s allocable share of Minimum Rent as reasonably determined by Landlord and Tenant.

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          3.1.2 Additional Charges. In addition to the Minimum Rent payable hereunder, Tenant shall pay (or cause to be paid) to the appropriate parties and discharge (or cause to be discharged) as and when due and payable the following (collectively, “Additional Charges”):

     (a) Impositions. Subject to Article 8 relating to permitted contests, Tenant shall pay, or cause to be paid, all Impositions before any fine, penalty, interest or cost (other than any opportunity cost as a result of a failure to take advantage of any discount for early payment) may be added for non-payment, such payments to be made directly to the taxing authorities where feasible, and shall promptly, upon request, furnish to Landlord copies of official receipts or other reasonably satisfactory proof evidencing such payments. If any such Imposition may, at the option of the taxpayer, lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Tenant may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay, or cause to pay, such installments which are due and payable during the Term as the same become due and before any fine, penalty, premium, further interest or cost may be added thereto. Landlord, at its expense, shall, to the extent required or permitted by Applicable Law, prepare and file, or cause to be prepared and filed, all tax returns and pay all taxes due in respect of Landlord’s net income, gross receipts, sales and use, single business, transaction privilege, rent, ad valorem, franchise taxes and taxes on its capital stock, and Tenant, at its expense, shall, to the extent required or permitted by Applicable Laws and regulations, prepare and file all other tax returns and reports in respect of any Imposition as may be required by Government Agencies. Provided no Event of Default shall have occurred and be continuing, if any refund shall be due from any taxing authority in respect of any Imposition paid by or on behalf of Tenant, the same shall be paid over to or retained by Tenant. Landlord and Tenant shall, upon request of the other, provide such data as is maintained by the party to whom the request is made with respect to the Leased Property as may be necessary to prepare any required returns and reports. In the event Government Agencies classify any property covered by this Agreement as personal property, Tenant shall file, or cause to be filed, all

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personal property tax returns in such jurisdictions where it may legally so file. Each party shall, to the extent it possesses the same, provide the other, upon request, with cost and depreciation records necessary for filing returns for any property so classified as personal property. Where Landlord is legally required to file personal property tax returns for property covered by this Agreement, Landlord shall provide Tenant with copies of assessment notices in sufficient time for Tenant to file a protest. All Impositions assessed against such personal property shall be (irrespective of whether Landlord or Tenant shall file the relevant return) paid by Tenant not later than the last date on which the same may be made without interest or penalty, subject to the provisions of Article 8.

     Landlord shall give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of which Landlord at any time has knowledge; provided, however, that Landlord’s failure to give any such notice shall in no way diminish Tenant’s obligation hereunder to pay such Impositions.

     (b) Utility Charges. Tenant shall pay or cause to be paid all charges for electricity, power, gas, oil, water and other utilities used in connection with the Leased Property.

     (c) Insurance Premiums. Tenant shall pay or cause to be paid all premiums for the insurance coverage required to be maintained pursuant to Article 9.

     (d) Other Charges. Tenant shall pay or cause to be paid all other amounts, liabilities and obligations, and all amounts payable under any equipment leases and all agreements to indemnify Landlord under Sections 4.3.2 and 9.5.

     (e) Reimbursement for Additional Charges. If Tenant pays or causes to be paid property taxes or similar or other Additional Charges attributable to periods after the end of the Term, whether upon expiration or sooner termination of this Agreement (other than termination by reason of an Event of Default), Tenant may, within a reasonable time after the end of the Term, provide Notice to Landlord of its estimate of such amounts. Landlord shall promptly reimburse Tenant for all payments of such taxes and other similar Additional Charges that are

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attributable to any period after the Term of this Agreement.

     3.2 Late Payment of Rent, Etc. If any installment of Minimum Rent or Additional Charges (but only as to those Additional Charges which are payable directly to Landlord) shall not be paid on its due date, Tenant shall pay Landlord, on demand, as Additional Charges, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment, from the due date of such installment to the date of payment thereof. To the extent that Tenant pays any Additional Charges directly to Landlord or any Facility Mortgagee pursuant to any requirement of this Agreement, Tenant shall be relieved of its obligation to pay such Additional Charges to the Entity to which they would otherwise be due. If any payments due from Landlord to Tenant shall not be paid on its due date, Landlord shall pay to Tenant, on demand, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment from the due date of such installment to the date of payment thereof.

     In the event of any failure by Tenant to pay any Additional Charges when due, Tenant shall promptly pay and discharge, as Additional Charges, every fine, penalty, interest and cost which is added for non-payment or late payment of such items. Landlord shall have all legal, equitable and contractual rights, powers and remedies provided either in this Agreement or by statute or otherwise in the case of non-payment of the Additional Charges as in the case of non-payment of the Minimum Rent.

     3.3 Net Lease. The Rent shall be absolutely net to Landlord so that this Agreement shall yield to Landlord the full amount of the installments or amounts of the Rent throughout the Term, subject to any other provisions of this Agreement which expressly provide otherwise, including those provisions for adjustment or abatement of such Rent.

     3.4 No Termination, Abatement, Etc. Except as otherwise specifically provided in this Agreement, each of Landlord and Tenant, to the maximum extent permitted by law, shall remain bound by this Agreement in accordance with its terms and shall not take any action without the consent of the other to modify, surrender or terminate this Agreement. In addition, except as otherwise expressly provided in this Agreement, Tenant shall not seek, or be entitled to, any abatement, deduction, deferment or

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reduction of the Rent, or set-off against the Rent, nor shall the respective obligations of Landlord and Tenant be otherwise affected by reason of (a) any damage to or destruction of the Leased Property or any portion thereof from whatever cause or any Condemnation, (b) the lawful or unlawful prohibition of, or restriction upon, Tenant’s use of the Leased Property, or any portion thereof, or the interference with such use by any Person or by reason of eviction by paramount title; (c) any claim which Tenant may have against Landlord by reason of any default (other than a monetary default) or breach of any warranty by Landlord under this Agreement or any other agreement between Landlord and Tenant, or to which Landlord and Tenant are parties; (d) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Landlord or any assignee or transferee of Landlord; or (e) for any other cause whether similar or dissimilar to any of the foregoing (other than a monetary default by Landlord). Except as otherwise specifically provided in this Agreement, Tenant hereby waives all rights arising from any occurrence whatsoever, which may now or hereafter be conferred upon it by law (a) to modify, surrender or terminate this Agreement or quit or surrender the Leased Property or any portion thereof, or (b) which would entitle Tenant to any abatement, reduction, suspension or deferment of the Rent or other sums payable or other obligations to be performed by Tenant hereunder. The obligations of Tenant hereunder shall be separate and independent covenants and agreements, and the Rent and all other sums payable by Tenant hereunder shall continue to be payable in all events unless the obligations to pay the same shall be terminated pursuant to the express provisions of this Agreement.

ARTICLE 4

USE OF THE LEASED PROPERTY

     4.1 Permitted Use.

          4.1.1 Permitted Use. Tenant shall, at all times during the Term, and at any other time that Tenant shall be in possession of the Leased Property, continuously use and operate, or cause to be used and operated (except as a result of damage, destruction or partial or complete Condemnation in accordance with Article 10 and Article 11, or in connection with any alterations or additions approved by Landlord or permitted pursuant to Article 6), each Property as an athletic

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club/fitness center/wellness center as such uses may be operated from time to time in athletic club/fitness center/wellness center properties owned and/or operated by Tenant and its Affiliated Persons, and any uses incidental thereto and consistent with comparable brand standards of such other properties of the type and nature of these facilities. Tenant shall not use (and shall not permit any Person to use) any Property or any portion thereof for any other use without the prior written consent of Landlord, which approval shall not be unreasonably withheld, delayed or conditioned. No use shall be made or permitted to be made of any Property and no acts shall be done thereon which will cause the cancellation of any insurance policy covering such Property or any part thereof (unless another adequate policy is available), nor shall Tenant sell or otherwise provide, or permit to be kept, used or sold in or about any Property any article which may be prohibited by law or by the standard form of fire insurance policies, or any other insurance policies required to be carried hereunder, or fire underwriter’s regulations. Tenant shall, at its sole cost, comply or cause to be complied with all Insurance Requirements.

          4.1.2 Necessary Approvals. Tenant shall proceed with all due diligence and exercise reasonable efforts to obtain and maintain, or cause to be obtained and maintained, all approvals necessary to use and operate, for its Permitted Use, each Property and the Fitness Center located thereon under applicable law.

          4.1.3 Lawful Use, Etc. Tenant shall not, and shall not permit any Person to use or suffer or permit the use of any Property or Tenant’s Personal Property, if any, for any unlawful purpose. Tenant shall not, and shall not permit any Person to, commit or suffer to be committed any waste on any Property, or in any Fitness Center, nor shall Tenant cause or permit any unlawful nuisance thereon or therein. Tenant shall not, and shall not permit any Person to, suffer nor permit any Property, or any portion thereof, to be used in such a manner as (i) may materially and adversely impair Landlord’s title thereto or to any portion thereof, or (ii) may reasonably allow a claim or claims for adverse usage or adverse possession by the public, as such, or of implied dedication of such Property or any portion thereof.

     4.2 Compliance with Legal/Insurance Requirements, Etc. Subject to the provisions of Article 8, Tenant, at its sole expense, shall (i) comply with (or cause to be complied with)

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all material Legal Requirements and Insurance Requirements in respect of the use, operation, maintenance, repair, alteration and restoration of the Leased Property and with the terms and conditions of any ground lease affecting any Property, and (ii) procure, maintain and comply with (or cause to be procured, maintained and complied with) all material licenses, permits and other authorizations and agreements required for any use of the Leased Property and Tenant’s Personal Property, if any, then being made, and for the proper erection, installation, operation and maintenance of the Leased Property or any part thereof.

     4.3 Environmental Matters.

          4.3.1 Restriction on Use, Etc. During the Term and any other time that Tenant shall be in possession of any Property, Tenant shall not, and shall not permit any Person to, store, spill upon, dispose of or transfer to or from such Property any Hazardous Substance, except in compliance with all Applicable Laws. During the Term and any other time that Tenant shall be in possession of any Property, Tenant shall maintain (or shall cause to be maintained) such Property at all times free of any Hazardous Substance (except in compliance with all Applicable Laws). Tenant shall promptly: (a) upon receipt of notice or knowledge, notify Landlord in writing of any material change in the nature or extent of Hazardous Substances at any Property, (b) transmit to Landlord a copy of any report which is required to be filed by Tenant or any Manager with respect to any Property pursuant to SARA Title III or any other Applicable Law, (c) transmit to Landlord copies of any citations, orders, notices or other governmental communications received by Tenant or any Manager or their respective agents or representatives with respect thereto (collectively, “Environmental Notice”), which Environmental Notice requires a written response or any action to be taken and/or if such Environmental Notice gives notice of and/or presents a material risk of any material violation of any Applicable Law and/or presents a material risk of any material cost, expense, loss or damage (an “Environmental Obligation”), (d) observe and comply with (and cause to be observed and complied with) all Applicable Laws relating to the use, maintenance and disposal of Hazardous Substances and all orders or directives from any official, court or agency of competent jurisdiction relating to the use or maintenance or requiring the removal, treatment, containment or other disposition thereof, and (e) pay or otherwise dispose (or cause to be paid or otherwise disposed) of any fine, charge or Imposition related thereto, unless Tenant or any Manager shall

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contest the same in good faith and by appropriate proceedings and the right to use and the value of any of the Leased Property is not materially and adversely affected thereby.

     If, at any time prior to the termination of this Agreement, Hazardous Substances (other than those maintained in accordance with Applicable Laws) are discovered on any Property (in violation of Applicable Laws), subject to Tenant’s right to contest the same in accordance with Article 8, Tenant shall take (and shall cause to be taken) all actions and incur any and all expenses, as are required by any Government Agency and by Applicable Law, (i) to clean up and remove from and about such Property all Hazardous Substances thereon, (ii) to contain and prevent any further release or threat of release of Hazardous Substances on or about such Property (in violation of Applicable Laws) and (iii) to use good faith efforts to eliminate any further release or threat of release of Hazardous Substances on or about such Property.

          4.3.2 Indemnification of Landlord. Tenant shall protect, indemnify and hold harmless Landlord and each Facility Mortgagee, their trustees, officers, agents, employees and beneficiaries, and any of their respective successors or assigns with respect to this Agreement (collectively, the “Indemnitees” and, individually, an “Indemnitee”) for, from and against any and all debts, liens, claims, causes of action, administrative orders or notices, costs, fines, penalties or expenses (including, without limitation, reasonable attorney’s fees and expenses) imposed upon, incurred by or asserted against any Indemnitee resulting from, either directly or indirectly, the presence in, upon or under the soil or ground water of any Property during the Term and any other time that Tenant shall be in possession of any Property or any properties surrounding such Property of any Hazardous Substances in violation of any Applicable Law, except to the extent the same arise from the acts or omissions of Landlord or any other Indemnitee or during any period that Landlord or a Person designated by Landlord (other than Tenant) is in possession of such Property from and after the date hereof. Tenant’s duty herein includes, but is not limited to, costs associated with personal injury or property damage claims as a result of the presence prior to the expiration or sooner termination of the Term and the surrender of such Property to Landlord in accordance with the terms of this Agreement of Hazardous Substances in, upon or under the soil or ground water of such Property in violation of any Applicable Law. Upon Notice from Landlord and any other of the

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Indemnitees, Tenant shall undertake the defense, at Tenant’s sole cost and expense, of any indemnification duties set forth herein, in which event, Tenant shall not be liable for payment of any duplicative attorneys’ fees incurred by any Indemnitee.

     Tenant shall, upon demand, pay (or cause to be paid) to Landlord, as an Additional Charge, any cost, expense, loss or damage (including, without limitation, reasonable attorneys’ fees) reasonably incurred by Landlord and arising from a failure of Tenant to observe and perform (or to cause to be observed and performed) the requirements of this Section 4.3, which amounts shall bear interest from the date ten (10) Business Days after written demand therefor is given to Tenant until paid by Tenant to Landlord at the Overdue Rate.

          4.3.3 Survival. The provisions of this Section 4.3 shall survive the expiration or sooner termination of this Agreement.

ARTICLE 5

MAINTENANCE AND REPAIRS

     5.1 Maintenance and Repair.

          5.1.1 Tenant’s General Obligations. Tenant shall keep (or cause to be kept), at Tenant’s sole cost and expense, the Leased Property and all private roadways, sidewalks and curbs appurtenant thereto (and Tenant’s Personal Property) in good order and repair, reasonable wear and tear excepted (whether or not the need for such repairs occurs as a result of Tenant’s or any Manager’s use, any prior use, the elements or the age of the Leased Property or Tenant’s Personal Property or any portion thereof), and shall promptly make or cause to be made all necessary and appropriate repairs and replacements thereto of every kind and nature, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the commencement of the Term (concealed or otherwise). All repairs shall be made in a good, workmanlike manner, consistent with industry standards for comparable Fitness Centers in like locales, in accordance with all applicable federal, state and local statutes, ordinances, codes, rules and regulations relating to any such work. Tenant shall not take or omit to take (or permit any Person to take or omit to take) any action, the taking or omission of which would materially and adversely

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impair the value or the usefulness of the Leased Property or any material part thereof for its Permitted Use. Tenant’s obligations under this Section 5.1.1 shall be limited in the event of any casualty or Condemnation as set forth in Article 10 and Article 11 and Tenant’s obligations with respect to Hazardous Substances are as set forth in Section 4.3.

          5.1.2 Landlord’s Obligations. Except as otherwise expressly provided in this Agreement, Landlord shall not, under any circumstances, be required to build or rebuild any improvement on the Leased Property, or to make any repairs, replacements, alterations, restorations or renewals of any nature or description to the Leased Property, whether ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto, or to maintain the Leased Property in any way. Except as otherwise expressly provided in this Agreement, Tenant hereby waives, to the maximum extent permitted by law, the right to make repairs at the expense of Landlord pursuant to any law in effect on the date hereof or hereafter enacted. Landlord shall have the right to give, record and post, as appropriate, notices of nonresponsibility under any mechanic’s lien laws now or hereafter existing.

          5.1.3 Nonresponsibility of Landlord, Etc. All materialmen, contractors, artisans, mechanics and laborers and other persons contracting with Tenant with respect to the Leased Property, or any part thereof, are hereby charged with notice that liens on the Leased Property or on Landlord’s interest therein are expressly prohibited and that they must look solely to Tenant to secure payment for any work done or material furnished to Tenant or any Manager or for any other purpose during the term of this Agreement.

     Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialmen for the performance of any labor or the furnishing of any materials for any alteration, addition, improvement or repair to the Leased Property or any part thereof or as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any lien against the Leased Property or any part thereof nor to subject Landlord’s estate in the Leased Property or any part thereof to liability under any mechanic’s

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lien law of any State in any way, it being expressly understood Landlord’s estate shall not be subject to any such liability.

     5.2 Tenant’s Personal Property. Tenant shall provide and maintain (or cause to be provided and maintained) throughout the Term all such Tenant’s Personal Property as shall be necessary in order to operate in compliance with applicable material Legal Requirements and Insurance Requirements and otherwise in accordance with customary practice in the industry for the Permitted Use. In furtherance, but not in limitation of, the foregoing, Tenant shall have the right in its sole and absolute discretion from time to time to install, alter, remove and/or replace such Tenant’s Personal Property as it shall deem to be useful or desirable in connection with its business in the Leased Property. Tenant and its subtenants further shall have the right to enter into such agreements and assignments with respect to Tenant’s Personal Property as are necessary for Tenant or its subtenant to lease or obtain such financing for Tenant’s Personal Property as Tenant or its subtenant shall desire. Landlord shall execute such landlord consents and other agreements as shall be reasonably requested by Tenant in connection with any such agreements and arrangements provided, however, that Tenant shall reimburse Landlord, within ten (10) days of invoice therefor, for any costs incurred by Landlord in connection with such consents and agreements and any consents or agreements executed by Landlord pursuant to this paragraph shall impose no obligations or liabilities on Landlord nor adversely affect any of Landlord’s rights under this Agreement. To the extent required by Tenant’s lessor or lender thereof, Landlord shall subordinate to the rights of such lessor or lender Landlord’s rights under Article 15 of this Agreement and any right which Landlord now has or may hereafter have under Applicable Law to levy or distrain upon any of Tenant’s Personal Property for rent or to claim or assert title to any of Tenant’s Personal Property, subject to such lender to agreeing to terms consistent with the provisions of Section 7.2.

     5.3 Yield Up. Upon the expiration or sooner termination of this Agreement, Tenant shall remove all of Tenant’s Personal Property (other than that purchased by Landlord pursuant to Article 15) and vacate and surrender the Leased Property to Landlord in substantially the same condition in which the Leased Property was in on the Commencement Date, except as repaired, rebuilt, restored, altered or added to as permitted or required by the provisions of this Agreement, reasonable wear and tear excepted (and casualty damage and Condemnation, in the event

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that this Agreement is terminated following a casualty or Condemnation in accordance with Article 10 or Article 11 excepted).

     In addition, upon the expiration or earlier termination of this Agreement, Tenant shall, at Landlord’s sole cost and expense, use its good faith efforts to transfer (or cause to be transferred) to and cooperate with Landlord or Landlord’s nominee in connection with the processing of all applications for licenses, operating permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental Entities which may be necessary for the use and operation of the Fitness Centers as then operated.

     5.4 Management Agreement. Tenant may from time to time during the Term, enter into, amend (except as provided in, and subject to the provisions of, clauses (i) and (ii) below) and/or terminate any Management Agreement delegating operational authority for the day-to-day operation of the Leased Property (or any portion thereof) to an Affiliated Person of Tenant or LTF, in any such case without Landlord’s consent; provided that any such Management Agreement (i) shall comply with the terms and conditions of this Section 5.4, and (ii) is not entered into in connection with, or simultaneously with (whether through one or a series of transactions), a direct or indirect Change in Control in violation of the restrictions contained in Section 16.1. Except as permitted above, Tenant shall not otherwise enter into, amend or modify any Management Agreement without Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Any Management Agreement entered into pursuant to the provisions of this Section 5.4 shall be subordinate to this Agreement and shall provide, inter alia, that all amounts due from Tenant to the Manager thereunder shall be subordinate to all amounts due from Tenant to Landlord (provided that, as long as no Event of Default has occurred and is continuing, Tenant may pay all amounts due to a Manager pursuant to such Management Agreement) and for termination thereof, at Landlord’s option, upon the termination of this Agreement.

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ARTICLE 6

IMPROVEMENTS, ETC.

     6.1 Improvements to the Leased Property. Tenant shall not make, construct or install (or permit to be made, constructed or installed) any Capital Additions without, in each instance, obtaining Landlord’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing, Tenant shall have the right, upon notice to Landlord thereof in the case of Capital Additions costing in excess of $100,000, without Landlord’s consent, to make, construct or install (or permit to be made, constructed or installed, Capital Additions that (i) require immediate action in order to prevent imminent harm to person or property or (ii) are non-structural in nature, cost less than $1,000,000, do not materially and adversely affect any of the mechanical or building systems therein, or the exterior appearance thereof (other than renovations, repairs or improvements to the entrances to the Fitness Centers conforming with entrances to other health, fitness and/or wellness centers owned or operated by Tenant), or reduce the gross square footage of the Property. Prior to commencing construction of any Capital Addition requiring Landlord’s consent hereunder, Tenant shall submit to Landlord, in writing, a proposal setting forth, in reasonable detail, any such proposed improvement and shall provide to Landlord such plans and specifications, and such permits, licenses, contracts and such other information concerning the same as Landlord may reasonably request. Landlord shall have thirty (30) days to review all materials submitted to Landlord in connection with any such proposal. Failure of Landlord to respond to Tenant’s proposal within thirty (30) days after receipt of all information and materials requested by Landlord in connection with the proposed improvement shall be deemed to constitute approval of the same. Without limiting the generality of the foregoing, such proposal shall indicate the approximate projected cost of constructing such proposed improvement and the use or uses to which it will be put. No Capital Addition shall be made which would tie in or connect any Leased Improvements with any other improvements on property adjacent to the Leased Property (and not part of the Land) including, without limitation, tie-ins of buildings or other structures or utilities. Except as permitted herein, Tenant shall not finance the cost of any construction of such improvement by the granting of a lien on or security interest in

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the Leased Property or such improvement, or Tenant’s interest therein, without the prior written consent of Landlord, which consent may be withheld by Landlord in Landlord’s sole discretion. Any such improvements shall, upon the expiration or sooner termination of this Agreement, remain or pass to and become the property of Landlord, free and clear of all encumbrances other than Permitted Encumbrances.

     6.2 Salvage. All materials which are scrapped or removed in connection with the making of either Capital Additions or non-Capital Additions or repairs required by Article 5 shall be or become the property of the party that paid for such work.

ARTICLE 7

LIENS

     7.1 Liens. Subject to Article 8, Tenant shall not, directly or indirectly, create or allow to remain and shall promptly discharge (or cause to be discharged), at its expense, any lien, encumbrance, attachment, title retention agreement or claim upon the Leased Property, or any portion thereof, or Tenant’s leasehold interest therein or any attachment, levy, claim or encumbrance in respect of the Rent, other than (a) Permitted Encumbrances, (b) restrictions, liens and other encumbrances which are consented to in writing by Landlord, (c) liens for those taxes of Landlord which Tenant is not required to pay hereunder, (d) subleases permitted by Article 16, (e) liens for Impositions or for sums resulting from noncompliance with Legal Requirements so long as the same (i) are not yet due and payable, or (ii) are being contested in accordance with Article 8, (f) liens of mechanics, laborers, materialmen, suppliers or vendors incurred in the ordinary course of business that are not yet due and payable or are for sums that are being contested in accordance with Article 8, (g) any Facility Mortgages or other liens which are the responsibility of Landlord pursuant to the provisions of Article 22 and (h) Landlord Liens and any other liens created by or as a result of the actions or inactions of Landlord.

     7.2 Subordination of Landlord’s Lien. Landlord agrees that, upon the request of any Person that shall be Tenant’s lessor or secured lender with respect to Tenant’s Personal Property, Landlord shall negotiate in good faith for the purpose of executing and delivering a commercially reasonable subordination of Landlord’s rights under Article 15 and

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Landlord’s statutory lien rights, if any, and a consent and agreement with respect to the respective rights of Landlord and such Person regarding the interests, in, and the timing and removal of, any Tenant’s Personal Property, inventory or equipment in which such Person has a security interest (the “Collateral”), in form and substance reasonably acceptable to Landlord and such Person, so long as such subordination and agreement (i) provides for the indemnification of Landlord against any claims by Tenant or any Person claiming through Tenant in connection with the removal of any of the Collateral by such Person or the exercise of any rights with respect thereto by such Person and any indemnity from all parties claiming an interest in the Collateral against any claims arising from the disposal of any Collateral once deemed abandoned, (ii) expressly excludes any claim by such Person to any right, title or interest in or to any Fixtures, (iii) provides for a reasonable, but in no event more than sixty (60) days after Notice from Landlord, time frame for the removal of such Collateral by such Person after the expiration of which such Collateral shall be deemed abandoned, and (iv) provides for, and shall condition such Person’s right to allow the Collateral to remain at the Leased Property on, the per diem payment of Minimum Rent due hereunder by such Person for each day following the date of the expiration or termination of this Agreement that Landlord permits such Person’s Collateral to remain in the Leased Property. Tenant shall pay all costs (including legal fees) incurred in connection with the negotiation of such subordination agreement(s), within ten (10) days of invoice therefor.

ARTICLE 8

PERMITTED CONTESTS

     Tenant shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim (collectively, “Claims”) as to the Leased Property, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) the foregoing shall in no way be construed as relieving, modifying or extending Tenant’s obligation to pay (or cause to be paid) any Claims as finally determined, (b) such contest shall not cause Landlord or Tenant to be in default under any mortgage or deed of trust encumbering the Leased Property or any portion thereof (Landlord agreeing that any such mortgage or deed of

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trust shall permit Tenant to exercise the rights granted pursuant to this Article 8) or any interest therein or result in or reasonably be expected to result in a lien attaching to the Leased Property or any portion thereof, (c) no part of the Leased Property nor any Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys’ fees, incurred by Landlord in connection therewith or as a result thereof. Landlord agrees to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) unless Tenant agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord with respect to the same. Tenant shall be entitled to any refund of any Claims and such charges and penalties or interest thereon which have been paid by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims when finally determined, (y) to provide reasonable security therefor or (z) to prosecute or cause to be prosecuted any such contest diligently and in good faith, Landlord may, upon reasonable notice to Tenant (which notice shall not be required if Landlord shall reasonably determine that the same is not practicable), pay such charges, together with interest and penalties due with respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges.

ARTICLE 9

INSURANCE AND INDEMNIFICATION

     9.1 General Insurance Requirements.

     (a) Tenant shall obtain, pay for and maintain the following insurance on or in connection with the Leased Property: (i) insurance against all risk of physical loss or damage to Tenant’s Personal Property and the Leased Improvements and Fixtures as provided under “special form” coverage, and including perils of fire, lightning, hail, windstorm, civil commotion, smoke, aircraft and vehicle impact, explosion, vandalism and malicious mischief, riot, glass breakage, crime, water, mold, weight of snow and ice, sewer backup, flood coverage for any Property located in a

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designated flood plain, earthquake coverage for any Property located in a designated earthquake zone under Applicable Law and, to the extent required by Facility Mortgagee, terrorism insurance (to the extent available on commercially reasonable terms), in amounts not less than the actual replacement cost of the Leased Improvements and Fixtures (except that the amount of flood and earthquake coverage need not exceed a $5,000,0000 per occurrence and annual aggregate limit) and loss of rent insurance for a period of not less than eighteen (18) months which shall be payable in the event of a termination of this Agreement with respect to any or all of the Properties pursuant to Article 10; provided that, if Tenant’s insurance company is unable or unwilling to include any of all of such specified perils, Tenant shall have the option of purchasing coverage against such perils from another insurer on a “difference in conditions” form policy or through a stand-alone policy. Such policies shall contain replacement cost and agreed amount endorsements and “law and ordinance” coverage (at full replacement cost). Such policies and endorsements shall contain deductibles not more than $100,000 per occurrence (or $250,000 per occurrence with respect to flood and earthquake coverage); (ii) commercial general liability insurance and business automobile liability insurance (including non-owned and hired automobile liability) against claims for personal and bodily injury, death or property damage occurring on, in or as a result of the use of the Leased Property, in an amount not less than $11,000,000 per occurrence/annual aggregate, on an occurrence basis, with no self insured retention or deductible, provided, however, that so long as Tenant or Guarantor has a net worth calculated in accordance with GAAP consistently applied of not less than $200,000,000, then, the insurance required under this clause (ii) may have a deductible or self-insured retention of up to $[5,000,000;] (iii) workers’ compensation insurance in the amount required by Applicable Law and employers’ liability insurance covering all persons employed by Tenant in connection with any work done on or about any of the Leased Property; (iv) comprehensive boiler and machinery/equipment breakdown insurance on any of the Fixtures or any other equipment on or in the Leased Property, in an amount not less than $5,000,000 per accident for damage to property (and which may be carried as part of the coverage required under clause (i) above or pursuant to a separate policy or

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endorsement). Either such boiler and machinery policy or the special causes of loss policy required in clause (i) above shall include at least $1,000,000 per incidence for off-premises service interruption, and not less than $100,000 per incidence for expediting expenses, ammonia contamination, and hazardous materials clean-up expense and may contain a deductible not to exceed $100,000; (v) business income/extra expense insurance at limits sufficient to cover 100% of the Rent due under this Agreement for a period of not less than twelve (12) months from time of loss; (vi) during any period in which substantial alterations at the Leased Property are being undertaken, builder’s risk insurance covering the total completed value, including all hard and soft costs (which shall include business interruption coverage) with respect to the Leased Improvements being constructed, altered or repaired (on a completed value, non-reporting basis), replacement cost of work performed and equipment, supplies and materials furnished in connection with such construction, alteration or repair of Leased Improvements or Fixtures, together with such other endorsements as Landlord may reasonably require, and general liability, worker’s compensation and automobile liability insurance with respect to the Leased Improvements being constructed, altered or repaired; and (vii) such other insurance (or other terms with respect to any insurance required pursuant to this Article 9, including without limitation amounts of coverage, deductibles, ratings, form of mortgagee clause) on or in connection with any Property as Landlord or Facility Mortgagee may reasonably require, which at the time is usual and commonly obtained in connection with properties similar in type of building size, use and location to the applicable Property or in connection with loans similar to that secured by the Facility Mortgage.

     (b) All of the insurance required by Section 9.1(a) shall be written by companies having a Best’s rating of A:X or above and a claims paying ability rating of A or better by Standard & Poor’s Rating Services, a division of the McGraw Hill Companies, Inc. or equivalent rating agency approved by Landlord and Facility Mortgagee in their sole discretion and which are authorized to write insurance policies by, the State Insurance Department (or its equivalent) for the states in which the Leased Property are located. The insurance policies (i) shall be for such

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terms as Landlord may reasonably approve and (ii) shall be in amounts sufficient at all times to satisfy any coinsurance requirements thereof. If said insurance or any part thereof shall expire, be withdrawn, become void, voidable, unreliable or unsafe for any reason, including a breach of any condition thereof by Tenant or the failure or impairment of the capital of any insurer, or if for any other reason whatsoever said insurance shall become reasonably unsatisfactory to Landlord, Tenant shall immediately obtain new or additional insurance reasonably satisfactory to Landlord.

     (c) Each insurance policy referred to in clauses (i), (iv), (v) and (vi) of Section 9.1(a) shall contain standard non-contributory mortgagee clauses in favor of and acceptable to Facility Mortgagee. Each policy required by any provision of Section 9.1(a), except clause (iii) thereof, shall provide that it may not be cancelled, substantially modified or allowed to lapse on any renewal date except after thirty (30) days’ prior written notice to Landlord and Facility Mortgagee. Each insurance policy shall be primary in relation to any policies which Landlord may elect to carry.

     (d) Tenant shall pay as they become due all premiums for the insurance required by Section 9.1(a), shall renew or replace each policy and deliver to Landlord evidence of the payment of the full premium therefor or installment then due at least ten (10) days prior to the expiration date of such policy, and shall promptly deliver to Landlord all original certificates of insurance evidencing such coverages or, if required by Landlord, original or certified policies. All certificates of insurance (including liability coverage) provided to Landlord and Facility Mortgagee shall be on ACORD Form 27 (or its equivalent).

     (e) Anything in this Article 9 to the contrary notwithstanding, any insurance which Tenant is required to obtain pursuant to Section 9.1(a) may be carried under a “blanket” policy or policies covering other properties of Tenant or under an “umbrella” policy or policies covering other liabilities of Tenant, as applicable; provided that, such blanket or umbrella policy or policies otherwise comply with the provisions of this Article 9, and such policy shall reference the Property and shall guarantee a

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minimum limit available with respect to the Property which is equal to the insurance limits required by this Agreement. Upon request of Landlord, Tenant shall provide to Landlord a statement of replacement cost of the Property for purposes of updating the insurance required by Section 9.1(a)(i). The original or a certified copy of each such blanket or umbrella policy shall promptly be delivered to Landlord upon Landlord’s request.

     (f) Each policy (other than workers’ compensation coverage) shall contain an effective waiver by the carrier against all claims for payment of insurance premiums against Landlord.

     (g) The insurance referred to in Section 9.1(a)(i), Section 9.1(a)(iv) and Section 9.1(a)(vi) shall name Landlord as loss payee and Facility Mortgagee as loss payee and mortgagee, and shall name Tenant as an insured as its interest may appear in the case of Tenant’s Personal Property. The insurance referred to in Section 9.1(a)(ii) shall name Landlord and Facility Mortgagee as additional insureds, and the insurance referred to in Section 9.1(a)(v) shall name Landlord as insured and Facility Mortgagee and Landlord as loss payee to the extent of the Rent payable to or for the benefit of Landlord as its interest appears under this Agreement.

     9.2 Waiver of Claims and Subrogation. Tenant agrees that (insofar as and to the extent that such agreement may be effective without making it impossible to secure insurance coverage from responsible insurance companies doing business in any State) with respect to any property loss which is or is required herewith to be covered by insurance carried by Tenant, Tenant hereby releases Landlord of and from any and all claims with respect to such loss; and further agrees that its insurance companies shall have no right of subrogation against Landlord on account thereof, even though extra premium may result therefrom. In the event that any extra premium is payable by Tenant as a result of this provision, Landlord shall not be liable for reimbursement to Tenant for such extra premium.

     9.3 Miscellaneous. All loss adjustments shall be payable as provided in Article 10, except that losses under liability and worker’s compensation insurance policies shall be payable directly to the party entitled thereto. In the event Tenant shall fail to effect (or cause to be effected) such insurance as

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herein required, to pay (or cause to be paid) the premiums therefor or to deliver (or cause to be delivered) such policies or certificates to Landlord or any Facility Mortgagee at the times required, Landlord shall have the right, upon Notice to Tenant, but not the obligation, to acquire such insurance and pay the premiums therefor, which amounts shall be payable to Landlord, upon demand, as Additional Charges, together with interest accrued thereon at the Overdue Rate from the date such payment is made until (but excluding) the date repaid.

     9.4 No Separate Insurance. Tenant shall not take (or permit any Person to take) out separate insurance, concurrent in form or contributing in the event of loss with that required by this Article 9, or increase the amount of any existing insurance by securing an additional policy or additional policies, unless all parties having an insurable interest in the subject matter of such insurance, including Landlord and all Facility Mortgagees, are included therein as additional insureds and the loss is payable under such insurance in the same manner as losses are payable under this Agreement. In the event Tenant shall take out any such separate insurance or increase any of the amounts of the then existing insurance, Tenant shall give Landlord prompt Notice thereof.

     9.5 Indemnification of Landlord. Notwithstanding the existence of any insurance provided for herein and without regard to the policy limits of any such insurance, Tenant shall protect, indemnify and hold harmless Landlord for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys’ fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Landlord by reason of the following, except to the extent caused by Landlord’s gross negligence or willful misconduct: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about any Property or adjoining sidewalks or rights of way, (b) any past, present or future use, misuse, non-use, condition, management, maintenance or repair by Tenant, any Manager or anyone claiming under any of them of any Property or Tenant’s Personal Property or any litigation, proceeding or claim by governmental entities or other third parties to which Landlord is made a party or participant relating to any Property or Tenant’s Personal Property or such use, misuse, non-use, condition, management, maintenance, or repair thereof including, failure to perform obligations (other than Condemnation proceedings) to which

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Landlord is made a party, (c) any Impositions that are the obligations of Tenant to pay pursuant to the applicable provisions of this Agreement, and (d) any failure on the part of Tenant or anyone claiming under Tenant to perform or comply with any of the terms of this Agreement. Tenant, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Landlord (and shall not be responsible for any duplicative attorneys’ fees incurred by Landlord) or may compromise or otherwise dispose of the same, with Landlord’s prior written consent (which consent may not be unreasonably withheld, delayed or conditioned). The obligations of Tenant under this Section 9.5 are in addition to the obligations set forth in Section 4.3 and shall survive the termination of this Agreement.

ARTICLE 10

CASUALTY

     10.1 Insurance Proceeds. Except as provided in the last clause of this sentence, all proceeds payable by reason of any loss or damage to any Property, or any portion thereof, and insured under any policy of insurance required by Article 9 (other than the proceeds of any business interruption insurance), shall be paid directly to Landlord (subject to the provisions of Section 10.2) and all loss adjustments with respect to losses payable to Landlord shall require the prior written consent of Landlord; provided, however, that, so long as no Event of Default shall have occurred and be continuing, if such proceeds shall be less than or equal to Five Hundred Thousand Dollars ($500,000), shall be paid directly to Tenant and such losses may be adjusted without Landlord’s consent. If Tenant is required to reconstruct or repair any Property as provided herein, such proceeds shall be paid out by Landlord from time to time for the reasonable costs of reconstruction or repair of such Property necessitated by such damage or destruction, subject to and in accordance with the provisions of Section 10.2.4. Provided no Default or Event of Default has occurred and is continuing, any excess proceeds of insurance remaining after the completion of the restoration shall be paid to Tenant. In the event that the provisions of Section 10.2.1 are applicable, the insurance proceeds shall be retained by the party entitled thereto pursuant to Section 10.2.1.

     10.2 Damage or Destruction.

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     10.2.1 Damage or Destruction of Leased Property. If, during the Term, any Property shall be totally or partially destroyed such that such Property is thereby rendered Unsuitable for Its Permitted Use, Landlord may, by the giving of Notice thereof to Tenant, terminate this Agreement with respect to such affected Property, whereupon, this Agreement shall terminate with respect to such affected Property and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage (other than any proceeds relating to Tenant’s Personal Property). In such event, Tenant shall pay to Landlord the amount of any deductible under the insurance policies covering such Property, the amount of any uninsured loss and any difference between the replacement cost of the affected Property and the casualty insurance proceeds therefor.

     10.2.2 Partial Damage or Destruction. If, during the Term, any Property shall be totally or partially destroyed but the Property is not rendered Unsuitable for Its Permitted Use, Tenant shall, subject to Section 10.2.3, restore such Property as provided in Section 10.2.4.

     10.2.3 Insufficient Insurance Proceeds. If the cost of the repair or restoration of the applicable Property exceeds the amount of insurance proceeds received by Landlord and Tenant pursuant to Section 9.1 (including, without limitation, by reason of an uninsured loss), Landlord shall have the right (but not the obligation), exercisable at Landlord’s sole election by Notice to Tenant given within sixty (60) days after Tenant’s Notice of any such deficiency, to elect to make available for application to the cost of repair or restoration the amount of such deficiency; provided, however, in such event, upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(d). If Landlord shall not so elect, Tenant shall, upon the demand of Landlord, contribute any excess amounts needed to restore such Property. Such difference shall be paid by Tenant to Landlord and held by Landlord, together with any other insurance proceeds, for application to the cost of repair and restoration.

     10.2.4 Disbursement of Proceeds. In the event Tenant is required to restore any Property pursuant to Section 10.2, Tenant shall, at its sole cost and expense, commence (or cause to be commenced) promptly and continue diligently to perform (or cause to be performed) the repair and restoration of such Property (hereinafter called the “Work”), so as to restore (or cause to be restored) such Property in material compliance

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with all Legal Requirements and so that such Property shall be, to the extent practicable, substantially equivalent in value and general utility to its general utility and value immediately prior to such damage or destruction. Subject to the terms hereof, Landlord shall advance the insurance proceeds and any additional amounts otherwise deposited with or paid by Landlord to Tenant regularly during the repair and restoration period so as to permit payment for the cost of any such restoration and repair. Any such advances shall be made not more than monthly within ten (10) Business Days after Tenant submits to Landlord a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Landlord). Landlord may, at its option, condition advancement of such insurance proceeds and other amounts on (i) the absence of any Event of Default, (ii) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (iii) general contractors’ estimates, (iv) architect’s certificates, (v) unconditional lien waivers of general contractors, if available, (vi) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, and (vii) such other certificates as Landlord may, from time to time, reasonably require.

     Tenant’s obligation to restore any Property pursuant to this Article 10 and operate therein shall be subject to the release of available insurance proceeds by the applicable Facility Mortgagee to Landlord or directly to Tenant.

     10.3 Damage Near End of Term. Notwithstanding any provisions of Section 10.1 or 10.2 to the contrary, if damage to or destruction of any Property occurs during the last eighteen (18) months of the Term (including any Extended Term) and if such damage or destruction cannot reasonably be expected to be fully repaired and restored prior to the date that is six (6) months prior to the end of the Term (including any Extended Term), then either party may, by the giving of notice thereof to the other party, terminate this Agreement with respect to such affected Property, whereupon, this Agreement shall terminate with respect to such affected Property and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage (other than any proceeds relating to Tenant’s Personal Property).

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     10.4 Tenant’s Property. All insurance proceeds payable by reason of any loss of or damage to any of Tenant’s Personal Property shall be paid to Tenant.

     10.5 Restoration of Tenant’s Property. If Tenant is required to restore any Property as hereinabove provided, Tenant shall either (a) restore or cause to be restored all alterations and improvements made by Tenant and Tenant’s Personal Property, or (b) replace or cause to be replaced such alterations and improvements and Tenant’s Personal Property with improvements or items of the same or better quality and utility in the operation of such Property.

     10.6 No Abatement of Rent. This Agreement shall remain in full force and effect and Tenant’s obligation to make all payments of Rent and to pay all other charges as and when required under this Agreement shall remain unabated during the Term notwithstanding any damage involving the Leased Property or any portion thereof. The provisions of this Article 10 shall be considered an express agreement governing any cause of damage or destruction to the Leased Property or any portion thereof and, to the maximum extent permitted by law, no local or State statute, law, rule, regulation or ordinance in effect during the Term which provides for such a contingency shall have any application in such case.

     10.7 Waiver. Tenant hereby waives any statutory rights of termination which may arise by reason of any damage or destruction of the Leased Property, or any portion thereof.

ARTICLE 11

CONDEMNATION

     11.1 Total Condemnation, Etc. If either (i) the whole of any Property shall be taken by Condemnation or (ii) a Condemnation of less than the whole of any Property renders any Property Unsuitable for Its Permitted Use, this Agreement shall terminate with respect to such Property, Tenant and Landlord shall seek the Award for their interests in the applicable Property as provided in Section 11.5.

     11.2 Partial Condemnation. In the event of a Condemnation of less than the whole of any Property such that such Property is still suitable for its Permitted Use, Tenant shall, to the extent of the Award and any additional amounts disbursed by

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Landlord as hereinafter provided, commence (or cause to be commenced) promptly and continue diligently to restore (or cause to be restored) the untaken portion of the applicable Leased Improvements so that such Leased Improvements shall constitute a complete architectural unit of the same general character and condition (as nearly as may be possible under the circumstances) as such Leased Improvements existing immediately prior to such Condemnation, in material compliance with all Legal Requirements, subject to the provisions of this Section 11.2. If the cost of the repair or restoration of the affected Property exceeds the amount of the Award, Tenant shall give Landlord Notice thereof which notice shall set forth in reasonable detail the nature of such deficiency and whether Tenant shall pay and assume the amount of such deficiency (Tenant having no obligation to do so, except that if Tenant shall elect to make such funds available, the same shall become an irrevocable obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay and assume the amount of such deficiency, Landlord shall have the right (but not the obligation), exercisable at Landlord’s sole election by Notice to Tenant given within sixty (60) days after Tenant’s Notice of the deficiency, to elect to make available for application to the cost of repair or restoration the amount of such deficiency; provided, however, in such event, upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(d). In the event that neither Landlord nor Tenant shall elect to make such deficiency available for restoration, Landlord may terminate this Agreement with respect to the affected Property by Notice to Tenant and the entire Award shall be retained by Landlord.

     Subject to the terms hereof, Landlord shall contribute to the cost of restoration that part of the Award necessary to complete such repair or restoration, together with severance and other damages awarded for the taken Leased Improvements and any deficiency Landlord has agreed to disburse, to Tenant regularly during the restoration period so as to permit payment for the cost of such repair or restoration. Landlord may, at its option, condition advancement of such Award and other amounts on (i) the absence of any Event of Default, (ii) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (iii) general contractors’ estimates, (iv) architect’s certificates, (v) unconditional lien waivers of general contractors, if available, (vi) evidence of approval by

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all governmental authorities and other regulatory bodies whose approval is required, and (vii) such other certificates as Landlord may, from time to time, reasonably require. Landlord’s obligation under this Section 11.2 to disburse the Award and such other amounts shall be subject to the collection thereof by Landlord. Tenant’s obligation to restore the applicable Leased Improvements and operate therein shall be subject to the release of the Award by the applicable Facility Mortgagee to Landlord.

     11.3 No Abatement of Rent. Other than as specifically provided in this Agreement, this Agreement shall remain in full force and effect and Tenant’s obligation to make all payments of Rent and to pay all other charges as and when required under this Agreement shall remain unabated during the Term notwithstanding any Condemnation involving the Leased Property, or any portion thereof. The provisions of this Article 11 shall be considered an express agreement governing any Condemnation involving the Leased Property, or any portion thereof, and, to the maximum extent permitted by law, no local or State statute, law, rule, regulation or ordinance in effect during the Term which provides for such a contingency shall have any application in such case.

     11.4 Temporary Condemnation. In the event of any temporary Condemnation of any Property or Tenant’s interest therein, this Agreement shall continue in full force and effect and Tenant shall continue to pay (or cause to be paid), in the manner and on the terms herein specified, the full amount of the Rent. Tenant shall continue to perform and observe (or cause to be performed and observed) all of the other terms and conditions of this Agreement on the part of the Tenant to be performed and observed. Provided no Event of Default has occurred and is continuing, the entire amount of any Award made for such temporary Condemnation allocable to the Term, whether paid by way of damages, rent or otherwise, shall be paid to Tenant. Tenant shall, promptly upon the termination of any such period of temporary Condemnation, at its sole cost and expense, restore the affected Property to the condition that existed immediately prior to such Condemnation, in material compliance with all applicable Legal Requirements, unless such period of temporary Condemnation shall extend beyond the expiration of the Term, in which event Tenant shall not be required to make such restoration.

     11.5 Allocation of Award. Except as provided in Section 11.4 and the second sentence of this Section 11.5, the total

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Award shall be solely the property of and payable to Landlord. Any portion of the Award made for the taking of Tenant’s leasehold interest in the Leased Property, loss of business during the remainder of the Term, the taking of Tenant’s Personal Property, or Tenant’s removal and relocation expenses shall be the sole property of and payable to Tenant (subject to the provisions of Section 11.2). In any Condemnation proceedings, Landlord and Tenant shall each seek its own Award in conformity herewith, at its own expense.

ARTICLE 12

DEFAULTS AND REMEDIES

     12.1 Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder:

     (a) should Tenant fail to make any payment of the Rent or any other sum payable hereunder when due and such failure shall continue for a period of ten (10) days after Notice thereof from Landlord to Tenant; or

     (b) should Tenant fail to maintain the insurance coverages required under Article 9 and such failure shall continue for a period of ten (10) days after Notice thereof from Landlord to Tenant; or

     (c) should Tenant default in the due observance or performance of any of the terms, covenants or agreements contained herein to be performed or observed by it (other than as specified in clauses (a) and (b) above) and should such default continue for a period of thirty (30) days after Notice thereof from Landlord to Tenant; provided, however, that if such default is susceptible of cure but such cure cannot be accomplished with due diligence within such period of time and if, in addition, Tenant commences to cure or cause to be cured such default within thirty (30) days after Notice thereof from Landlord and thereafter prosecutes the curing of such default with all due diligence, such period of time shall be extended to such period of time (not to exceed an additional sixty (60) days in the aggregate) as may be necessary to cure such default with all due diligence; or

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     (d) should any Guarantor be in breach of any obligation under its Guaranty; or

     (e) should LTF fail to timely file such public filings and other financial information as LTF is required or elects to file with the SEC; or

     (f) should any representation or warranty made by or on behalf of Tenant or any Guarantor under or in connection with this Agreement or any Guaranty, or in any document, certificate or agreement delivered in connection herewith or therewith prove to have been false or misleading in any material respect on the day when made or deemed made and, if such default is susceptible of cure but such cure cannot be accomplished with due diligence within thirty (30) days after Notice thereof from Landlord to Tenant or Guarantor, such period of time and if, in addition, Tenant commences to cure or cause to be cured such default within thirty (30) days after Notice thereof from Landlord and thereafter prosecutes the curing of such default with all due diligence, such period of time shall be extended to such period of time (not to exceed an additional sixty (60) days in the aggregate), as may be necessary to cure such default with all due diligence; or

     (g) should Tenant or any Guarantor generally not be paying its debts as they become due or should Tenant or any Guarantor make a general assignment for the benefit of creditors; or

     (h) should any petition be filed by or against Tenant or any Guarantor under the Federal bankruptcy laws, or should any other proceeding be instituted by or against Tenant or any Guarantor seeking to adjudicate Tenant or any Guarantor bankrupt or insolvent, or seeking liquidation, reorganization, arrangement, adjustment or composition of Tenant’s debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for Tenant or any Guarantor or for any substantial part of the property of Tenant or any Guarantor and such proceeding is not dismissed within one hundred eighty (180) days after institution thereof; or

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     (i) should Tenant or any Guarantor cause or institute any proceeding for its dissolution or termination; or

     (j) should Tenant voluntarily cease operation of any of the Leased Property for its Permitted Use for a period in excess of thirty (30) consecutive days, except as a result of damage, destruction or partial or complete Condemnation in accordance with Article 10 and Article 11, in connection with any alterations or additions approved by Landlord or permitted pursuant to Article 6; or

     (k) should the estate or interest of Tenant in the Leased Property or any part thereof be levied upon or attached in any proceeding and the same shall not be vacated or discharged within the later of (x) ninety (90) days after commencement thereof, unless the amount in dispute is less than One Hundred Thousand Dollars ($100,000), in which case Tenant shall give notice to Landlord of the dispute but Tenant may defend in any suitable way, and (y) one hundred eighty (180) days after receipt by Tenant of Notice thereof from Landlord (unless Tenant shall be contesting such lien or attachment in good faith in accordance with Article 8); or

     (l) should there occur any direct or indirect Change in Control of Tenant or any Guarantor, except as otherwise permitted by Article 16; or

     (m) should Tenant fail to provide a Guaranty from any Acquiring Guarantor in accordance with the provisions of Section 16.1;

then, and in any such event, Landlord, in addition to all other remedies available to it, may terminate this Agreement with respect to any or all of the Leased Property by giving Notice thereof to Tenant and upon the expiration of the time, if any, fixed in such Notice, this Agreement shall terminate with respect to all or the designated portion of the Leased Property and all rights of Tenant under this Agreement with respect thereto shall cease. Landlord shall have and may exercise all rights and remedies available at law and in equity to Landlord as a result of Tenant’s breach of this Agreement.

     Upon the occurrence of an Event of Default, Landlord may, in addition to any other remedies provided herein, enter upon the Leased Property or any portion thereof.

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     12.2 Remedies. None of (a) the termination of this Agreement pursuant to Section 12.1, (b) the repossession of the Leased Property or any portion thereof, (c) the failure of Landlord to relet the Leased Property or any portion thereof, nor (d) the reletting of all or any of portion of the Leased Property, shall relieve Tenant of its liability and obligations hereunder, all of which shall survive any such termination, repossession or reletting. In the event of any such termination, Tenant shall forthwith pay to Landlord all Rent due and payable with respect to the Leased Property, or terminated portion thereof, through and including the date of such termination. Thereafter, Tenant, until the end of what would have been the Term of this Agreement in the absence of such termination, and whether or not the Leased Property or any portion thereof shall have been relet, shall be liable to Landlord for, and shall pay to Landlord, as current damages, the Rent and other charges which would be payable hereunder for the remainder of the Term had such termination not occurred, less the net proceeds, if any, of any reletting of the Leased Property, or any portion thereof, after deducting all reasonable expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, advertising, expenses of employees, alteration costs and expenses of preparation for such reletting. Tenant shall pay such current damages to Landlord monthly on the days on which the Minimum Rent would have been payable hereunder if this Agreement had not been so terminated with respect to such of the Leased Property.

     At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages beyond the date of such termination, at Landlord’s election, Tenant shall pay to Landlord an amount equal to the net present value (as determined utilizing an assumed interest rate of nine percent (9%) per annum) of the excess, if any, of the Rent and other charges which would be payable hereunder from the date of such termination (assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Impositions would be the same as payments required for the immediately preceding twelve calendar months, or if less than twelve calendar months have expired since the Commencement Date, the payments required for such lesser period projected to an annual amount) for what would be the then unexpired term of this Agreement if the same remained in effect, over the fair market rental for the same period. Nothing contained in this Agreement

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shall, however, limit or prejudice the right of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

     In case of any Event of Default, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may, (a) relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlord’s option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to relet the same, and (b) may make such reasonable alterations, repairs and decorations in the Leased Property or any portion thereof as Landlord, in its reasonable discretion, considers advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any way whatsoever for any failure to relet all or any portion of the Leased Property, or, in the event that the Leased Property is relet, for failure to collect the rent under such reletting. To the maximum extent permitted by law, Tenant hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Leased Property, by reason of the occurrence and continuation of an Event of Default hereunder.

     12.3 Tenant’s Waiver. IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.

     12.4 Application of Funds. Any payments received by Landlord under any of the provisions of this Agreement during the existence or continuance of any Event of Default (and any payment made to Landlord rather than Tenant due to the existence of any Event of Default) shall be applied to Tenant’s current and past due obligations under this Agreement in such order as

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Landlord may determine or as may be prescribed by the laws of the State. Any balance shall be paid to Tenant.

     12.5 Landlord’s Right to Cure Tenant’s Default. If an Event of Default shall have occurred and be continuing, Landlord, after Notice to Tenant (which Notice shall not be required if Landlord shall reasonably determine immediate action is necessary to protect person or property), without waiving or releasing any obligation of Tenant and without waiving or releasing any Event of Default, may (but shall not be obligated to), at any time thereafter, make such payment or perform such act for the account and at the expense of Tenant, and may, to the maximum extent permitted by law, enter upon the Leased Property or any portion thereof for such purpose and take all such action thereon as, in Landlord’s reasonable discretion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Tenant. All reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by Landlord in connection therewith, together with interest thereon (to the extent permitted by law) at the Overdue Rate from the date such sums are paid by Landlord until repaid, shall be paid by Tenant to Landlord, on demand.

ARTICLE 13

HOLDING OVER

     Any holding over by Tenant after the expiration or sooner termination of this Agreement shall be treated as a daily tenancy at sufferance at a rate equal to one hundred seventy-five percent (175%) the Minimum Rent and other charges herein provided (prorated on a daily basis). Tenant shall also pay to Landlord all damages (direct or indirect) sustained by reason of any such holding over. Otherwise, such holding over shall be on the terms and conditions set forth in this Agreement, to the extent applicable. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Agreement.

ARTICLE 14

LANDLORD DEFAULT

     If Landlord shall default in the performance or observance of any of its covenants or obligations set forth in this

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Agreement or any obligation of Landlord, if any, under any agreement affecting any Property, the performance of which is not Tenant’s obligation pursuant to this Agreement, and any such default shall continue for a period of thirty (30) days after Notice thereof from Tenant to Landlord and any applicable Facility Mortgagee, or such additional period as may be reasonably required to correct the same, Tenant may declare the occurrence of a “Landlord Default” by a second Notice to Landlord and to such Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the provisions of the following paragraph, invoice Landlord for costs and expenses (including reasonable attorneys’ fees and court costs) incurred by Tenant in curing the same, together with interest thereon (to the extent permitted by law) from the date Landlord receives Tenant’s invoice until paid, at the Overdue Rate. Tenant shall have no right to terminate this Agreement for any default by Landlord hereunder and no right, for any such default, to offset or counterclaim against any Rent or other charges due hereunder.

ARTICLE 15

PURCHASE RIGHTS

     If and to the extent permitted by any and all lenders or other applicable financing sources of Tenant, LTF or any of their respective Parents, Subsidiaries or affiliates, Landlord shall have the option to purchase Tenant’s Personal Property, at the expiration or termination of this Agreement, for an amount equal to the then fair market value thereof (as determined by agreement of the parties or, in the absence of such agreement, appraisal), subject to, and with appropriate price adjustments for, all equipment leases, conditional sale contracts, UCC-1 financing statements and other encumbrances to which such Personal Property is subject (and subject to the right of any lender or other financing source thereunder to grant or withhold its consent thereto as provided in any such financing agreements or arrangements relating thereto), provided that Landlord shall be permitted to assume any such lease, contract, financing or encumbrance to the extent the same only relates to Tenant’s Personal Property at the Leased Property and Tenant is released from liability in connection therewith. Upon the expiration or sooner termination of this Agreement, Tenant shall use its reasonable efforts to transfer and assign, or cause to be transferred and assigned, to Landlord or its designee, or assist Landlord or its designee in obtaining, any contracts, licenses,

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and certificates required for the then operation of the Leased Property.

ARTICLE 16

SUBLETTING AND ASSIGNMENT

     16.1 Subletting and Assignment. Except as provided in Section 16.3, Tenant shall not, without Landlord’s prior written consent (which consent may be given or withheld in Landlord’s sole and absolute discretion), assign, mortgage, pledge, hypothecate, encumber or otherwise transfer this Agreement or sublease or permit the sublease (which term shall be deemed to include the granting of concessions, licenses and the like), of all or any part of the Leased Property or suffer or permit this Agreement or the leasehold estate created hereby or any other rights arising under this Agreement to be assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether voluntarily, involuntarily or by operation of law, or permit the use or operation of all or any part of the Leased Property by anyone other than Tenant, any Manager approved by Landlord or permitted pursuant to the applicable provisions of this Agreement, or the Leased Property or any part thereof to be offered or advertised for assignment or subletting.

     For purposes of this Section 16.1, an assignment of this Agreement shall be deemed to include, without limitation, any direct or indirect Change in Control of Tenant or any Guarantor; provided, however that any assignment of this Agreement (including, without limitation, any direct or indirect Change in Control of Tenant or any Guarantor) shall not require Landlord’s consent if each of the following conditions precedent shall have been satisfied: (i) no Default or Event of Default shall have occurred and be continuing, (ii) after giving effect to any such transaction constituting an assignment, the successor tenant (the “Successor Tenant”) or the Acquiring Guarantor, as the case may be, shall have a Tangible Net Worth in excess of Two Hundred Million Dollars ($200,000,000) (the “Required Net Worth”), and shall be projected to maintain such Required Net Worth for not less than the succeeding twenty-four (24) months, as evidenced by audited financials and projections prepared in accordance with GAAP and delivered to Landlord with an Officer’s Certificate not less than fifteen (15) Business Days prior to the closing or projected closing of such assignment or Change of Control, (iii) if applicable, each Guarantor shall have confirmed its obligations under its Guaranty by written

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agreement in form and substance reasonably satisfactory to Landlord, (iv) any Acquiring Guarantor in connection with such transaction shall have executed a Guaranty in favor of Landlord, which Guaranty shall be in form and substance substantially similar to the LTF Guaranty, and (v) any Acquiring Guarantor in connection with such transaction shall have delivered to Landlord evidence, in form and substance reasonably satisfactory to Landlord, of the due authorization, execution, delivery and enforceability of each such Guaranty. Tenant shall give Landlord no less than fifteen (15) Business Days prior written Notice of such contemplated assignment (including, without limitation, any such direct or indirect Change in Control), together with such evidence regarding the satisfaction of the conditions precedent set forth in the foregoing clauses as Landlord shall, in its sole discretion, require, including, without limitation, audited financial statements for the immediately preceding five (5) fiscal years of the Successor Tenant and any Acquiring Guarantor (including, without limitation, balance sheets and related statements of income and cash flows), and pro forma balance sheets and income statements with respect to the Successor Tenant and any Acquiring Guarantor following consummation of such assignment (including, without limitation, any direct or indirect Change in Control).

     Notwithstanding the foregoing, in the event that the Successor Tenant or Acquiring Guarantor is unable or unwilling to provide a Guaranty in connection with any such assignment or Change of Control, Tenant may elect, in lieu thereof, to deposit, or caused to be deposited, with Landlord, fifteen (15) Business Days prior to the date of closing of such proposed assignment or Change of Control, a cash security deposit (the “Security Deposit”) in an amount equal to the per annum Minimum Rent then payable hereunder, which security deposit is to be held by Landlord as security for the payment and performance of Tenant’s obligations under this Agreement in accordance with the provisions of this Section 16.1.

     Upon an assignment permitted under this Section 16.1, the transferor Tenant or Guarantor, as the case may be, shall be released from all liabilities and obligations under this Agreement or its Guaranty arising subsequent to the effective date of such assignment.

     In the event that Tenant shall at any time during the Term deposit the Security Deposit with Landlord, the Security Deposit shall be held by Landlord as security for the faithful

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observance and performance by Tenant of all the terms, covenants and conditions of this Agreement by Tenant to be observed and performed. The Security Deposit shall not be mortgaged, assigned, transferred or otherwise encumbered by Tenant without the prior written consent of Landlord and any such act on the part of Tenant without first having obtained Landlord’s consent shall be without force and effect and shall not be binding upon Landlord.

     If an Event of Default shall occur and be continuing, Landlord may, as its option and without prejudice to any other remedy which Landlord may have on account thereof, appropriate and apply the entire Security Deposit or so much thereof as may be necessary to compensate Landlord toward the payment of Rent or other sums or loss or damage sustained by Landlord due to such breach on the part of Tenant, and Tenant shall, upon demand, restore the Security Deposit to the original sum deposited. It is understood and agreed that the Security Deposit is not to be considered as prepaid rent, nor shall damages be limited to the amount of the Security Deposit. Provided no Event of Default shall have occurred and be continuing, any unapplied balance of the Security Deposit shall be returned in full to Tenant at the end of the Term. Landlord shall have no obligation to pay interest on the Security Deposit and shall have the right to commingle the same with Landlord’s other funds. If Landlord conveys Landlord’s interest under this Agreement, the portion of the Security Deposit so turned over, or any part thereof not previously applied, may be turned over by Landlord to Landlord’s grantee, and, if so turned over, Tenant shall look solely to such grantee for proper application of the Security Deposit in accordance with the terms of this Section 16.1 and the return thereof in accordance herewith.

     If this Agreement is assigned or if all or any part of the Leased Property is sublet (or occupied by anybody other than Tenant or any Manager), following an Event of Default Landlord may collect the rents from such assignee, subtenant or occupant, as the case may be, and apply the net amount collected to the Rent herein reserved, but no such collection shall be deemed a waiver of the provisions set forth in the first paragraph of this Section 16.1, the acceptance by Landlord of such assignee, subtenant or occupant, as the case may be, as a tenant, or a release of Tenant from the future performance by Tenant of its covenants, agreements or obligations contained in this Agreement.

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     No subletting or assignment shall in any way impair the continuing primary liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise agree that Tenant shall be released from all obligations hereunder), and no consent to any subletting or assignment in a particular instance shall be deemed to be a waiver of the prohibition set forth in this Section 16.1. No assignment, subletting or occupancy shall affect any Permitted Use. Any subletting, assignment or other transfer of Tenant’s interest under this Agreement in contravention of this Section 16.1 shall be voidable at Landlord’s option.

     16.2 Required Sublease Provisions. Any sublease of all or any portion of the Leased Property entered into on or after the date hereof shall provide (a) that it is subject and subordinate to this Agreement and to the matters to which this Agreement is or shall be subject or subordinate; (b) that in the event of termination of this Agreement or reentry or dispossession of Tenant by Landlord under this Agreement, Landlord may, at its option, terminate such sublease or take over all of the right, title and interest of Tenant, as sublessor under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that neither Landlord nor any Facility Mortgagee, as holder of a mortgage or as Landlord under this Agreement, if such Facility Mortgagee succeeds to that position, shall (i) be liable for any act or omission of Tenant under such sublease, (ii) be subject to any credit, counterclaim, offset or defense which theretofore accrued to such subtenant against Tenant, (iii) be bound by any previous modification of such sublease not consented to in writing by Landlord or by any previous prepayment of more than one (1) month’s Rent, (iv) be bound by any covenant of Tenant to undertake or complete any construction of the Leased Property or any applicable portion thereof, (v) be required to account for any security deposit of the subtenant other than any security deposit actually delivered to Landlord by Tenant, (vi) be bound by any obligation to make any payment to such subtenant or grant any credits, except for services, repairs, maintenance and restoration provided for under the sublease that are performed after the date of such attornment, (vii) be responsible for any monies owing by Tenant to the credit of such subtenant unless actually delivered to Landlord by Tenant, or (viii) be required to remove any Person occupying any applicable portion of the Leased Property; and (c), in the event that such subtenant receives a written Notice

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from Landlord or any Facility Mortgagee stating that an Event of Default has occurred and is continuing, such subtenant shall thereafter be obligated to pay all rentals accruing under such sublease directly to the party giving such Notice or as such party may direct. All rentals received from such subtenant by Landlord or the Facility Mortgagee, as the case may be, shall be credited against the amounts owing by Tenant under this Agreement and such sublease shall provide that the subtenant thereunder shall, at the request of Landlord, execute a suitable instrument in confirmation of such agreement to attorn. An original counterpart of each such sublease and assignment and assumption, duly executed by Tenant and such subtenant or assignee, as the case may be, in form and substance reasonably satisfactory to Landlord, shall be delivered promptly to Landlord and (a) in the case of an assignment, the assignee shall assume in writing and agree to keep and perform all of the terms of this Agreement on the part of Tenant to be kept and performed and shall be, and become, jointly and severally liable with Tenant for the performance thereof and (b) in case of either an assignment or subletting, Tenant shall remain primarily liable, as principal rather than as surety, for the prompt payment of the Rent and for the performance and observance of all of the covenants and conditions to be performed by Tenant hereunder.

     The provisions of this Section 16.2 shall not be deemed a waiver of the provisions set forth in the first paragraph of Section 16.1.

     16.3 Permitted Sublease Notwithstanding the foregoing, including, without limitation, Section 16.2, but subject to the provisions of Section 16.4 and any other express conditions or limitations set forth herein, Tenant may, in each instance after Notice to Landlord, (a) enter into one or more subleases, licenses, concessions or other occupancy agreements in furtherance of the Permitted Use with respect to any Property, so long as (i) such subleases, concessions or other occupancy agreements are incidental to the use of such Property as an athletic club/fitness center/wellness center as such use may be from time to time be operated in athletic club/fitness center/wellness center properties owned and/or operated by Tenant and its Affiliated Persons, and (ii) such subleases, concessions or other occupancy agreements will not violate or affect any Legal Requirement or Insurance Requirement, and Tenant shall provide such additional insurance coverage applicable to the activities to be conducted in the space

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covered thereby as Landlord and any Facility Mortgagee may reasonably require, and (b) enter into one or more subleases with Affiliated Persons of Tenant or LTF with respect to the Leased Property or any portion thereof (provided that any such sublease is not entered into in connection with, or simultaneously with (whether through one or a series of transactions), a direct or indirect Change in Control in violation of the restrictions contained in Section 16.1).

     16.4 Sublease Limitation. Anything contained in this Agreement to the contrary notwithstanding, Tenant shall not sublet all or any portion of the Leased Property on any basis such that the rental to be paid by any sublessee thereunder would be based, in whole or in part, on the net income or profits derived by the business activities of such sublessee or any other formula such that any portion of such sublease rental would fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or any similar or successor provision thereto or would otherwise disqualify Landlord for treatment under the Code as a real estate investment trust.

ARTICLE 17

ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

     17.1 Estoppel Certificates. At any time and from time to time, upon not less than ten (10) Business Days prior Notice by either party, the party receiving such Notice shall furnish to the other an Officer’s Certificate certifying that this Agreement is unmodified and in full force and effect (or that this Agreement is in full force and effect as modified and setting forth the modifications), the date to which the Rent has been paid, that no Default or an Event of Default has occurred and is continuing or, if a Default or an Event of Default shall exist, specifying in reasonable detail the nature thereof, and the steps being taken to remedy the same, and such additional information as the requesting party may reasonably request. Any such certificate furnished pursuant to this Section 17.1 may be relied upon by the requesting party, its lenders and any prospective purchaser or mortgagee of all or any portion of the Leased Property or the leasehold estate created hereby.

     17.2 LTF Financial Statements. So long as LTF shall be a Guarantor under this Agreement, Tenant shall provide, or cause to be provided, to Landlord, financial information as follows:

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     (a) (i) So long as LTF shall be a registrant with the SEC, by filing such public filings and other financial information as LTF is required or elects to file with the SEC, copies of all public filings submitted to the SEC, including, without limitation, quarterly form 10-Q filings, annual form 10-K filings and other shareholder or debt holder communications with shareholders or holders of publicly traded debt, provided that copies of all filings submitted to the SEC through EDGAR shall be deemed to be delivered to Landlord upon such filing; and (ii) if LTF shall cease to be a registrant with the SEC or to timely file with the SEC, Tenant shall deliver, or cause to be delivered to Landlord, substantially similar financial statements as would have been filed had LTF remained a timely filing public reporting company;

     (b) Annual and quarterly financial statements of Tenant, including Tenant’s balance sheet and the related statements of income and cash flows, as a part of Guarantor’s consolidated financial information provided pursuant to the preceding clause (a), with the parties hereto agreeing that, as of the date of this Agreement, Tenant is not required to provide separately prepared and delivered financial statements and shall not be so required during the Term hereof except as may be required pursuant and subject to the terms and conditions set forth in Section 17.4 below;

     (c) Annually and quarterly during the Term, financial information and operating statistics with respect to each Property as Landlord may reasonably request, including revenues, EBITDA, membership and average monthly membership fee, which information Landlord shall not make public, except as required by law or SEC regulation, or when aggregated with similar information for a pool or portfolio of other properties;

     (d) Promptly after the sending or filing thereof, to the extent the same are not publicly available, copies of all reports which Tenant and/or any Guarantor sends to its security holders generally;

     (e) Promptly after the occurrence thereof, notice of any event or condition that will, or that Tenant should reasonably believe will, have a material adverse effect on

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any of the Fitness Centers or on Tenant’s ability to perform its obligations hereunder; and

     (f) Promptly, upon Notice from Landlord, such other information concerning the business, financial condition and affairs of Tenant, any Guarantor or any Property as Landlord may reasonably request from time to time.

     17.3 Other Financial Statements. If LTF shall at any time cease to be a Guarantor or if any other Guarantor shall provide a Guaranty under this Agreement, Tenant shall furnish, or cause to be furnished, the following statements to Landlord:

     (a) (i) So long as Acquiring Guarantor shall be a registrant with the SEC, by timely filing such public filings and other financial information as Acquiring Guarantor is required or elects to file with the SEC, copies of all public filings submitted to the SEC, including, without limitation, quarterly form 10-Q filings, annual form 10-K filings and other shareholder or debt holder communications with shareholders or holders of publicly traded debt, provided that copies of all filings submitted to the SEC through EDGAR shall be deemed to be delivered to Landlord upon such filing; and (ii) if Acquiring Guarantor shall cease to be a registrant or timely with the SEC or to timely file with the SEC, Tenant shall deliver, or cause to be delivered to Landlord, substantially similar financial statements as would have been filed had Acquiring Guarantor remained a timely filing public reporting company;

     (b) Annual and quarterly financial statements of Tenant, including Tenant’s balance sheet and the related statements of income and cash flows, as a part of Acquiring Guarantor’s consolidated financial information provided pursuant to the preceding clause (a), with the parties hereto agreeing that, as of the date of this Agreement, Tenant is not required to provide separately prepared and delivered financial statements and shall not be so required during the Term hereof except as may be required pursuant and subject to the terms and conditions set forth in Section 17.4 below;

     (c) Annually and quarterly during the Term, financial information and operating statistics with respect to each Property as Landlord may reasonably request, including

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revenues, EBITDA, membership and average monthly membership fee, which information Landlord shall not make public, except as required by law or SEC regulation, or when aggregated with similar information for a pool or portfolio of other properties;

     (d) Promptly after the sending or filing thereof, to the extent the same are not publicly available, copies of all reports which Tenant and/or any Guarantor sends to its security holders generally;

     (e) Promptly after the occurrence thereof, notice of any event or condition that will, or that Tenant should reasonably believe will, have a material adverse effect on any of the Fitness Centers or on Tenant’s ability to perform its obligations hereunder; and

     (f) Promptly, upon Notice from Landlord, such other information concerning the business, financial condition and affairs of Tenant, Guarantor or any Property as Landlord may reasonably request from time to time.

     17.4 General. In addition, Tenant shall provide Landlord information relating to Tenant and its operation of the Leased Property, including separately prepared and delivered financial statements for Tenant, to the extent the same (a) may be required in order for Landlord to prepare financial statements in accordance with GAAP or to comply with applicable securities laws and regulations and the SEC’s interpretation thereof, and (b) is of the type that Tenant and its Affiliated Persons customarily prepare for other of its property owners and/or lenders.

     Landlord shall maintain all such statements and information in the strictest confidence, except (i) as may be required by Applicable Law or by the rules of any national securities exchange or automated quotation system to which Landlord or any Affiliated Person of Landlord is or becomes subject, or (ii) as Landlord reasonably determines necessary and advisable in connection with its investor relations program, conducted in the normal course, including, without limitation, disclosure of the rent coverage and other information that Landlord or any Affiliated Person of Landlord files or may file, from time to time, with the SEC for other tenants of Landlord or any Affiliated Person of Landlord. Landlord may at any time, and from time to time, provide any Facility Mortgagee with copies of any of the foregoing statements, subject to Landlord obtaining

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the agreement of such Facility Mortgagee to maintain such statements and the information therein as confidential.

ARTICLE 18

LANDLORD’S RIGHT TO INSPECT

     Tenant shall permit Landlord and its authorized representatives to inspect all or any portion of the Leased Property during usual business hours upon not less than forty-eight (48) hours’ notice and to make such repairs as Landlord is permitted or required to make pursuant to the terms of this Agreement, provided that any inspection or repair by Landlord or its representatives will not unreasonably interfere with Tenant’s use and operation of the same and further provided that in the event of an emergency, as determined by Landlord in its reasonable discretion, prior Notice shall not be necessary.

ARTICLE 19

EASEMENTS

     19.1 Grant of Easements. Provided no Event of Default has occurred and is continuing, Landlord will join in granting and, if necessary, modifying or abandoning such rights-of-way, easements and other interests as may be reasonably requested by Tenant for ingress and egress, and electric, telephone, gas, water, sewer and other utilities so long as:

     (a) the instrument creating, modifying or abandoning any such easement, right-of-way or other interest is satisfactory to and approved by Landlord (which approval shall not be unreasonably withheld, delayed or conditioned);

     (b) Landlord receives an Officer’s Certificate from Tenant stating (i) that such grant, modification or abandonment is not detrimental to the proper conduct of business on such Property, (ii) the consideration, if any, being paid for such grant, modification or abandonment (which consideration shall be paid by Tenant), (iii) that such grant, modification or abandonment does not impair the use or value of such Property for the Permitted Use, and (iv) that, for as long as this Agreement shall be in

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effect, Tenant will perform all obligations, if any, of Landlord under any such instrument.

     19.2 Exercise of Rights by Tenant. So long as no Event of Default has occurred and is continuing, Tenant shall have the right to exercise all rights of Landlord under the Easement Agreements and, in connection therewith, Landlord shall execute and promptly return to Tenant such documents as Tenant shall reasonably request. Tenant shall perform all obligations of Landlord under the Easement Agreements.

     19.3 Permitted Encumbrances. Any agreements entered into in accordance with this Article 19 shall be deemed a Permitted Encumbrance.

ARTICLE 20

RIGHT OF FIRST OFFER

     20.1 Right of First Offer. If Landlord desires to sell the Leased Property, or if Landlord shall otherwise receive an offer from a party other than Tenant for any such sale or transfer which Landlord intends to accept, then Landlord shall, prior to entering into an agreement with respect to such sale, provide, or shall cause to be provided, written notice (the “ROFO Notice”) to Tenant of its intention to effect such a transaction, which ROFO Notice shall specify the cash purchase price for the Leased Property (the “ROFO Purchase Price”), the terms of payment and the closing date. Tenant shall have fifteen (15) days from the receipt of the ROFO Notice to notify Landlord in writing (the “ROFO Acceptance Notice”) of its intent to purchase the Leased Property on the terms and conditions set forth in the ROFO Notice, except that any sale to Tenant to shall in all events be “AS IS”, “WHERE IS”, without representation or warranty by Landlord. In the event that, at any time within three hundred sixty five (365) days after the date that Tenant shall have failed to provide Landlord with a ROFO Acceptance Notice, Landlord shall elect to sell the Leased Property for a purchase price that is less than ninety percent (90%) of the ROFO Purchase Price, Landlord shall provide to Tenant a ROFO Notice specifying such reduced ROFO Purchase Price and Tenant shall have fifteen (15) days from the receipt of the ROFO Notice in which to deliver a ROFO Acceptance Notice with respect thereto. The negotiation and execution of a mutually acceptable purchase and sale agreement must occur no more than fifteen (15) days from Landlord’s receipt of any ROFO

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Acceptance Notice pursuant to this Article 20 for any reason other than bad faith on the part of Landlord. If Tenant shall fails to provide Landlord with a ROFO Acceptance Notice within fifteen (15) days of receipt of any ROFO Notice pursuant to this Article 20, or if a mutually acceptable purchase and sale agreement is not executed within fifteen (15) days after receipt of any ROFO Acceptance Notice, then Landlord shall have three hundred sixty-five (365) days from the date thereof to sell the Leased Property to any third party for a purchase price not less than the ROFO Purchase Price specified in the applicable ROFO Notice. If at the expiration of any such three hundred sixty-five (365) day period Landlord shall not have sold the Leased Property, Tenant shall again have the rights under this Article 20.

     Notwithstanding anything to the contrary contained in this Agreement, Tenant’s rights under this Article 20 shall be limited to a sale of one or more of the Properties and shall not include (i) a sale of the Properties as part of a sale of other properties, (ii) a sale of the Properties as part of a series of related sales of other properties, (iii) any transfer in connection with any financing (or a foreclosure sale or deed in lieu thereof), (iv) a transfer to any Affiliated Person of Landlord, (v) a transfer to any Person to whom Landlord sells all or substantially all of its assets or (vi) any sale of an interest in Landlord.

     20.2 Attornment. If the Leased Property is transferred to a third party in accordance with this Article 20, Tenant shall attorn to such third party as Landlord so long as such third party and Landlord notify Tenant in writing of such transfer. At the request of Landlord, Tenant shall execute such documents confirming the agreement referred to above and such other agreements as Landlord shall reasonably request, provided that such agreements do not increase the liabilities and obligations of Tenant hereunder.

     20.3 General. Notwithstanding anything to the contrary contained in this Agreement, upon the delivery of any ROFO Acceptance Notice by Tenant, no event or circumstances affecting the Leased Property, including, but not limited to, a Condemnation or casualty, shall give Tenant any right or option to cancel, surrender or otherwise terminate this Agreement.

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ARTICLE 21

REPRESENTATIONS AND WARRANTIES

     21.1 Representations of Tenant. To induce Landlord to enter into this Agreement, Tenant represents and warrants to Landlord as follows:

     (a) Status and Authority of Tenant. Tenant is a corporation duly organized, validly existing and in corporate good standing under the laws of its state of incorporation. Tenant has all requisite power and authority under the laws of its state of formation and its charter documents to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. Tenant has duly qualified to transact business in each jurisdiction in which the nature of the business conducted by it requires such qualification.

     (b) Action of Tenant. Tenant has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and this Agreement constitutes the valid and binding obligation and agreement of Tenant, enforceable against Tenant in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

     (c) No Violations of Agreements. Neither the execution, delivery or performance of this Agreement by Tenant, nor compliance with the terms and provisions hereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon the Leased Property pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other material agreement or instrument by which Tenant is bound.

     (d) Litigation. Tenant has received no written notice of and, to Tenant’s knowledge, no action or proceeding is pending or threatened and no investigation looking toward such an action or proceeding has begun, which questions the validity of this Agreement or any action taken or to be taken pursuant hereto, will result in any material adverse change in the business, operation,

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affairs or condition of the Leased Property, result in or subject the Leased Property to a material liability, or involves condemnation or eminent domain proceedings against any material part of the Leased Property.

     (e) Compliance With Law. Except as disclosed in writing to Landlord, to Tenant’s knowledge, the Leased Property and the use and operation thereof do not violate any material federal, state, municipal and other governmental statutes, ordinances, by-laws, rules, regulations or any other legal requirements, including, without limitation, those relating to construction, occupancy, zoning, adequacy of parking, environmental protection, occupational health and safety and fire safety applicable thereto; and there are presently in effect all material licenses, permits and other authorizations necessary for the current use, occupancy and operation thereof. Tenant has not received written notice of any threatened request, application, proceeding, plan, study or effort which would materially adversely affect the present use or zoning of the Leased Property or which would modify or realign any adjacent street or highway in a manner which would materially adversely affect the use and operation of the Leased Property.

     (f) Hazardous Substances. Except as disclosed to Landlord or as described in any environmental report delivered to Landlord, to Tenant’s knowledge, none of Tenant nor any tenant or other occupant or user of the Leased Property, or any portion thereof, has stored or disposed of (or engaged in the business of storing or disposing of) or has released or caused the release of any Hazardous Substances on the Leased Property, or any portion thereof, the removal of which is required or the maintenance of which is prohibited or penalized by any Applicable Law, and, to Tenant’s knowledge, except as disclosed to Landlord or as described in any environmental report delivered to Landlord, the Leased Property is free from any such Hazardous Substances, except any such materials maintained in accordance with Applicable Law.

     21.2 Representations of Landlord. To induce Tenant to enter in this Agreement, Landlord represents and warrants to Tenant as follows:

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     (a) Status and Authority of Landlord. Landlord is a Maryland real estate investment trust/limited liability company duly organized, validly existing and in good standing under the laws of the State of Maryland, and has all requisite power and authority under the laws of such state and under its charter documents to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. Landlord has duly qualified and is in good standing as a trust, unincorporated business association or limited liability company in each jurisdiction in which the nature of the business conducted by it requires such qualification.

     (b) Action of Landlord. Landlord has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and upon the execution and delivery of this Agreement by Landlord constitutes the valid and binding obligation and agreement of Landlord, enforceable against Landlord in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of general application affecting the rights and remedies of creditors.

     (c) No Violations of Agreements. Neither the execution, delivery or performance of this Agreement by Landlord, nor compliance with the terms and provisions hereof, will result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any property or assets of Landlord pursuant to the terms of any indenture, mortgage, deed of trust, note, evidence of indebtedness or any other agreement or instrument by which Landlord is bound.

     (d) Litigation. No investigation, action or proceeding is pending and, to Landlord’s actual knowledge, no action or proceeding is threatened and no investigation looking toward such an action or proceeding has begun, which questions the validity of this Agreement or any action taken or to be taken pursuant hereto.

ARTICLE 22

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FACILITY MORTGAGES

     22.1 Landlord May Grant Liens. Without the consent of Tenant, Landlord may, from time to time, directly or indirectly, create or otherwise cause to exist any lien, encumbrance or title retention agreement (“Encumbrance”) upon the Leased Property, or any portion thereof or interest therein, whether to secure any borrowing or other means of financing or refinancing.

     22.2 Subordination of Lease. This Agreement and any and all rights of Tenant hereunder are, and shall be, subject and subordinate (as applicable) to any ground or master lease, and all renewals, extensions, modifications and replacements thereof, and to all mortgages and deeds of trust, which may now or hereafter affect the Leased Property or any portion thereof or any improvements thereon and/or any of such leases, whether or not such mortgages or deeds of trust shall also cover other lands and/or buildings and/or leases, to each and every advance made or hereafter to be made under such mortgages and deeds of trust, and to all renewals, modifications, replacements and extensions of such leases and such mortgages and deeds of trust and all consolidations of such mortgages and deeds of trust, provided that the holder thereof shall agree that it shall recognize and not disturb this Agreement and all of Tenant’s rights hereunder subject to, and upon, the terms and conditions hereof, including, without limitation, the provisions of this Article 22. This section shall be self-operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall promptly execute, acknowledge and deliver any instrument that Landlord, the lessor under any such lease or the holder of any such mortgage or the trustee or beneficiary of any deed of trust or any of their respective successors in interest may reasonably request to evidence such subordination; provided that any such instrument shall provide for the recognition and nondisturbance of this Agreement and all of Tenant’s rights hereunder upon and subject to the terms and conditions contained herein, including, without limitation, this Section 22.2 and shall obligate the Facility Mortgagee to permit Landlord to apply insurance proceeds and Awards as required by this Agreement. Any lease to which this Agreement is, at the time referred to, subject and subordinate is herein called “Superior Lease” and the lessor of a Superior Lease or its successor in interest at the time referred to is herein called “Superior Landlord” and any mortgage or deed of trust to which this Agreement is, at the time referred to, subject and subordinate is herein called “Superior Mortgage” and

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the holder, trustee or beneficiary of a Superior Mortgage is herein called “Superior Mortgagee”.

     If any Superior Landlord or Superior Mortgagee or the nominee or designee of any Superior Landlord or Superior Mortgagee shall succeed to the rights of Landlord under this Agreement (any such person, “Successor Landlord”), whether through possession or foreclosure action or delivery of a new lease or deed, or otherwise, at such Successor Landlord’s request, Tenant shall attorn to and recognize the Successor Landlord as Tenant’s landlord under this Agreement and Tenant shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment (provided that such instrument does not alter the terms of this Agreement), whereupon, this Agreement shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Agreement, except that the Successor Landlord (unless formerly the landlord under this Agreement or its nominee or designee) shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of any prior Landlord under this Agreement, (b) responsible for any monies owing by or on deposit with any prior Landlord to the credit of Tenant (except to the extent actually paid or delivered to the Successor Landlord), (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound by any modification of this Agreement subsequent to such Superior Lease or Mortgage, or by any previous prepayment of Rent for more than one (1) month in advance of the date due hereunder, which was not approved in writing by the Superior Landlord or the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlord’s interest in the Leased Property and the rents, income, receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible for the performance of any work to be done by the Landlord under this Agreement to render the Leased Property ready for occupancy by Tenant (subject to Landlord’s obligations with respect to any insurance or Condemnation proceeds), or (g) required to remove any Person occupying the Leased Property or any part thereof, except if such person claims by, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenant’s agreement to attorn, as aforesaid and Landlord agrees to provide Tenant with an instrument of nondisturbance and attornment from each such Superior Mortgagee

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and Superior Landlord in form and substance reasonably satisfactory to Tenant. Notwithstanding anything in this Agreement to the contrary, any Successor Landlord shall be liable to pay to Tenant any portions of insurance proceeds or Awards received by Landlord or the Successor Landlord required to be paid to Tenant pursuant to the terms of this Agreement, and, as a condition to any mortgage, lien or lease in respect of the Leased Property, or any portion thereof, and the subordination of this Agreement thereto, the mortgagee, lienholder or lessor, as applicable, shall expressly agree, for the benefit of Tenant, to make such payments, which agreement shall be embodied in an instrument in form reasonably satisfactory to Tenant.

     22.3 Notice to Mortgagee and Superior Landlord. Subsequent to the receipt by Tenant of Notice from Landlord as to the identity of any Facility Mortgagee or Superior Landlord under a lease with Landlord, as ground lessee, which includes the Leased Property or any portion thereof as part of the demised premises and which complies with Section 22.1 (which Notice shall be accompanied by a copy of the applicable mortgage or lease), no Notice from Tenant to Landlord as to a default by Landlord under this Agreement shall be effective with respect to a Facility Mortgagee or Superior Landlord unless and until a copy of the same is given to such Facility Mortgagee or Superior Landlord at the address set forth in the above described Notice, and the curing of any of Landlord’s defaults within the applicable notice and cure periods set forth in Article 14 by such Facility Mortgagee or Superior Landlord shall be treated as performance by Landlord.

ARTICLE 23

ADDITIONAL COVENANTS OF TENANT

     23.1 Prompt Payment of Indebtedness. Tenant shall pay or cause to be paid when due all lawful claims for labor and rents with respect to the Leased Property.

     23.2 Conduct of Business. Tenant shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect and in good standing its corporate existence and its rights and licenses necessary to conduct its business at the Leased Property.

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     23.3 Maintenance of Accounts and Records. Tenant shall keep true and accurate records and books of account of Tenant in relation to the business and financial affairs of Tenant with respect to the Leased Property in accordance with GAAP. Tenant shall apply accounting principles in the preparation of the financial statements of Tenant which, in the judgment of and the opinion of its independent public accountants, are in accordance with GAAP, where applicable, except for changes approved by such independent public accountants. Tenant shall permit Landlord by its agents, accountants and attorneys to visit and inspect the Leased Property and examine (and make copies of) at Tenant’s main offices the records and books of account and to discuss the finances and business with the officers of Tenant, at such reasonable times as may be requested by Landlord, upon not less than ten (10) days’ prior notice to Tenant. Upon the request of Landlord (either telephonically or in writing), Tenant shall provide Landlord within ten (10) days’ of such request with copies of any information to which Landlord would be entitled in the course of a personal visit.

     23.4 Notice of Litigation, Etc. Tenant shall give prompt Notice to Landlord of any litigation or any administrative proceeding to which it may hereafter become a party of which Tenant has notice or actual knowledge relating to the Leased Property.

     23.5 Liens and Encumbrances. Except as permitted by Section 7.1, Tenant shall not create or incur or suffer to be created or incurred or to exist any Lien on this Agreement or the Leased Property, other than the Permitted Encumbrances.

ARTICLE 24

MISCELLANEOUS

     24.1 Limitation on Payment of Rent. All agreements between Landlord and Tenant herein are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the Rent or any other amounts payable to Landlord under this Agreement exceed the maximum permissible under applicable law, the benefit of which may be asserted by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment of any provision of this Agreement, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, or if from any circumstances Landlord should ever

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receive as fulfillment of such provision such an excessive amount, then, ipso facto, the amount which would be excessive shall be applied to the reduction of the installment(s) of Minimum Rent next due and not to the payment of such excessive amount. This provision shall control every other provision of this Agreement and any other agreements between Landlord and Tenant.

     24.2 No Waiver. No failure by Landlord or Tenant to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof, and no acceptance of full or partial payment of Rent during the continuance of any such breach, shall constitute a waiver of any such breach or of any such term. To the maximum extent permitted by law, no waiver of any breach shall affect or alter this Agreement, which shall continue in full force and effect with respect to any other then existing or subsequent breach.

     24.3 Remedies Cumulative. To the maximum extent permitted by law, each legal, equitable or contractual right, power and remedy of Landlord or Tenant, now or hereafter provided either in this Agreement or by statute or otherwise, shall be cumulative and concurrent and shall be in addition to every other right, power and remedy and the exercise or beginning of the exercise by Landlord or Tenant (as applicable) of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Landlord of any or all of such other rights, powers and remedies.

     24.4 Severability. Any clause, sentence, paragraph, section or provision of this Agreement held by a court of competent jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate or nullify the remainder of this Agreement, but rather the effect thereof shall be confined to the clause, sentence, paragraph, section or provision so held to be invalid, illegal or ineffective, and this Agreement shall be construed as if such invalid, illegal or ineffective provisions had never been contained therein.

     24.5 Acceptance of Surrender. No surrender to Landlord of this Agreement or of the Leased Property or any part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Landlord and no act by Landlord or any representative or agent of Landlord, other than such a written acceptance by Landlord, shall constitute an acceptance of any such surrender.

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     24.6 No Merger of Title. It is expressly acknowledged and agreed that it is the intent of the parties that there shall be no merger of this Agreement or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly this Agreement or the leasehold estate created hereby and the fee estate or ground landlord’s interest in the Leased Property.

     24.7 Conveyance by Landlord. If Landlord or any successor owner of all or any portion of the Leased Property shall convey all or any portion of the Leased Property in accordance with the terms hereof other than as security for a debt, and the grantee or transferee of such of the Leased Property shall expressly assume all obligations of Landlord hereunder arising or accruing from and after the date of such conveyance or transfer, Landlord or such successor owner, as the case may be, shall thereupon be released from all future liabilities and obligations of Landlord under this Agreement with respect to such of the Leased Property arising or accruing from and after the date of such conveyance or other transfer and all such future liabilities and obligations shall thereupon be binding upon the new owner.

     24.8 Quiet Enjoyment. Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for the Term, free of hindrance or molestation by Landlord or anyone claiming by, through or under Landlord, but subject to (a) any Encumbrance permitted under Article 22 or otherwise permitted to be created by Landlord hereunder, (b) all Permitted Encumbrances set forth on Schedule B to the applicable owner’s title insurance policy issued Landlord with respect to such Property or otherwise permitted under this Agreement, (c) liens as to obligations of Landlord that are either not yet due or which are being contested in good faith and by proper proceedings, provided the same do not materially interfere with Tenant’s ability to operate any Fitness Center and (d) liens that have been consented to in writing by Tenant. Except as otherwise provided in this Agreement, no failure by Landlord to comply with the foregoing covenant shall give Tenant any right to cancel or terminate this Agreement or abate, reduce or make a deduction from or offset against the Rent or any other sum payable under this Agreement, or to fail to perform any other obligation of Tenant hereunder.

     24.9 No Recordation. Neither Landlord nor Tenant shall record this Agreement. Landlord and Tenant agree to execute, acknowledge and deliver, at the time of execution hereof, a

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memorandum of this Agreement, and any supplement hereto or thereto, to be recorded in such manner and in such places as may be reasonably required by the other.

     24.10 Notices.

     (a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).

     (b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

     (c) All such notices shall be addressed,

     if to Landlord:

c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
Telecopier No. (617) 796-8349

     with a copy to:

Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attn: Nancy S. Grodberg, Esq.
Telecopier No. (617) 338-2880

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     if to Tenant to:

LTF Real Estate Company, Inc.
2902 Corporate Place
Chanhassen, Minnesota 55317
Attn: General Counsel
Telecopier No. (952) 947-0099

     (d) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

     24.11 Construction. Anything contained in this Agreement to the contrary notwithstanding, all claims against, and liabilities of, Tenant or Landlord arising prior to any date of termination or expiration of this Agreement with respect to the Leased Property shall survive such termination or expiration. In no event shall Landlord be liable for any consequential damages suffered by Tenant as the result of a breach of this Agreement by Landlord. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the party to be charged. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Each term or provision of this Agreement to be performed by Tenant shall be construed as an independent covenant and condition. Time is of the essence with respect to the provisions of this Agreement. Except as otherwise set forth in this Agreement, any obligations of Tenant (including without limitation, any monetary, repair and indemnification obligations) and Landlord shall survive the expiration or sooner termination of this Agreement. Tenant hereby acknowledges that the agreement between Landlord and Tenant to treat this Agreement as a single lease in all respects was and is of primary importance, and a material inducement, to Landlord to enter into this Agreement. Without limiting the generality of the foregoing, the parties hereto acknowledge that this Agreement constitutes a single lease of the Leased Property and is not divisible notwithstanding any references herein to any

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individual Property and notwithstanding the possibility that certain individual Properties may be deleted herefrom pursuant to the express provisions of this Agreement.

     24.12 Counterparts; Headings. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but which, when taken together, shall constitute but one instrument and shall become effective as of the date hereof when copies hereof, which, when taken together, bear the signatures of each of the parties hereto shall have been signed. Headings in this Agreement are for purposes of reference only and shall not limit or affect the meaning of the provisions hereof.

     24.13 Applicable Law, Etc. This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (i) where this Agreement is executed or delivered; or (ii) where any payment or other performance required by this Agreement is made or required to be made; or (iii) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than Massachusetts; or (vii) any combination of the foregoing. Notwithstanding the foregoing, the laws of the State shall apply to the perfection and priority of liens upon and the disposition of any Property.

     To the maximum extent permitted by applicable law, any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement may be brought and prosecuted in such court or courts located in The Commonwealth of Massachusetts and to service of process by registered mail, return receipt requested, or by any other manner provided by law.

     24.14 Right to Make Agreement. Each party warrants, with respect to itself, that neither the execution of this Agreement, nor the consummation of any transaction contemplated hereby, shall violate any provision of any law, or any judgment, writ, injunction, order or decree of any court or governmental

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authority having jurisdiction over it; nor result in or constitute a breach or default under any indenture, contract, other commitment or restriction to which it is a party or by which it is bound; nor require any consent, vote or approval which has not been given or taken, or at the time of the transaction involved shall not have been given or taken. Each party covenants that it has and will continue to have throughout the term of this Agreement and any extensions thereof, the full right to enter into this Agreement and perform its obligations hereunder.

     24.15 Attorneys’ Fees. If any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, the prevailing party therein shall be entitled to receive from the other party the prevailing party’s costs and expenses, including reasonable attorneys’ fees incurred in connection therewith, in preparation therefor and on appeal therefrom, which amounts shall be included in any judgment therein.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed instrument as of the date above first written.

LANDLORD: SNH LTF PROPERTIES LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
TENANT: LTF REAL ESTATE COMPANY, INC.
By:
	Its:

     IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed instrument as of the date above first written.

LANDLORD: SNH LTF PROPERTIES LLC
By:
	David J. Hegarty
	President
TENANT: LTF REAL ESTATE COMPANY, INC.
By:	/s/ Eric J. Buss
	Its:

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EXHIBITS A-1 through A-4

Land

[See attached copies.

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Exhibit A-l

Legal Description of Alpharetta, Georgia Property

All That Tract or Parcel of Land lying and being in Land Lot 1189 and 1260, 2nd District, 2nd Section, the City of Alpharetta, Fulton County, Georgia, being more particularly described as follows:

To Find The True Point of Beginning commence at the point of intersection of the West right-of-way of North Point Parkway, having a varying right-of-way and a chamfer to Tradewinds Parkway, and The True Point of Beginning. Thence, southwesterly, along said chamfer, South 43 degrees 48 minutes 19 seconds West, a distance of 30.77 feet to a point, said point being located on the North right-of-way of Tradewinds Parkway, having a varying right-of-way; thence, northwesterly, along said right-of-way, North 89 degrees 58 minutes 03 seconds West, a distance of 27.96 feet to a point; thence, South 86 degrees 59 minutes 20 seconds West, a distance of 182.62 feet to a point; thence, along an arc of curve to the right (which has a radius of 470.00 feet, a central angle of 28 degrees 31 minutes 50 seconds and a chord distance of 231.63 feet, along a bearing of North 78 degrees 44 minutes 45 seconds West), an arc distance of 234.04 feet to a point; thence, North 64 degrees 28 minutes 50 seconds West, a distance of 150.27 feet to a point; thence, along an arc of curve to the left (which has a radius of 547.50 feet, a central angle of 13 degrees 21 minutes 28 seconds and a chord distance of 127.35 feet, along a bearing of North 71 degrees 09 minutes 34 seconds West), an arc distance of 127.64 feet to a point; thence, North 77 degrees 50 minutes 18 seconds West, a distance of 55.22 feet to a point, said point being the beginning of a chamfer; thence, leaving said Tradewinds Parkway right-of-way, northwesterly, along said chamfer, North 34 degrees 40 minutes 03 seconds West, a distance of 29.17 feet to a point, said point being the intersection of said chamfer and the Southeast right-of-way of Morris Road, having a varying right-of-way; thence, northeasterly, along said Morris Road right-of-way, along an arc of curve to the right (which has a radius of 965.00 feet, a central angle of 17 degrees 49 minutes 56 seconds and a chord distance of 299.13 feet, along a bearing of North 17 degrees 58 minutes 20 seconds East), an arc distance of 300.34 feet to a point; thence, along an arc of curve to the right (which has a radius of 1,330.00 feet, a central angle of 14 degrees 47 minutes 15 seconds and a chord distance of 342.31 feet, along a bearing of North 34 degrees 16 minutes 56 seconds East), an arc

distance of 343.26 feet to a point; thence, along an arc of curve to the right (which has a radius of 930.00 feet, a central angle of 06 degrees 52 minutes 25 seconds and a chord distance of 111.50 feet, along a bearing of North 45 degrees 06 minutes 47 seconds East), an arc distance of 111.57 feet to a point; thence, North 57 degrees 55 minutes 19 seconds East, a distance of 179.02 feet to a point; thence, along an arc of curve to the right (which has a radius of 918.00 feet, a central angle of 01 degrees 21 minutes 59 seconds and a chord distance of 21.89 feet, along a bearing of North 60 degrees 19 minutes 35 seconds East), an arc distance of 21.89 feet to a point; thence, North 61 degrees 00 minutes 35 seconds East, a distance of 26.18 feet to a point, said point being the beginning of a chamfer; thence, leaving said Morris Road right-of-way, southeasterly, along said chamfer, South 73 degrees 59 minutes 25 seconds East, a distance of 28.28 feet to an iron pin found, said iron pin being located on the Northwest right-of-way of the Old Morris Road, having a 60 foot right-of-way; thence, southeasterly, along said Old Morris Road right-of-way, South 28 degrees 59 minutes 25 seconds East, a distance of 2.74 feet to a point; thence, along an arc of curve to the right (which has a radius of 1,801.12 feet, a central angle of 09 degrees 09 minutes 47 seconds and a chord distance of 287.74 feet, along a bearing of South 24 degrees 24 minutes 32 seconds East), an arc distance of 288.05 feet to an iron pin found; thence, along an arc of curve to the left (which has a radius of 252.11 feet, a central angle of 36 degrees 33 minutes 54 seconds and a chord distance of 158.17 feet, along a bearing of South 44 degrees 13 minutes 30 seconds East), an arc distance of 160.89 feet to an iron pin found; thence, South 62 degrees 30 minutes 26 seconds East, a distance of 20.00 feet to an iron pin found, said iron pin being located at the beginning of a chamfer; thence, leaving said Old Morris Road right-of-way, southeasterly, along said chamfer, South 41 degrees 24 minutes 56 seconds East, a distance of 20.00 feet to an iron pin found, said iron pin being located at the intersection of said chamfer and the Northwest right-of-way of North Point Parkway, having a varying right-of-way; thence, southwesterly, along said North Point Parkway right-of-way, along an arc of curve to the left (which has a radius of 686.62 feet, a central angle of 27 degrees 10 minutes 46 seconds and a chord distance of 322.67 feet, along a bearing of South 10 degrees 33 minutes 40 seconds West), an arc distance of 325.71 feet to an iron pin set; thence, South 86 degrees 58 minutes 17 seconds West, a distance of 10.00 feet to an iron pin set; thence, South 02 degrees 27 minutes 41 seconds East, a distance of 192.30 feet to a point, and The True Point of Beginning.

Exhibit A-2

Legal Description of Romeoville, Illinois Property

Lot 1 in Final Plat of Resubdivision of Lot 3 in Windham Lakes 22nd Resubdivision, being a Resubdivision in Windham Lakes Resubdivision No. 22 Document No. R2005-55441, being a Resubdivision of Lot 12 in Windham Lakes Resubdivision Number 3, a Subdivision of part of the West Half of Section 29, Township 37 North, Range 10 East of the Third Principal Meridian, according to the Plat thereof recorded April 17, 2001 as Document No. R2001-43185, in Will County, Illinois.

Exhibit A-3

Legal Description of Allen, Texas Property

Being 12.941 acre tract of land situated in the Francis Dosser Survey, Abstract Number 280, Collin County, Texas, in the City of Allen, being a portion of the tract of land described as Tract B in the deed to Blue Star Allen, L.P. recorded in Volume 5638, Page 5196, Deed Records of Collin County, Texas, a portion of the tract of land described as Tract A in the Deed to Blue Star Allen Land, L.P. recorded in Volume 5638, Page 5127, Deed Records of Collin County, Texas, and also being all of Lot 1, Block A, StarCreek Commercial an Addition to the City of Allen as recorded in Cabinet Q, Page 511, Plat Records of Collin County, Texas; said 12.941 acre tract of land being more particularly described as follows:

Beginning at a 1/4 inch iron rod found in the easterly line of the tract of land described in the Deed to Wines Family Irrevocable Trust recorded in Volume 2774, Page 647, Deed Records of Collin County, Texas, near the approximate centerline of County Road Number 150 (an undefined width right-of-way) for the southwesterly corner of said Tract B; Thence with the easterly line of said Wines Family Irrevocable Trust Tract and the approximate centerline of County Road Number 150, North 00 degrees 30 minutes 41 seconds West at a distance of 258.24 feet passing a 1/2 inch iron rod with a cap stamped “DAA” found for the common westerly corner of said Tract B and said Tract A, in all a total distance of 671.18 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence departing the easterly line of said Wines Family Irrevocable Trust Tract, North 64 degrees 36 minutes 21 seconds East a distance of 644.45 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 80 degrees 23 minutes 39 seconds East a distance of 148.19 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence North 64 degrees 36 minutes 21 seconds East a distance of 60.02 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 25 degrees 23 minutes 39 seconds East a distance of 123.43 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 23 degrees 17 minutes 34 seconds East a distance of 150.00 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 25 degrees 23 minutes 39 seconds East a distance of 21.21 feet passing the common line of said Tract A and said Tract B, in all

a total distance of 200.00 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 19 degrees 36 minutes 21 seconds West a distance of 35.36 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 64 degrees 36 minutes 21 seconds West a distance of 200.00 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 60 degrees 47 minutes 00 seconds West a distance of 150.00 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner; Thence South 64 degrees 36 minutes 21 seconds West a distance of 293.85 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for the point of curvature of a curve to the left having a radius of 1,560.00 feet; Thence southwesterly along said curve through a central angle of 13 degrees 43 minutes 09 seconds an arc distance of 373.53 feet with a chord bearing of South 57 degrees 44 minutes 47 seconds West and a chord distance of 372.64 feet to a 5/8 inch iron rod with a cap stamped “Dunaway Assoc, Inc.” set for corner in the northerly line of the tract of land described in the Deed to Bryan Bush recorded in Volume 1598, Page 373, Deed Records of Collin County, Texas, also being the southerly line of the aforementioned Tract B; Thence with the common line of said Tract B and said Bush Tract, South 88 degrees 51 minutes 41 seconds West a distance of 70.51 feet to the point of beginning; Containing a computed area of 12.941 acres (563,705 square feet) of land.

Exhibit A-4

Legal Description of Omaha, Nebraska Property

Lot 2, Legacy Replat 12, a subdivision in Douglas County, Nebraska.

EX-10.3

Exhibit 10.3

GUARANTY AGREEMENT

     THIS GUARANTY AGREEMENT (this “Agreement”) is made and given as of August 21, 2008, by LIFE TIME FITNESS, INC., a Minnesota corporation (the “Guarantor”), for the benefit of SNH LTF PROPERTIES LLC, a Maryland limited liability company, (together with its successors and assigns, the “Landlord”).

WITNESSETH:

     WHEREAS, pursuant to a Lease Agreement, dated as of the date hereof (the “Lease”), the Landlord has agreed to lease to LTF Real Estate Company, Inc., a Minnesota corporation and an indirect wholly owned subsidiary of the Guarantor (the “Tenant”), and the Tenant has agreed to lease from the Landlord, certain real and personal property, together with certain related improvements, as more particularly described in the Lease; and

     WHEREAS, it is a condition precedent to the Landlord’s entering into the Lease that the Guarantor guarantee all of the payment and performance obligations of the Tenant with respect to the Lease; and

     WHEREAS, the transactions contemplated by the Lease are of direct material benefit to the Guarantor;

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the Guarantor hereby agrees as follows:

     1. Certain Terms. Capitalized terms used and not otherwise defined in this Agreement shall have the meanings ascribed to such terms in the Lease.

     2. Guaranteed Obligations. For purposes of this Agreement, the term “Guaranteed Obligations” shall mean the payment and performance of each and every obligation of the Tenant to the Landlord under the Lease or relating thereto, whether now existing or hereafter arising, and including, without limitation, the payment of the full amount of the Rent payable under the Lease.

     3. Representations and Covenants. The Guarantor hereby represents, warrants, covenants, and agrees that:

     3.1 Incorporation of Representations and Warranties. The representations and warranties of the Tenant and its Affiliated Persons set forth in the Lease and the Purchase Agreement of even date herewith among the Guarantor, the Landlord and the Tenant are true and correct on and as of the date hereof in all material respects.

     3.2 Performance of Covenants and Agreements. The Guarantor hereby agrees to take all lawful action in its power to cause the Tenant duly and punctually to perform all of the covenants and agreements set forth in the Lease.

     3.3 Validity of Agreement. The Guarantor has duly and validly executed and delivered this Agreement; this Agreement constitutes the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, except as the enforceability thereof may be subject to bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and subject to general equitable principles, regardless of whether enforceability is considered in a proceeding at law or in equity, and law of general applicability in the jurisdictions where the Leased Property is located and the Commonwealth of Massachusetts; and the execution, delivery and performance of this Agreement has been duly authorized by all requisite action of each of the Guarantor and such execution, delivery and performance by the Guarantor will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets of the Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust, note, other evidence of indebtedness, agreement or other instrument to which it may be a party or by which it or any of its property or assets may be bound, or violate any provision of law, or any applicable order, writ, injunction, judgment or decree of any court or any order or other public regulation of any governmental commission, bureau or administrative agency.

     3.4 Payment of Expenses. The Guarantor agrees, as principal obligor and not as guarantor only, to pay to the Landlord forthwith, upon demand, in immediately available federal funds, all costs and expenses (including reasonable attorneys’ fees and disbursements) incurred or expended by the Landlord in connection with the enforcement of this Agreement, together with interest on amounts recoverable under this Agreement from the time such amounts become due until payment at the Overdue Rate. The Guarantor’s covenants and agreements set

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forth in this Section 3.4 shall survive the termination of this Agreement.

     3.8 Legal Existence of Guarantor. The Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence.

     3.9 Compliance. The Guarantor shall use reasonable efforts to comply in all material respects with all applicable statutes, rules, regulations and orders of, and all applicable restrictions imposed by, all governmental authorities in respect of the conduct of its business and the ownership of its property (including, without limitation, applicable statutes, rules, regulations, orders and restrictions relating to environmental, safety and other similar standards or controls).

     3.10 Insurance. The Guarantor shall maintain, with financially sound and reputable insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by owners of established reputation engaged in the same or similar businesses and similarly situated, in such amounts and by such methods as shall be customary for such owners and deemed adequate by the Guarantor.

     3.11 Financial Statements, Etc. The financial statements previously delivered fairly present the financial condition of the Guarantor in accordance with generally accepted accounting principles consistently applied and there has been no material adverse change from the date thereof through the date hereof.

     3.12 No Change in Control. Except as otherwise expressly permitted pursuant to the terms of the Lease, the Guarantor shall not permit the occurrence of any direct or indirect Change in Control of the Tenant or the Guarantor.

     3.13 Financial Condition of Guarantor. The Guarantor shall at all times maintain a Tangible Net Worth in excess of Two Hundred Million Dollars ($200,000,000) and shall, from time to time, upon Landlord’s request (but no less frequently than quarterly), provide an Officer’s Certificate with respect thereto, which shall, inter alia, set forth the calculation thereof and otherwise be in form and substance reasonably satisfactory to Landlord.

     4. Guarantee. The Guarantor hereby unconditionally guarantees that the Guaranteed Obligations which are monetary obligations shall be paid in full when due and payable, whether

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upon demand, at the stated or accelerated maturity thereof pursuant to the Lease, or otherwise, and that the Guaranteed Obligations which are performance obligations shall be fully performed at the times and in the manner such performance is required by the Lease. With respect to the Guaranteed Obligations which are monetary obligations, this guarantee is a guarantee of payment and not of collectibility and is absolute and in no way conditional or contingent. In case any part of the Guaranteed Obligations shall not have been paid when due and payable or performed at the time performance is required, the Guarantor shall, within five (5) Business Days after receipt of notice from the Landlord, pay or cause to be paid to the Landlord the amount thereof as is then due and payable and unpaid (including interest and other charges, if any, due thereon through the date of payment in accordance with the applicable provisions of the Lease) or perform or cause to be performed such obligations in accordance with the Lease.

     5. Set-Off. The Guarantor hereby authorizes the Landlord, at any time and without notice to set off the whole or any portion or portions of any or all sums credited by or due from the Landlord to it against amounts payable under this Agreement. The Landlord shall promptly notify the Guarantor of any such set-off made by the Landlord and the application made by the Landlord of the proceeds thereof.

     6. Unenforceability of Guaranteed Obligations, Etc. If the Tenant is for any reason under no legal obligation to discharge any of the Guaranteed Obligations (other than because the same have been previously discharged in accordance with the terms of the Lease), or if any other moneys included in the Guaranteed Obligations have become unrecoverable from the Tenant by operation of law or for any other reason, including, without limitation, the invalidity or irregularity in whole or in part of any Guaranteed Obligation or of the Lease or any limitation on the liability of the Tenant thereunder not contemplated by the Lease or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever, the guarantees contained in this Agreement shall nevertheless remain in full force and effect and shall be binding upon the Guarantor to the same extent as if the Guarantor at all times had been the principal debtor on all such Guaranteed Obligations.

     7. Additional Guarantees. This Agreement shall be in addition to any other guarantee or other security for the Guaranteed Obligations and it shall not be prejudiced or rendered unenforceable by the invalidity of any such other

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guarantee or security or by any waiver, amendment, release or modification thereof.

     8. Consents and Waivers, Etc. The Guarantor hereby acknowledges receipt of a correct and complete copies of the Lease and any and all agreements, documents and other instruments directly or indirectly relating thereto, and consents to all of the terms and provisions thereof, as the same may be from time to time hereafter amended or changed in accordance with the terms and conditions thereof, and, except as otherwise provided herein, to the maximum extent permitted by applicable law, waives (a) presentment, demand for payment, and protest of nonpayment, of any principal of or interest on any of the Guaranteed Obligations, (b) notice of acceptance of this Agreement and of diligence, presentment, demand and protest, (c) notice of any default hereunder and any default, breach or nonperformance or Event of Default under any of the Guaranteed Obligations or the Lease, (d) notice of the terms, time and place of any private or public sale of any collateral held as security for the Guaranteed Obligations, (e) demand for performance or observance of, and any enforcement of any provision of, or any pursuit or exhaustion of rights or remedies against the Tenant or any other guarantor of the Guaranteed Obligations, under or pursuant to the Lease, or any agreement directly or indirectly relating thereto and any requirements of diligence or promptness on the part of the holders of the Guaranteed Obligations in connection therewith, and (f) to the extent it lawfully may do so, any and all demands and notices of every kind and description with respect to the foregoing or which may be required to be given by any statute or rule of law and any defense of any kind which it may now or hereafter have with respect to this Agreement, or the Lease or the Guaranteed Obligations (other than that the same have been discharged in accordance with the terms of the Lease).

     9. No Impairment, Etc. The obligations, covenants, agreements and duties of the Guarantor under this Agreement shall not be affected or impaired by any assignment or transfer in whole or in part of any of the Guaranteed Obligations without notice to the Guarantor, or any waiver by the Landlord or any holder of any of the Guaranteed Obligations or by the holders of all of the Guaranteed Obligations of the performance or observance by the Tenant or any other guarantor of any of the agreements, covenants, terms or conditions contained in the Guaranteed Obligations or the Lease or any indulgence in or the extension of the time for payment by the Tenant or any other guarantor of any amounts payable under or in connection with the Guaranteed Obligations or the Lease or any other instrument or

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agreement relating to the Guaranteed Obligations or of the time for performance by the Tenant or any other guarantor of any other obligations under or arising out of any of the foregoing or the extension or renewal thereof (except that with respect to any extension of time for payment or performance of any of the Guaranteed Obligations granted by the Landlord or any other holder of such Guaranteed Obligations to the Tenant, the Guarantor’s obligations to pay or perform such Guaranteed Obligation shall be subject to the same extension of time for performance), or the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of the Tenant or any other guarantor set forth in any of the foregoing, or the voluntary or involuntary sale or other disposition of all or substantially all the assets of the Tenant or any other guarantor or insolvency, bankruptcy, or other similar proceedings affecting the Tenant or any other guarantor or any assets of the Tenant or any such other guarantor, or the release or discharge of the Tenant or any such other guarantor from the performance or observance of any agreement, covenant, term or condition contained in any of the foregoing without the consent of the holders of the Guaranteed Obligations by operation of law, or any other cause, whether similar or dissimilar to the foregoing.

     10. Reimbursement, Subrogation, Etc. The Guarantor hereby covenants and agrees that it will not enforce or otherwise exercise any rights of reimbursement, subrogation, contribution or other similar rights against the Tenant (or any other person against whom the Landlord may proceed) with respect to the Guaranteed Obligations prior to the payment in full of all amounts owing with respect to the Lease, and until all indebtedness of the Tenant to the Landlord shall have been paid in full, the Guarantor shall not have any right of subrogation, and the Guarantor waives any defense it may have based upon any election of remedies by the Landlord which destroys its subrogation rights or its rights to proceed against the Tenant for reimbursement, including, without limitation, any loss of rights the Guarantor may suffer by reason of any rights, powers or remedies of the Tenant in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the indebtedness to the Landlord. Until all obligations of the Tenant pursuant to the Lease shall have been paid and satisfied in full, the Guarantor further waives any right to enforce any remedy which the Landlord now has or may in the future have against the Tenant, any other guarantor or any other person and any benefit of, or any right to participate in, any security whatsoever now or in the future held by the Landlord.

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     11. Defeasance. This Agreement shall terminate at such time as the Guaranteed Obligations have been paid and performed in full and all other obligations of the Guarantor to the Landlord under this Agreement have been satisfied in full; provided, however, if at any time, all or any part of any payment applied on account of the Guaranteed Obligations is or must be rescinded or returned for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Tenant), this Agreement, to the extent such payment is or must be rescinded or returned, shall be deemed to have continued in existence notwithstanding any such termination.

     12. Notices. (a) Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Agreement shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).

     (b) All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Agreement upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Agreement a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

     (c) All such notices shall be addressed,

     if to the Landlord to:

     c/o Senior Housing Properties Trust
     400 Centre Street
     Newton, Massachusetts 02458
     Attn: Mr. David J. Hegarty
     [Telecopier No. (617) 796-8349]

     if to the Guarantor to:

     Life Time Fitness, Inc.
     2902 Corporate Place
     Chanhassen, Minnesota 55317

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     Attn: General Counsel
     [Telecopier No. (952) 947-0099]

     (d) By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

     13. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, including without limitation the holders, from time to time, of the Guaranteed Obligations; and all representations, warranties, covenants and agreements by or on behalf of each of the Guarantor which are contained in this Agreement shall inure to the benefit of the Landlord’s successors and assigns, including without limitation said holders, whether so expressed or not.

     14. Applicable Law. This Agreement, the Lease and any other instruments executed and delivered to evidence, complete or perfect the transactions contemplated hereby and thereby shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (i) where any such instrument is executed or delivered; or (ii) where any payment or other performance required by any such instrument is made or required to be made; or (iii) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; or (iv) where any action or other proceeding is instituted or pending; or (v) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (vi) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (vii) any combination of the foregoing.

     To the maximum extent permitted by applicable law, any action to enforce, arising out of, or relating in any way to, any of the provisions of this Agreement may be brought and prosecuted in such court or courts located in The Commonwealth of Massachusetts and to service of process by registered mail, return receipt requested, or by any other manner provided by law.

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     NOTWITHSTANDING ANY TERM OR PROVISION OF THIS AGREEMENT TO THE CONTRARY, EACH OF LANDLORD AND GUARANTOR HEREBY ABSOLUTELY, IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LITIGATION, CLAIM, ACTION, SUIT OR PROCEEDING, AT LAW OR IN EQUITY, ARISING OUT OF, PERTAINING TO OR IN ANY WAY ASSOCIATED WITH THIS AGREEMENT OR THE COVENANTS, UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES SET FORTH HEREIN OR THE RELATIONSHIPS OF THE PARTIES HERETO.

     16. Modification of Agreement. No modification or waiver of any provision of this Agreement, nor any consent to any departure by the Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Landlord, and such modification, waiver or consent shall be effective only in the specific instances and for the purpose for which given. No notice to or demand on the Guarantor in any case shall entitle the Guarantor to any other or further notice or demand in the same, similar or other circumstances. This Agreement may not be amended except by an instrument in writing executed by or on behalf of the party against whom enforcement of such amendment is sought.

     17. Waiver of Rights by the Landlord. Neither any failure nor any delay on the Landlord’s part in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege.

     18. Severability. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, but this Agreement shall be reformed and construed and enforced to the maximum extent permitted by applicable law.

     19. Entire Contract. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.

     20. Headings; Counterparts. Headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this

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Agreement, it shall not be necessary to produce more than one of such counterparts.

     21. Remedies Cumulative. No remedy herein conferred upon the Landlord is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.

     22. NON-LIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING THE LANDLORD, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME “SNH ALT LEASED PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE LANDLORD SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF OR CLAIM AGAINST, THE LANDLORD. ALL PERSONS DEALING WITH THE LANDLORD, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE LANDLORD FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

[Remainder of page intentionally left blank.]

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     WITNESS the execution hereof under seal as of the date above first written.

LIFE TIME FITNESS, INC.,
a Minnesota corporation
 

/s/ Eric J. Buss  

Eric J. Buss 

Secretary 

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EX-10.4

Exhibit 10.4

EXECUTION COPY

LEASE AGREEMENT

by and between

LT FIT (AZ-MD) LLC,
a Delaware limited liability company

as LANDLORD

and

LTF REAL ESTATE COMPANY, INC.,
a Minnesota corporation,

as TENANT

Premises: Columbia, Maryland
                 Scottsdale, Arizona

Dated as of: September 26, 2008

TABLE OF CONTENTS

		Page
1.	Demise of Premises		1
2.	Certain Definitions		1
3.	Title and Condition; Single Lease Transaction		7
4.	Use of Leased Premises; Quiet Enjoyment		9
5.	Term		9
6.	Basic Rent		10
7.	Additional Rent		10
8.	Net Lease: Non-Terminability		11
9.	Payment of Impositions		12
10.	Compliance with Laws and Easement Agreements; Environmental Matters		13
11.	Liens; Recording		14
12.	Maintenance and Repair		15
13.	Alterations and Improvements		15
14.	Permitted Contests		16
15.	Indemnification		17
16.	Insurance		17
17.	Casualty and Condemnation		20
18.	Termination Events		21
19.	Restoration		23
20.	Procedures Upon Purchase		24
21.	Assignment and Subletting: Prohibition against Leasehold Financing		25
22.	Events of Default		28
23.	Remedies and Damages Upon Default		30
24.	Notices		33
25.	Estoppel Certificate		33
26.	Surrender		33
27.	No Merger of Title		34
28.	Books and Records		34
29.	Tenant’s Property		35
30.	Non-Recourse as to Landlord		36
31.	Financing		36
32.	Subordination, Non-Disturbance and Attornment		37

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		Page
33.	Tax Treatment; Reporting		37
34.	Right of First Offer		37
35.	State Specific Provisions		39
36.	Post-Closing Obligations		40
(i)	Estoppel Certificate by The Columbia Association, Inc., a Maryland Non-Profit Membership Corporation, regarding Deed, Agreement and Declaration of Covenants, Easements, Charges And Liens recorded in Liber 463, Folio 158, Howard County, Maryland; as amended by Agreement and Declaration of Annexation dated 12/1/04, recorded 2/22/05 in Liber 8998, Folio 239.		40
37.	Miscellaneous		41

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EXHIBITS
Exhibit “A”	- Premises
Exhibit “B”	- Machinery and Equipment
Exhibit “C”	- Schedule of Permitted Encumbrances
Exhibit “D”	- Rent Schedule
Exhibit “E”	- Termination Amounts
Exhibit “F”	- Premises Percentage Allocation of Basic Rent

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     LEASE AGREEMENT, made as of this                      day of September, 2008, between LT FIT (AZ-MD) LLC, a Delaware limited liability company (“Landlord”), with an address c/o W. P. Carey & Co. LLC, 50 Rockefeller Plaza, 2^nd Floor, New York, New York 10020, and LTF REAL ESTATE COMPANY, INC., a Minnesota corporation (“Tenant”) with an address c/o Life Time Fitness, Inc., 2902 Corporate Place, Chanhassen, MN 55317.

     In consideration of the rents and provisions herein stipulated to be paid and performed, Landlord and Tenant hereby covenant and agree as follows:

          1. Demise of Premises. Landlord hereby demises and lets to Tenant, and Tenant hereby takes and leases from Landlord, for the term and upon the provisions hereinafter specified, the following described property (hereinafter referred to collectively as the “Leased Premises” and individually as the “Scottsdale Premises” and “Columbia Premises”, each of which premises shall include the following item (a) and the following items (b) and (c) of this Paragraph 1 located thereon or therein and appertaining thereto: (a) the real property described in Exhibit “A” hereto, together with the Appurtenances (collectively, the “Land”); (b) the buildings containing approximately 220,338 square feet in the aggregate, structures and other improvements now or hereafter constructed on the Land (collectively, the “Improvements”); and (c) the fixtures, machinery, equipment and other property described in Exhibit “B” hereto (collectively, the “Equipment”).

          2. Certain Definitions.

               “Additional Rent” shall mean Additional Rent as defined in Paragraph 7.

               “Adjoining Property” shall mean all sidewalks, driveways, curbs, gores and vault spaces adjoining any of the Leased Premises that Landlord is obligated by contract or applicable Law to maintain and/or repair.

               “Affected Premises” shall mean the Affected Premises as defined in Paragraph 18.

               “Affiliate” of any Person shall mean any Person which shall (i) control, (ii) be under the control of, or (iii) be under common control with such Person (the term “control” as used herein shall be deemed to mean ownership of more than 50% of the outstanding voting stock of a corporation or other majority equity and control interest if such Person is not a corporation) and the power to direct or cause the direction of the management or policies of such Person.

               “Alterations” shall mean all changes, additions, improvements or repairs to, all alterations, reconstructions, restorations, renewals, replacements or removals of and all substitutions or replacements for any of the Improvements or Equipment, both interior and exterior, structural and non-structural, and ordinary and extraordinary.

               “Appurtenances” shall mean all tenements, hereditaments, easements, rights-of-way, rights, privileges in and to the Land, including (a) easements over other lands granted by any Easement Agreement and (b) any streets, ways, alleys, vaults, gores or strips of land adjoining the Land.

               “Asset Transfer” shall mean Asset Transfer as defined in Paragraph 21(j).

               “Assignment” shall mean any first lien assignment of rents and leases from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord’s obligation to repay a Loan, as the same may be amended, supplemented or modified from time to time.

               “Basic Rent” shall mean Basic Rent as defined in Paragraph 6.

               “Basic Rent Payment Date” shall mean Basic Rent Payment Date as defined in Paragraph 6.

               “Casualty” shall mean any loss of or damage to or destruction of or which affects the Leased Premises or Adjoining Property.

               “Commencement Date” shall mean Commencement Date as defined in Paragraph 5.

               “Condemnation” shall mean a Taking.

               “Condemnation Notice” shall mean notice or knowledge of the institution of or intention to institute any proceeding for Condemnation.

               “Costs” of a Person or associated with a specified transaction shall mean all reasonable out-of-pocket costs and expenses incurred by such Person or associated with such transaction, including without limitation, attorneys’ fees and expenses.

               “Default Rate” shall mean the Default Rate as defined in Paragraph 7(a)(iv).

               “Easement Agreement” shall mean any conditions, covenants, restrictions, easements, declarations, licenses and other agreements listed as Permitted Encumbrances or as may hereafter affect any Related Premises (other than any Mortgage, Assignment or other document or agreement relating to a Loan).

               “Environmental Law” shall mean (a) whenever enacted or promulgated, any applicable federal, state, foreign and local law, statute, ordinance, rule, regulation, license, permit, authorization, approval, consent, court order, judgment, decree, injunction, code, requirement or agreement with any governmental entity, (i) relating to pollution (or the cleanup thereof), or the protection of air, water vapor, surface water, groundwater, drinking water supply, land (including land surface or subsurface), plant, aquatic and animal life from injury caused by a Hazardous Substance or (ii) concerning exposure to, or the use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, handling, labeling, production, disposal or remediation of any Hazardous Substance, Hazardous Condition or Hazardous Activity, in each case as amended and as now or hereafter in effect, and (b) any common law or equitable doctrine (including, without limitation, injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to or threatened as a result of the presence of, exposure to, or ingestion of, any Hazardous Substance. The term Environmental Law includes, without limitation, the federal Comprehensive Environmental Response Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the federal Water Pollution Control Act, the federal Clean Air Act, the federal Clean Water Act, the federal Resources Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments to RCRA), the federal Solid Waste Disposal Act, the federal Toxic Substance Control Act, the federal Insecticide, Fungicide and Rodenticide Act, the federal Occupational Safety and Health Act of 1970, the federal National Environmental Policy Act and the federal Hazardous Materials

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Transportation Act, each as amended and as now or hereafter in effect and any similar state or local Law.

               “Environmental Violation” shall mean (a) any direct or indirect discharge, disposal, spillage, emission, escape, pumping, pouring, injection, leaching, release, seepage, filtration or transporting of any Hazardous Substance at, upon, under, onto or within any Related Premises, or from any Related Premises to the environment, in violation of any Environmental Law or in excess of any reportable quantity established under any Environmental Law or which could result in any liability to Landlord, Tenant or Lender, any Federal, state or local government or any other Person for the costs of any removal or remedial action or natural resources damage or for bodily injury or property damage, (b) any deposit, storage, dumping, placement or use of any Hazardous Substance at, upon, under or within any Related Premises or which extends to any Adjoining Property in violation of any Environmental Law or in excess of any reportable quantity established under any Environmental Law or which could result in any liability to any Federal, state or local government or to any other Person for the costs of any removal or remedial action or natural resources damage or for bodily injury or property damage, (c) the abandonment or discarding on or about any Related Premises of any barrels, containers or other receptacles containing any Hazardous Substances in violation of any Environmental Laws, (d) any activity, occurrence or condition which could result in any liability, cost or expense to Landlord or Lender, or which could result in a creation of a lien on any Related Premises under any Environmental Law or (e) any violation of or noncompliance with any Environmental Law.

               “Equipment” shall mean the Equipment as defined in Paragraph 1, but specifically excluding Tenant’s Property.

               “Event of Default” shall mean an Event of Default as defined in Paragraph 22(a).

               “Federal Funds” shall mean federal or other immediately available funds which at the time of payment are legal tender for the payment of public and private debts in the United States of America.

               “Guarantor” shall mean Life Time Fitness, Inc., a Minnesota corporation.

               “Guaranty” shall mean the Guaranty and Suretyship Agreement dated as of the date hereof from Guarantor to Landlord guaranteeing the payment and performance by Tenant of all of Tenant’s obligations under the Lease.

               “Hazardous Activity” means any activity, process, procedure or undertaking which directly or indirectly (a) procures, generates or creates any Hazardous Substance on or about any Related Premises; (b) causes or results in (or threatens to cause or result in) the release, seepage, spill, leak, flow, discharge or emission of any Hazardous Substance from any Related Premises into the environment (including the air, ground water, watercourses or water systems), (c) involves the containment or storage of any Hazardous Substance on or about any Related Premises; or (d) would cause any of the Leased Premises or any portion thereof to become a hazardous waste treatment, recycling, reclamation, processing, storage or disposal facility within the meaning of any Environmental Law.

               “Hazardous Condition” means any condition which would support any claim or liability under any Environmental Law, including the presence of underground storage tanks.

               “Hazardous Substance” means (i) any substance, material, product, petroleum, petroleum product, derivative, compound or mixture, mineral (including asbestos),

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chemical, gas, medical waste, or other pollutant, in each case whether naturally occurring, man-made or the by-product of any process, that is toxic, harmful or hazardous or acutely hazardous to the environment or public health or safety and regulated under applicable Environmental Law or (ii) any substance supporting a claim under any Environmental Law, whether or not defined as hazardous as such under any Environmental Law. Hazardous Substances include, without limitation, any toxic or hazardous waste, pollutant, contaminant, industrial waste, petroleum or petroleum-derived substances or waste, radon, radioactive materials, asbestos, asbestos containing materials, microbial matter (including but not limited to mold, mildew and other fungi or bacterial matter which reproduces through the release of spores or the splitting of cells), urea formaldehyde foam insulation, lead and polychlorinated biphenyls.

               “Impositions” shall mean the Impositions as defined in Paragraph 9(a).

               “Improvements” shall mean the Improvements as defined in Paragraph 1.

               “Indemnitee” shall mean an Indemnitee as defined in Paragraph 15.

               “Initial Term” shall mean Initial Term as defined in Paragraph 5(a).

               “Insurance Requirements” shall mean the requirements of all insurance policies maintained in accordance with this Lease.

               “Land” shall mean the Land as defined in Paragraph 1.

               “Law” shall mean any applicable constitution, statute, rule of law, code, ordinance, order, judgment, decree, injunction, rule, regulation, policy, requirement or administrative or judicial determination, even if unforeseen or extraordinary, of every duly constituted governmental authority, court or agency, now or hereafter enacted or in effect.

               “Lease” shall mean this Lease Agreement.

               “Lease Year” shall mean, with respect to the first Lease Year, the period commencing on the Commencement Date and ending at midnight on the last day of the twelfth (12^th) full consecutive calendar month following the month in which the Commencement Date occurred, and each succeeding twelve (12) month period during the Term.

               “Leased Premises” shall mean the Leased Premises as defined in Paragraph 1.

               “Legal Requirements” shall mean the requirements of all present and future Laws (including but not limited to Environmental Laws and Laws relating to accessibility to, usability by, and discrimination against, disabled individuals) and all Easement Agreements which may be applicable to Tenant or to any of the Leased Premises or any Related Premises, or to the use, manner of use, occupancy, possession, operation, maintenance, alteration, repair or restoration of any of the Leased Premises or any Related Premises, even if compliance therewith necessitates structural changes or improvements or results in interference with the use or enjoyment of any of the Leased Premises or any Related Premises or requires Tenant to carry insurance other than as required by this Lease.

               “Lender” shall mean any Person (and its respective successors and assigns) which may, on or after the date hereof, make a Loan to Landlord or be the holder of a Note.

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               “Loan” shall mean any first lien mortgage loan made by one or more Lenders to Landlord, which loan is secured by a Mortgage and an Assignment and evidenced by a Note.

               “Monetary Obligations” shall mean Rent and all other sums payable by Tenant under this Lease to Landlord, to any third party on behalf of Landlord or to any Indemnitee.

               “Moody’s” shall mean Moody’s Investor Services, Inc.

               “Mortgage” shall mean any first lien mortgage or deed of trust from Landlord to a Lender which (a) encumbers any of the Leased Premises and (b) secures Landlord’s obligation to repay a Loan, as the same may be amended, supplemented or modified.

               “Net Award” shall mean (a) the entire award payable to Landlord or Lender by reason of a Condemnation whether pursuant to a judgment or by agreement or otherwise, or (b) the entire proceeds of any insurance required under clauses (i) (except with respect to Tenant’s Property), (ii) (to the extent payable to Landlord or Lender), (iv) (except with respect to Tenant’s Property), (v) (to the extent of the Rent payable to or for the benefit of Landlord under this Lease) or (vi) of Paragraph 16(a), as the case may be, less any expenses incurred by Landlord and Lender in collecting such award or proceeds.

               “Note” shall mean any promissory note evidencing Landlord’s obligation to repay a Loan, as the same may be amended, supplemented or modified.

               “Partial Casualty” shall mean any Casualty which does not constitute a Termination Event.

               “Partial Condemnation” shall mean any Condemnation which does not constitute a Termination Event.

               “Permitted Encumbrances” shall mean those covenants, restrictions, reservations, liens, conditions and easements and other encumbrances, other than any Mortgage or Assignment or any other document or agreement relating to a Loan, listed on Exhibit “C” hereto (but such listing shall not be deemed to revive any such encumbrances that have expired or terminated or are otherwise invalid or unenforceable).

               “Person” shall mean an individual, partnership, association, corporation or other entity.

               “Premises Percentage Allocation” shall mean the percentage allocated to each Related Premises in Exhibit “F” to this Lease as the same may be adjusted in accordance with the formula specified in Exhibit “F”.

               “Prepayment Premium” shall mean any payment required to be made by Landlord to a Lender under a Note or other document evidencing or securing a Loan (other than payments of principal and/or interest which Landlord is required to make under a Note or a Mortgage) solely by reason of any prepayment or defeasance by Landlord of any principal due under a Note or Mortgage, and which may take the form of either: (i) a customary and commercially reasonable “make whole” or yield maintenance clause requiring a prepayment premium for loans from similar types of lenders to Lender or (ii) a customary and commercially reasonable defeasance payment for loans from similar types of lenders to Lender (such defeasance payment to be an amount equal to the positive difference between (a) the total amount required to defease a Loan and (b) the outstanding principal balance of the Loan as of the

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date of such defeasance (plus reasonable Costs of Landlord and Lender) or (iii) “breakage costs” or (iv) any combination of clauses (i), (ii) and (iii) above.

               “Present Value” of any amount shall mean such amount discounted by a rate of eight (8%) per annum.

               “Prime Rate” shall mean the interest rate per annum as published, from time to time, in The Wall Street Journal as the “Prime Rate” in its column entitled “Money Rate”. The Prime Rate may not be the lowest rate of interest charged by any “large U.S. money center commercial banks” and Landlord makes no representations or warranties to that effect. In the event The Wall Street Journal ceases publication or ceases to publish the “Prime Rate” as described above, the Prime Rate shall be the average per annum discount rate (the “Discount Rate”) on ninety-one (91) day bills (“Treasury Bills”) issued from time to time by the United States Treasury at its most recent auction, plus three hundred (300) basis points. If no such 91-day Treasury Bills are then being issued, the Discount Rate shall be the discount rate on Treasury Bills then being issued for the period of time closest to ninety-one (91) days.

               “Related Premises” shall mean any one of the Scottsdale Premises, and Columbia Premises.

               “Remaining Premises” shall mean the Related Premises which are not Affected Premises under Paragraph 18.

               “Renewal Term” shall mean Renewal Term as defined in Paragraph 5.

               “Rent” shall mean, collectively, Basic Rent and Additional Rent.

               “S&P” shall mean Standard and Poor’s Corporation.

               “Site Assessment” shall mean a Site Assessment as defined in Paragraph 10(c).

               “State” shall mean the State of Maryland.

               “Subsidiary(ies)” of a Person shall mean a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the shares of stock or other equity interests having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity.

               “Surviving Obligations” shall mean any obligations of Tenant under this Lease, actual or contingent, which arise on or prior to the expiration or prior termination of this Lease or which survive such expiration or termination by their own terms.

               “Taking” shall mean any taking or damaging of all or a portion of any of the Leased Premises (i) in or by condemnation or other eminent domain proceedings pursuant to any Law, general or special, or (ii) by reason of any agreement with any condemnor in settlement of or under threat of any such condemnation or other eminent domain proceeding. The Taking shall be considered to have taken place as of the later of the date actual physical possession is taken by the condemnor, or the date on which the right to compensation and damages accrues under the law applicable to the Related Premises.

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               “Tenant Group” shall mean Guarantor and its Subsidiaries if and for so long as each such Person shall be part of the group for the purpose of reporting financial positions and results on a consolidated basis.

               “Tenant’s Property” shall mean Tenant’s Property as defined in Paragraph 29.

               “Term” shall mean the Term as defined in Paragraph 5.

               “Termination Amount” shall mean (i) with respect to a Condemnation the applicable amount set forth in Exhibit “E” and (ii) with respect to a Casualty the applicable amount set forth in Exhibit “E” plus any Prepayment Premium which Landlord will be required to pay in prepaying or defeasing in whole or in part, as applicable, any Loan with proceeds of the Termination Amount.

               “Termination Date” shall mean the Termination Date as defined in Paragraph 18.

               “Termination Event” shall mean a Termination Event as defined in Paragraph 18.

               “Termination Notice” shall mean Termination Notice as defined in Paragraph 18(a).

               “Third Party Purchaser” shall mean the Third Party Purchaser as defined in Paragraph 21 (h).

               “Warranties” shall mean Warranties as defined in Paragraph 3(e).

               “Work” shall mean Work as defined in Paragraph 13(b).

          3. Title and Condition; Single Lease Transaction.

               (a) The Leased Premises are demised and let subject to (i) subject to Paragraph 32 the Mortgage and Assignment in effect as of the Commencement Date, (ii) the rights of any Persons in possession of the Leased Premises, (iii) the state of title of any of the Leased Premises as of the Commencement Date, including any Permitted Encumbrances, (iv) any state of facts which an accurate survey or physical inspection of the Leased Premises might show, (v) all Legal Requirements, including any existing violation of any thereof, and (vi) the condition of the Leased Premises as of the commencement of the Term, without representation or warranty by Landlord.

               (b) Tenant acknowledges that the Leased Premises are in good condition and repair at the inception of this Lease. LANDLORD LEASES AND WILL LEASE AND TENANT TAKES AND WILL TAKE THE LEASED PREMISES AS IS WHERE IS AND WITH ALL FAULTS. TENANT ACKNOWLEDGES THAT LANDLORD (WHETHER ACTING AS LANDLORD HEREUNDER OR IN ANY OTHER CAPACITY) 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 LEASED PREMISES, INCLUDING ANY WARRANTY OR REPRESENTATION AS TO (i) ITS FITNESS, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE, (ii) THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, (iii) THE EXISTENCE OF ANY DEFECT, LATENT OR PATENT, (iv) LANDLORD’S TITLE THERETO AS OF THE COMMENCEMENT DATE,

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(v) VALUE, (vi) COMPLIANCE WITH SPECIFICATIONS, (vii) LOCATION, (viii) USE, (ix) CONDITION, (x) MERCHANTABILITY, (xi) QUALITY, (xii) DESCRIPTION, (xiii) DURABILITY (xiv) OPERATION, (xv) THE EXISTENCE OF ANY HAZARDOUS SUBSTANCE, OR (xvi) COMPLIANCE OF THE LEASED PREMISES WITH ANY LAW OR LEGAL REQUIREMENT; AND ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY TENANT. TENANT ACKNOWLEDGES THAT THE LEASED PREMISES ARE OF ITS SELECTION AND TO ITS SPECIFICATIONS AND THAT THE LEASED PREMISES HAVE BEEN INSPECTED BY TENANT AND ARE SATISFACTORY TO IT. IN THE EVENT OF ANY DEFECT OR DEFICIENCY IN ANY OF THE LEASED PREMISES OF ANY NATURE, WHETHER LATENT OR PATENT, LANDLORD SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO OR FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING STRICT LIABILITY IN TORT). THE PROVISIONS OF THIS PARAGRAPH 3(b) HAVE BEEN NEGOTIATED, AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY WARRANTIES BY LANDLORD, EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE LEASED PREMISES, ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OR ANY OTHER LAW NOW OR HEREAFTER IN EFFECT OR ARISING OTHERWISE.

               (c) Tenant represents to Landlord that Tenant has examined the title to and condition of the Leased Premises as of the execution and delivery of this Lease and has found the same to be satisfactory for the purposes contemplated hereby. Tenant acknowledges that fee simple title (both legal and equitable) to the Leased Premises is in Landlord and that Tenant has only the leasehold right of possession and use of the Leased Premises, as provided herein.

               (d) Landlord hereby assigns to Tenant, without recourse or warranty whatsoever, in conjunction with Landlord, the right to enforce all assignable warranties, guaranties, indemnities, causes of action and similar rights (collectively “Warranties”) which Landlord may have against any manufacturer, seller, engineer, contractor or builder in respect of any of the Leased Premises. Such assignment shall remain in effect until the expiration or earlier termination of this Lease (unless Tenant or its affiliate or designee acquires any of the Leased Premises, in which instance such assignment shall become permanent and irrevocable with respect to such Leased Premises), whereupon such assignment shall cease and all of the Warranties shall automatically revert to Landlord. In confirmation of such reversion Tenant shall execute and deliver promptly any certificate or other document reasonably required by Landlord. Landlord shall also retain the right to enforce any Warranties upon the occurrence of an Event of Default.

               (e) LANDLORD AND TENANT AGREE THAT IT IS THEIR MUTUAL INTENT TO CREATE, AND THAT THIS LEASE CONSTITUTES, A SINGLE LEASE WITH RESPECT TO ALL PARCELS OF LAND AND IMPROVEMENTS (WHEREVER LOCATED) THAT THIS LEASE IS NOT INTENDED AND SHALL NOT BE CONSTRUED TO BE SEPARATE LEASES AND THAT ALL THE TERMS AND CONDITIONS HEREOF SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF LANDLORD AND TENANT WITH RESPECT THERETO.

               (f) TENANT, ON BEHALF OF ITSELF AND ANY TRUSTEE OR LEGAL REPRESENTATIVE EXPRESSLY ACKNOWLEDGES AND AGREES THAT, NOTWITHSTANDING THE PROVISIONS OF PARAGRAPH 18 HEREOF OR ANY OTHER PROVISION IN THIS LEASE TO THE CONTRARY, IT IS THE EXPRESS INTENT OF LANDLORD AND TENANT TO CREATE, AND THAT THIS LEASE CONSTITUTES, A SINGLE LEASE WITH RESPECT TO ALL PARCELS OF LAND AND IMPROVEMENTS AND EQUIPMENT INCLUDED IN EACH AND ALL OF THE RELATED PREMISES

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(WHEREVER LOCATED) AND SHALL NOT BE (OR BE DEEMED TO BE) DIVISIBLE OR SEVERABLE INTO SEPARATE LEASES FOR ANY PURPOSE WHATSOEVER, AND TENANT, ON BEHALF OF ITSELF AND ANY SUCH TRUSTEE OR LEGAL REPRESENTATIVE, HEREBY WAIVES ANY RIGHT TO CLAIM OR ASSERT A CONTRARY POSITION IN ANY ACTION OR PROCEEDING; IT BEING FURTHER UNDERSTOOD AND AGREED BY TENANT THAT THE ALLOCATIONS OF ACQUISITION COST AND PERCENTAGE ALLOCATION OF BASIC RENT AS SET FORTH ON EXHIBIT “E” AND EXHIBIT “F” HEREOF ARE INCLUDED TO PROVIDE A FORMULA FOR RENT ADJUSTMENT AND LEASE TERMINATION UNDER CERTAIN CIRCUMSTANCES THAT ARE BEYOND THE REASONABLE CONTROL OF THE PARTIES HERETO AND AS AN ACCOMMODATION TO TENANT. ANY EVENT OF DEFAULT HEREUNDER IN CONNECTION WITH ANY RELATED PREMISES SHALL BE DEEMED TO BE AN EVENT OF DEFAULT WITH RESPECT TO THE ENTIRE LEASED PREMISES (WHEREVER LOCATED). THE FOREGOING AGREEMENTS AND WAIVERS BY TENANT IN THIS PARAGRAPH 3(f) ARE MADE AS A MATERIAL INDUCEMENT TO LANDLORD TO ENTER INTO THE TRANSACTION CONTEMPLATED BY THIS LEASE AND THAT, BUT FOR THE FOREGOING AGREEMENTS AND WAIVERS BY TENANT, LANDLORD WOULD NOT CONSUMMATE THIS LEASE TRANSACTION.

          4. Use of Leased Premises; Quiet Enjoyment.

               (a) Tenant may occupy and use the Leased Premises 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 Leased Premises to be used or occupied, nor do or permit anything to be done in or on any of the Leased Premises, in a manner which would or might (i) violate any Law, Legal Requirement or Permitted Encumbrance, (ii) 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, (iii) cause structural injury to any of the Improvements or (iv) constitute a public or private nuisance or waste.

               (b) Subject to the provisions hereof, so long as no Event of Default has occurred and is continuing, Tenant shall quietly hold, occupy and enjoy the Leased Premises throughout the Term, without any hindrance, ejection or molestation by Landlord or any Person claiming by, through, or under Landlord with respect to matters that arise after the date hereof, provided that Landlord or its agents may enter upon and examine any of the Leased Premises during normal business hours, upon not less than twenty-four (24) hours’ prior written notice to Tenant (except in the case of any emergency, in which event only such notice as shall be reasonable under the circumstances shall be required), and in a manner which does not unreasonably interfere with Tenant’s business or operations, for the purpose of inspecting the Leased Premises, verifying compliance or non-compliance by Tenant with its obligations hereunder and the existence or non-existence of an Event of Default or event which with the passage of time and/or notice would constitute an Event of Default, showing the Leased Premises to prospective Lenders and purchasers, making any repairs and taking such other action with respect to the Leased Premises as is permitted by any provision hereof.

          5. Term.

               (a) Subject to the provisions hereof, Tenant shall have and hold the Leased Premises for an initial term (the “Initial Term”) (such Initial Term, as extended or renewed in accordance with the provisions hereof, being called the “Term”) commencing on the date hereof (the “Commencement Date”) and ending at 11:59 P.M. at each Related Premises on October 31, 2028.

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               (b) Provided that if, on or prior to the Expiration Date or any other Renewal Date (as hereinafter defined) this Lease shall not have been terminated pursuant to any provision hereof, then on the Expiration Date and on the fifth (5^th), tenth (10^th) and fifteenth (15^th) anniversaries of the Expiration Date (the Expiration Date and each such anniversary being referred to herein as a “Renewal Date”), the Term shall be deemed to have been automatically extended for an additional period of five (5) years (each such extension, a “Renewal Term”), unless Tenant shall notify Landlord in writing at least eighteen (18) months prior to the next Renewal Date that Tenant is terminating this Lease as of the next Renewal Date. Any such extension of the Term shall be subject to all of the provisions of this Lease, as the same may be amended, supplemented or modified (except that, in the case of the fourth Renewal Term, Tenant shall not have the right to any additional Renewal Terms).

               (c) If Tenant exercises its option pursuant to Paragraph 5(b) not to have the Term automatically extended, then Landlord shall have the right during the remainder of the Term then in effect and, in any event, Landlord shall have the right during the last year of the Term, to show any of the Leased Premises to prospective purchasers or tenants or their agents during normal business hours upon not less than twenty-four (24) hors’ written notice to Tenant and in a manner which does not unreasonably interfere with Tenant’s business or operations.

          6. Basic Rent. Tenant shall pay to Landlord, as annual rent for the Leased Premises during the Term, the amounts determined in accordance with Exhibit “D” hereto (“Basic Rent”), payable quarterly in advance for the next three (3) calendar months and, commencing on the twenty-fifth (25^th) day of October, 2008, and thereafter on the same day of each January, April, July and October during the Term which shall be payable as set forth in said Exhibit “D”. The date that each payment of Basic Rent is due is hereinafter referred to as a “Basic Rent Payment Date”. Each such payment of Basic Rent shall be made in Federal Funds on each Basic Rent Payment Date to Landlord and/or to such one or more other Persons, pursuant to wire transfer instructions delivered to Tenant from time to time at such addresses and in such proportions as Landlord may direct by fifteen (15) days’ prior written notice to Tenant (in which event Tenant shall give Landlord notice of each such payment concurrent with the making thereof).

          7. Additional Rent.

               (a) Tenant shall pay and discharge, as additional rent (collectively, “Additional Rent”):

                    (i) except as otherwise specifically provided herein, all costs and expenses of Tenant and Landlord which are incurred in connection or associated with (A) the ownership, use, non-use, occupancy, monitoring, possession, operation, condition, design, construction, maintenance, alteration, repair or restoration of any of the Leased Premises, (B) the performance of any of Tenant’s obligations under this Lease, (C) the exercise or enforcement by Landlord, its successors and assigns, of any of its rights under this Lease in connection with an Event of Default, (D) any amendment to or modification or termination of this Lease made at the request of Tenant, (E) Costs of Landlord’s counsel and reasonable internal Costs of Landlord incurred in connection with any act undertaken by Landlord (or its counsel) at the request of Tenant, any act of Landlord performed on behalf of Tenant in connection with an Event of Default or the review and monitoring of compliance by Tenant with the terms of this Lease in connection with an Event of Default, including compliance with [Post Closing Obligations and] applicable Law, (F) all costs and fees associated with the wire transfers of Rent payments, and (G) any other items specifically required to be paid by Tenant under this Lease;

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                    (ii) after the date all or any portion of any installment of Basic Rent is due and not paid by the applicable Basic Rent Payment Date, an amount (the “Late Charge”) equal to four percent (4%) of the amount of such unpaid installment or portion thereof to reimburse Landlord for its cost and inconvenience incurred as a result of Tenant’s delinquency, provided, however, that with respect to the first late payment of all or any portion of any installment of Basic Rent in any Lease Year, the Late Charge shall not be due and payable unless the Basic Rent has not been paid within five (5) days’ following notice thereof from Landlord to Tenant that such installment is due and payable. Tenant acknowledges that the damages to and costs incurred by Landlord resulting from Tenant’s late payment of Basic Rent would be difficult, if not impossible, to ascertain with any accuracy, and that the four percent (4%) charge represents Landlord and Tenant’s efforts to approximate such potential damages and costs;

                    (iii) a sum equal to any late charge in excess of the amount payable under clause (ii) above for that portion of the Basic Rent paid to the Lender as scheduled installments of principal and interest, any default interest in excess of amounts payable under clause (iv) below for that portion of the Basic Rent paid to the Lender as scheduled installments of principal and interest, and fees of Lender’s counsel, which are payable by Landlord to any Lender under any Note by reason of Tenant’s late payment or non-payment of Basic Rent or by reason of an Event of Default; and

                    (iv) interest at the rate (the “Default Rate”) of five percent (5%) over the Prime Rate per annum on the following sums until paid in full: (A) all overdue installments of Basic Rent from the respective due dates thereof, and (B) all overdue amounts of Additional Rent relating to obligations which Landlord shall have paid on behalf of Tenant pursuant to this Lease, from the date of payment thereof by Landlord;

                    (v) five thousand dollars ($5,000) per month for each month that Tenant is late in the delivery of the annual and quarterly financial statements that are required to be delivered pursuant to Paragraph 28(b).

               (b) Tenant shall pay and discharge (i) any Additional Rent referred to in Paragraph 7(a)(i) when the same shall become due, provided that amounts which are billed to Landlord or any third party, but not to Tenant, shall be paid within thirty (30) days after Landlord’s demand for payment thereof, and (ii) any other Additional Rent, within thirty (30) days after Landlord’s demand for payment thereof.

               (c) In no event shall amounts payable under Paragraph 7(a)(ii), (iii) and (iv) or elsewhere in this Lease exceed the maximum amount permitted by applicable Law.

          8. Net Lease: Non-Terminability.

               (a) 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”), except as otherwise provided in this Lease.

               (b) This Lease and the rights of Landlord and the obligations of Tenant hereunder shall not be affected by any event or for any reason or cause whatsoever foreseen or unforeseen, except as otherwise provided in this Lease.

               (c) The obligations of Tenant hereunder 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

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Tenant hereunder shall continue unaffected unless the requirement to pay or perform the same shall have been terminated or abated pursuant to an express provision of this Lease. All Rent payable by Tenant hereunder shall constitute “rent” for all purposes (including Section 502(b)(6) of the Federal Bankruptcy Code).

               (d) Except as otherwise expressly provided herein, Tenant shall have no right and hereby waives all rights which it may have under any Law (i) to quit, terminate or surrender this Lease or any of the Leased Premises, or (ii) to any Set-Off of any Monetary Obligations.

          9. Payment of Impositions.

               (a) Subject to Paragraph 9(b) below, Tenant shall, before interest or penalties are due thereon, pay directly to the applicable governmental authority, all taxes (including real and personal property, franchise, sales, use, gross receipts and rent taxes), all charges payable pursuant to any Easement Agreement, all assessments and levies, all permit, inspection and license fees, all rents and charges for water, sewer, utility and communication services relating to any of the Leased Premises, and all other public charges whether of a like or different nature, even if unforeseen or extraordinary, imposed upon or assessed against (i) Tenant, (ii) Tenant’s possessory interest in the Leased Premises, (iii) any of the Leased Premises, or (iv) Landlord as a result of or arising in respect of the ownership, occupancy, leasing, use or possession of any of the Leased Premises, any activity conducted on any of the Leased Premises, or the Rent (collectively, the “Impositions”); provided, that nothing herein shall obligate Tenant to pay (A) income, excess profits or other taxes of Landlord (or Lender) which are determined on the basis of Landlord’s (or Lender’s) net income or net worth (unless such taxes are in lieu of or a substitute for any other tax, assessment or other charge upon or with respect to the Leased Premises which, if it were in effect, would be payable by Tenant under the provisions hereof or by the terms of such tax, assessment or other charge), (B) any estate, inheritance, succession, gift or similar tax imposed on Landlord or (C) any capital gains tax imposed on Landlord in connection with the sale of the Leased Premises to any Person. Landlord shall have the right to require Tenant to pay, together with scheduled installments of Basic Rent, the amount of the gross receipts or rent tax, if any, payable with respect to the amount of such installment of Basic Rent. If any Imposition may be paid in installments without penalty, Tenant shall have the option to pay such Imposition in installments. Tenant shall be liable only for Impositions or installments thereof which become due and payable during the Term. Tenant shall be responsible to obtain all bills for the payment of Impositions and shall prepare and file all tax reports required by governmental authorities which relate to the Impositions. Tenant shall deliver to Landlord (1) copies of all settlements and notices pertaining to the Impositions which may be issued by any governmental authority within ten (10) days after Tenant’s receipt thereof, (2) receipts for payment of all taxes required to be paid by Tenant hereunder within thirty (30) days after the due date thereof and (3) receipts for payment of any other Impositions within ten (10) days after Landlord’s request therefor.

               (b) If Landlord is required by a Lender, Tenant shall pay to Landlord such amounts (each an “Escrow Payment”) quarterly or as required by such Lender (but not more often than quarterly) so that there shall be in an escrow account an amount sufficient to pay the Escrow Charges (as hereinafter defined) as they become due. As used herein, “Escrow Charges” shall mean: (i) real estate taxes and assessments due and payable during the Term on or with respect to the Leased Premises or payments in lieu thereof, and premiums on any insurance required by this Lease; and (ii) any reserves for capital improvements, deferred maintenance, repair and/or tenant improvements and leasing commissions required by any Lender following the occurrence of an Event of Default. Landlord shall reasonably determine the amount of the Escrow Charges (it being agreed that if required by a Lender, such amount shall equal any corresponding escrow installments required to be paid by Landlord) and the amount of each

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Escrow Payment. Escrow Charges for real estate taxes and assessments and insurance premiums may be commingled with other funds of Landlord or other Persons and no interest thereon shall be due or payable to Tenant. Escrow Charges listed in Paragraph 9(b)(ii) above shall be held in a separate interest bearing money market or similar account and all interest thereon shall become part of and applied to Escrow Payments. Landlord shall apply the Escrow Payments to the payment of the Escrow Charges in such order or priority as Landlord shall determine or as required by Law but in no event later than when same are due and payable. If at any time the Escrow Payments theretofore paid to Landlord shall be insufficient for the payment of the Escrow Charges, Tenant, within ten (10) days after Landlord’s demand therefor, shall pay the amount of the deficiency to Landlord. At the expiration or earlier termination of this Lease, all Escrow Payments not applied as provided in this Paragraph 9(b) shall be promptly refunded to Tenant, provided there is not then an uncured Event of Default existing under this Lease.

          10. Compliance with Laws and Easement Agreements; Environmental Matters.

               (a) Tenant shall, at its expense, comply with and conform to, and cause the Leased Premises and any other Person occupying any part of the Leased Premises to comply with and conform to, all Insurance Requirements and Legal Requirements (including all applicable Environmental Laws). Tenant shall not at any time (i) cause, permit or suffer to occur any Environmental Violation or (ii) permit any sublessee, assignee or other Person occupying the Leased Premises under or through Tenant to cause, permit or suffer to occur any Environmental Violation and, at the request of Landlord or Lender, Tenant shall promptly undertake any reasonable and appropriate response action to correct any existing Environmental Violation, however immaterial, and (iii) without the prior written consent of Landlord and Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining or extraction thereof. Any and all reports prepared for or by Landlord with respect to the Leased Premises shall be for the sole benefit of Tenant, Landlord and Lender and no other Person shall have the right to rely on any such reports.

               (b) Tenant, at its sole cost and expense, will at all times promptly and faithfully abide by, discharge and perform all of the covenants, conditions and agreements contained in any Easement Agreement on the part of Landlord or the occupier to be kept and performed thereunder. Neither Landlord nor Tenant will alter, modify, amend or terminate any Easement Agreement, give any consent or approval thereunder, or enter into any new Easement Agreement without, in each case, prior written consent of the other party.

               (c) Upon not less than five (5) days’ prior written notice from Landlord, Tenant shall permit such persons as Landlord may designate (“Site Reviewers”) to visit the Leased Premises during normal business hours and in a manner which does not unreasonably interfere with Tenant’s business or operations and perform, as agents of Tenant, environmental site investigations and assessments (“Site Assessments”) on the Leased Premises in any of the following circumstances: (i) in connection with any sale, financing or refinancing of the Leased Premises, (ii) within the six month period prior to the expiration of the Term, (iii) if required by Lender or the terms of any credit facility to which Landlord is bound, (iv) if an Event of Default exists, or (v) at any other time that, in the opinion of Landlord or Lender, a reasonable basis exists to believe that an Environmental Violation or any condition that could reasonably be expected to result in any Environmental Violation exists. Such Site Assessments may include both above and below the ground testing for Environmental Violations and such other tests as may be necessary, in the opinion of the Site Reviewers, to conduct the Site Assessments. Tenant shall supply to the Site Reviewers such historical and operational information regarding the Leased Premises as may be reasonably requested by the Site Reviewers to facilitate the Site Assessments, and shall make available for meetings with the Site

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Reviewers appropriate personnel having knowledge of such matters. The cost of performing and reporting Site Assessments shall be paid by Landlord; provided, however, in the case of a Site Assessment being performed as a result of an event enumerated in (ii), (iv) or (v) above, Tenant shall bear the cost of such Site Assessment.

               (d) If an Environmental Violation occurs or is found to exist and, in Landlord’s reasonable judgment, the cost of remediation of, or other response action with respect to, the same is likely to exceed $500,000, Tenant shall provide to Landlord, within ten (10) days after Landlord’s request therefor, adequate financial assurances that Tenant will effect such remediation in accordance with applicable Environmental Laws. Such financial assurances shall be a bond or letter of credit satisfactory to Landlord in form and substance and in an amount equal to or greater than Landlord’s reasonable estimate, based upon a Site Assessment performed pursuant to Paragraph 10(c), of the anticipated cost of such remedial action.

               (e) If Tenant fails to comply with any requirement of any Environmental Law in connection with any Environmental Violation which occurs or is found to exist, Landlord shall have the right (but no obligation) to take any and all actions as Landlord shall deem necessary or advisable in order to cure such Environmental Violation.

               (f) Tenant shall notify Landlord within ten (10) days after becoming aware of any Environmental Violation (or alleged Environmental Violation) or noncompliance with any of the covenants contained in this Paragraph 10 and shall forward to Landlord within ten (10) days after receipt thereof copies of all orders, reports, notices, permits, applications or other communications relating to any such violation or noncompliance.

               (g) All future leases, subleases or concession agreements relating to the Leased Premises entered into by Tenant shall contain covenants of the other party thereto which are identical to the covenants contained in Paragraph 10(a).

          11. Liens; Recording.

               (a) Tenant shall not, directly or indirectly, create or permit to be created or to remain and shall promptly discharge or remove any lien, levy or encumbrance on any of the Leased Premises or, to the extent caused by Tenant, on any Rent or any other sums payable by Tenant under this Lease, other than any Mortgage or Assignment or any other document or agreement executed in connection with any Loan, the Permitted Encumbrances and any mortgage, lien, encumbrance or other matter created by or resulting from any act or omission of Landlord or any Person claiming by, through or under Landlord. NOTICE IS HEREBY GIVEN THAT LANDLORD SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT OR TO ANYONE HOLDING OR OCCUPYING ANY OF THE LEASED PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS’ OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN AND TO ANY OF THE LEASED PREMISES. LANDLORD MAY AT ANY TIME POST ANY NOTICES REQUIRED UNDER APPLICABLE LAW ON THE LEASED PREMISES REGARDING SUCH NON-LIABILITY OF LANDLORD.

               (b) Landlord and Tenant shall execute, deliver and record, file or register (collectively, “record”) all such instruments as may be required or permitted by any present or future Law in order to evidence the respective interests of Landlord and Tenant in any of the Leased Premises, and shall cause a memorandum of this Lease (or, if such a memorandum cannot be recorded, this Lease), and any supplement hereto or thereto, to be recorded in such manner and in such places as may be required or permitted by any present or future Law in order to protect the validity and priority of this Lease.

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          12. Maintenance and Repair.

               (a) Tenant shall at all times maintain each Related Premises and the Adjoining Property in as good repair as each is in on the date hereof and fit to be used for their intended use in accordance with the better of the practices generally recognized as then acceptable by other companies in its industry or observed by Tenant with respect to the other real properties owned or operated by it, and, in the case of the Equipment, in as good mechanical condition as it was on the later of the date hereof or the date of its installation, except for ordinary wear and tear. Tenant shall promptly make all Alterations of every kind and nature, whether foreseen or unforeseen, which may be required to comply with the foregoing requirements of this Paragraph 12(a). Landlord shall not be required to make any Alteration, whether foreseen or unforeseen, or to maintain any Related Premises or Adjoining Property in any way, and Tenant hereby expressly waives any right which may be provided for in any Law now or hereafter in effect to make Alterations at the expense of Landlord or to require Landlord to make Alterations. Any Alteration made by Tenant pursuant to this Paragraph 12 shall be made in conformity with the provisions of Paragraph 13.

               (b) If any Improvement, now or hereafter constructed, shall (i) encroach upon any setback or any property, street or right-of-way adjoining any Related Premises or (ii) violate the provisions of any Easement Agreement, Tenant shall, within a reasonable time after receiving notice or otherwise acquiring knowledge thereof, either (A) obtain from all necessary parties waivers or settlements of all claims, liabilities and damages resulting from each such encroachment, violation, hindrance, obstruction or impairment, whether the same shall affect Landlord, Tenant or both, or (B) take such action as shall be reasonably necessary to remove all such encroachments, hindrances or obstructions and to end all such violations or impairments, including, if necessary, making Alterations.

          13. Alterations and Improvements.

               (a) Tenant shall have the right, without having obtained the prior written consent of Landlord or Lender and provided that no Event of Default then exists, (i) to make any and all non-structural Alterations or a series of related non-structural Alterations to any Related Premises that are decorative in nature and consistent with Tenant’s normal business practice of upgrading the “look and feel” of other real properties owned or operated by it (collectively, the “Decorative Alterations”), (ii) to make non-structural Alterations or a series of related non-structural Alterations (other than Decorative Alterations) that, as to any such Alterations or series of related Alterations, do not cost in excess of $500,000 with respect to any Related Premises, and (iii) to install Equipment in the Improvements or accessions to the Equipment that, as to such Equipment or accessions, do not cost in excess of $500,000, so long as at the time of construction or installation of any such Equipment or Alterations no Event of Default exists and the value and utility of the Leased Premises is not diminished thereby. If the cost of any non-structural Alterations (other than Decorative Alterations), series of related non-structural Alterations (other than Decorative Alterations), Equipment or accessions thereto is in excess of $500,000 or if Tenant desires to make structural Alterations to any Related Premises, the prior written approval of Landlord and Lender shall be required. Tenant shall not construct upon the Land any additional buildings without having first obtained the prior written consent of Landlord and Lender. Landlord shall have the right to require Tenant to remove any Alterations except for Decorative Alterations, those Alterations required by Law or for which Landlord has agreed in writing, or is deemed to have approved pursuant to the following sentence, that removal will not be required. If Tenant desires not to remove any Alterations at the expiration of the Term, Tenant shall provide to Landlord written notice specifying the Alterations for which it is requesting agreement that removal will not be required (which notice may be given by Tenant at any time during the Term (including, without limitation, at the time Tenant seeks any required approval from Landlord pursuant to this Paragraph 13)). If Landlord does not disapprove such

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request by Tenant within fifteen (15) days of receipt of such notice, such approval shall be deemed given. Notwithstanding anything to the contrary in this Lease, in no event shall Tenant be required to remove any Decorative Alterations.

               (b) If Tenant makes any Alterations pursuant to this Paragraph 13 or as required by Paragraph 12 or 17 (such Alterations and actions being hereinafter collectively referred to as “Work”), then (i) the market value of the Leased Premises shall not be lessened by any such Work, (ii) all such Work shall be performed by Tenant in a good and workmanlike manner, (iii) all such Work shall be expeditiously completed in compliance with all Legal Requirements, (iv) all such Work shall comply with the requirements of all insurance policies required to be maintained by Tenant hereunder, (v) if any such Work involves the replacement of Equipment or parts thereto, all replacement Equipment or parts shall have a value and useful life equal to the greater of (A) the value and useful life on the date hereof of the Equipment being replaced or (B) the value and useful life of the Equipment being replaced immediately prior to the occurrence of the event which required its replacement (assuming such replaced Equipment was then in the condition required by this Lease), (vi) Tenant shall promptly discharge or remove all liens filed against any of the Leased Premises arising out of such Work, (vii) Tenant shall procure and pay for all permits and licenses required in connection with any such Work, (viii) all such Work shall be the property of Landlord and shall be subject to this Lease, and Tenant shall execute and deliver to Landlord any document requested by Landlord evidencing the assignment to Landlord of all estate, right, title and interest (other than the leasehold estate created hereby) of Tenant or any other Person thereto or therein, and (ix) Tenant shall comply, to the extent requested by Landlord or required by this Lease, with the provisions of Paragraphs 12(a) and 19(a), whether or not such Work involves restoration of any Related Premises.

          14. Permitted Contests. Notwithstanding any other provision of this Lease, Tenant shall not be required to (a) pay any Imposition, (b) discharge or remove any lien referred to in Paragraph 11 or 13, (c) take any action with respect to any encroachment, violation, hindrance, obstruction or impairment referred to in Paragraph 12(b), or (d) comply with any Law or Easement Agreement with respect to the Leased Premises (such non-compliance with the terms hereof being hereinafter referred to collectively as “Permitted Violations”) and may dispute or contest the same, so long as at the time of such non-compliance no Event of Default exists and so long as Tenant shall contest, in good faith, the existence, amount or validity thereof, the amount of the damages caused thereby, or the extent of its or Landlord’s liability therefor by appropriate proceedings which shall operate during the pendency thereof to prevent or stay (i) the collection of, or other realization upon, the Permitted Violation so contested, (ii) the sale, forfeiture or loss of any of the Leased Premises or any Rent to satisfy or to pay any damages caused by any Permitted Violation, (iii) any interference with the use or occupancy of any of the Leased Premises, (iv) any interference with the payment of any Rent, or (v) the cancellation or increase in the rate of any insurance policy or a statement by the carrier that coverage will be denied. Tenant shall provide Landlord security which is satisfactory, in Landlord’s reasonable judgment, to assure that such Permitted Violation is corrected, including all Costs, interest and penalties that may be incurred or become due in connection therewith. While any proceedings which comply with the requirements of this Paragraph 14 are pending and the required security is held by Landlord, Landlord shall not have the right to correct any Permitted Violation thereby being contested unless Landlord is required by Law to correct such Permitted Violation and Tenant’s contest does not prevent or stay such requirement as to Landlord. Each such contest shall be promptly and diligently prosecuted by Tenant to a final conclusion, except that Tenant, so long as the conditions of this Paragraph 14 are at all times complied with, has the right to attempt to settle or compromise such contest through negotiations. Tenant shall pay any and all losses, judgments, decrees and Costs in connection with any such contest and shall, promptly after the final determination of such contest, fully pay and discharge the amounts which shall be levied, assessed, charged or imposed or be determined to be payable therein or in connection therewith, together with all penalties, fines, interest and Costs thereof or in connection therewith,

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and perform all acts the performance of which shall be ordered or decreed as a result thereof. No such contest shall subject Landlord to the risk of any criminal liability.

          15. Indemnification.

               (a) Tenant shall pay, protect, indemnify, defend, save and hold harmless Landlord, Lender and all other Persons described in Paragraph 30 (each an “Indemnitee”) from and against any and all liabilities, losses, damages (including punitive damages), penalties, Costs (including attorneys’ fees and costs), causes of action, suits, claims, demands or judgments of any nature whatsoever, howsoever caused, without regard to the form of action and whether based on strict liability, gross negligence, negligence or any other theory of recovery at law or in equity, arising from (i) any matter pertaining to the use, non-use, occupancy, operation, management, condition, design, construction, maintenance, repair or restoration of any of the Leased Premises or Adjoining Property, except to the extent arising in connection with the gross negligence or willful misconduct of Landlord or any Person described in Paragraph 30, (ii) any casualty in any manner arising from any of the Leased Premises or Adjoining Property, whether or not Indemnitee has or should have knowledge or notice of any defect or condition causing or contributing to said casualty, except to the extent arising in connection with the gross negligence or willful misconduct of Landlord or any Person described in Paragraph 30, (iii) any violation by Tenant of any provision of this Lease, any contract or agreement to which Tenant is a party, any Legal Requirement or any Permitted Encumbrance or any encumbrance Tenant consented to, or (iv) any alleged, threatened or actual Environmental Violation, including (A) liability for response costs and for costs of removal and remedial action incurred by the United States Government, any state or local governmental unit or any other Person, or damages from injury to or destruction or loss of natural resources, including the reasonable costs of assessing such injury, destruction or loss, incurred pursuant to Section 107 of CERCLA, or any successor section or act or provision of any similar state or local Law, (B) liability for costs and expenses of abatement, correction or clean-up, fines, damages, response costs or penalties which arise from the provisions of any of the other Environmental Laws and (C) liability for personal injury or property damage arising under any statutory or common-law tort theory, including damages assessed for the maintenance of a public or private nuisance or for carrying on of a dangerous activity.

               (b) In case any action or proceeding is brought against any Indemnitee by reason of any such claim, (i) Tenant may, except in the event of a conflict of interest or a dispute between Tenant and any such Indemnitee or during the continuance of an Event of Default, retain its own counsel and defend such action (it being understood that Landlord may employ counsel of its choice to monitor the defense of any such action, the reasonable cost of which shall be paid by Tenant) and (ii) such Indemnitee shall notify Tenant to resist or defend such action or proceeding by retaining counsel reasonably satisfactory to such Indemnitee, and such Indemnitee will cooperate and assist in the defense of such action or proceeding if reasonably requested to do so by Tenant. In the event of a conflict of interest or dispute or during the continuance of an Event of Default, Landlord shall have the right to select counsel, and the cost of such counsel shall be paid by Tenant.

               (c) The obligations of Tenant under this Paragraph 15 shall survive any termination, expiration or rejection in bankruptcy of this Lease with respect to matters that existed, arose or occurred prior to such termination, expiration or rejection.

          16. Insurance.

               (a) Tenant shall obtain, pay for and maintain the following insurance on or in connection with the Leased Premises:

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                    (i) Insurance against all risk of physical loss or damage to the Improvements and Equipment as provided under “Special Causes of Loss” form coverage, and including customarily excluded perils of hail, windstorm, flood coverage for any Related Premises located in a designated flood plain under applicable Law, earthquake coverage for any Related Premises located in a designated earthquake zone under applicable Law and, to the extent required by Lender (X) terrorism, in amounts not less than the actual replacement cost of the Improvements and Equipment and (Y) mold insurance for which a sub-limit may apply; provided that, if Tenant’s insurance company is unable or unwilling to include any of all of such excluded perils, Tenant shall have the option of purchasing coverage against such perils from another insurer on a “Difference in Conditions” form or through a stand-alone policy. Such policies shall contain Replacement Cost and Agreed Amount Endorsements in addition to “Law and Ordinance” coverage for which a sub-limit may apply. Such policies and endorsements shall contain deductibles not more than $50,000 per occurrence, except that with respect to the flood coverage the deductible may not exceed $250,000.00.

                    (ii) Commercial General Liability Insurance and Business Automobile Liability Insurance (including Non-Owned and Hired Automobile Liability) against claims for personal and bodily injury, death or property damage occurring on, in or as a result of the use of the Leased Premises, in an amount not less than $15,000,000 per occurrence/annual aggregate, with no self-insured retention or deductible, on a claims occurrence basis.

                    (iii) Workers’ compensation insurance in the amount required by applicable Law and employers’ liability insurance covering all persons employed by Tenant in connection with any work done on or about any of the Leased Premises.

                    (iv) Comprehensive Boiler and Machinery/Equipment Breakdown Insurance on any of the Equipment or any other equipment on or in the Leased Premises, in an amount not less than $5,000,000 per accident for damage to property (and which may be carried as part of the coverage required under clause (i) above or pursuant to a separate policy or endorsement). Either such Boiler and Machinery policy or the Special Causes of Loss policy required in clause (i) above shall include at least $1,000,000 per incidence for Off-Premises Service Interruption, and not less than $100,000 per incident for Expediting Expenses, Ammonia Contamination, and Hazardous Materials Clean-Up Expense and may contain a deductible not to exceed $50,000.

                    (v) Business Income/Extra Expense Insurance at limits sufficient to cover 100% of the period of indemnity not less than eighteen (18) months from time of loss, including an extended period of indemnity which provides that after the physical loss to the Improvements and Equipment has 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 six (6) months from the date that the applicable Related Premises is repaired or replaced and operations are resumed, whichever first occurs. Such insurance shall name Landlord as loss payee (but only with respect to Rent payable to or for the benefit of the Landlord under this Lease), and Tenant shall receive a dollar-for-dollar credit against Rent due hereunder for any amounts received by Landlord under any such policy.

                    (vi) During any period in which substantial Alterations at the Leased Premises are being undertaken, builder’s risk insurance covering the total completed value, including all hard and soft costs (which shall include business interruption coverage) with respect to the Improvements being constructed, altered or repaired (on a completed value, non-reporting basis), replacement cost of work performed and equipment, supplies and materials furnished in connection with such construction, alteration or repair of Improvements or Equipment, together with such other endorsements as Landlord may reasonably require, and

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general liability, worker’s compensation and automobile liability insurance with respect to the Improvements being constructed, altered or repaired.

                    (vii) Such other insurance (or other or different terms with respect to any insurance required pursuant to this Paragraph 16, including without limitation amounts of coverage, deductibles, insurer rating, form of mortgagee clause) on or in connection with any Related Premises as Landlord or Lender may reasonably require, which at the time is usual and commonly obtained in connection with properties similar in type of building size, use and location to the applicable Related Premises or in connection with loans similar to the Loan.

               (b) The insurance required by Paragraph 16(a) shall be written by companies having a Best’s rating of A:X or above and a claims paying ability rating of A or better by Standard & Poor’s Rating Services, a division of the McGraw Hill Companies, Inc. or equivalent rating agency approved by Landlord and Lender in their sole discretion and are authorized to write insurance policies by, the State Insurance Department (or its equivalent) for the states in which the Leased Premises are located. The insurance policies (i) shall be for such terms as Landlord may reasonably approve and (ii) shall be in amounts sufficient at all times to satisfy any coinsurance requirements thereof. If said insurance or any part thereof shall expire, be withdrawn, become void, voidable, unreliable or unsafe for any reason, including a breach of any condition thereof by Tenant or the failure or impairment of the capital of any insurer, or if for any other reason whatsoever said insurance shall become reasonably unsatisfactory to Landlord, Tenant shall immediately obtain new or additional insurance reasonably satisfactory to Landlord. The insurance referred to in Paragraphs 16(a)(i), 16(a)(iv) and 16(a)(vi) shall name Landlord and Lender as loss payee as its interest may appear and Lender as mortgagee. The insurance referred to in Paragraph 16(a)(ii) shall name Landlord and Lender as additional insureds, and the insurance referred to in Paragraph 16(a)(v) shall name Landlord as insured and Lender and Landlord as loss payee as its interest may appear.

               (c) Each insurance policy referred to in clauses (i), (iv), (v) and (vi) of Paragraph 16(a) shall contain standard non-contributory mortgagee clauses in favor of and acceptable to Lender. Each policy required by any provision of Paragraph 16(a), except clause (iii) thereof, shall provide that it may not be cancelled, substantially modified or allowed to lapse on any renewal date except after at least thirty (30) days’ prior written notice to Landlord and Lender.

               (d) Tenant shall pay as they become due all premiums for the insurance required by Paragraph 16(a), shall renew or replace each policy and deliver to Landlord evidence of the payment of the full premium therefor or installment then due at least ten (10) days prior to the expiration date of such policy, and shall promptly deliver to Landlord all original certificates of insurance evidencing such coverages or, if required by Lender, original or certified policies. All certificates of insurance (including liability coverage) provided to Landlord and Lender shall be on ACORD Form 28 (or its equivalent).

               (e) Anything in this Paragraph 16 to the contrary notwithstanding, any insurance which Tenant is required to obtain pursuant to Paragraph 16(a) may be carried under a “blanket” policy or policies covering other properties of Tenant or under an “umbrella” policy or policies covering other liabilities of Tenant, as applicable; provided that, such blanket or umbrella policy or policies otherwise comply with the provisions of this Paragraph 16, and upon request, Tenant shall provide to Landlord a Statement of Values which may be reviewed annually and shall be amended to the extent determined necessary by Landlord based on revised Replacement Cost Valuations. The original or a certified copy of each such blanket or umbrella policy shall promptly be delivered to Landlord upon Landlord’s request.

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               (f) Tenant shall not carry separate insurance concurrent in form or contributing in the event of a Casualty with that required in this Paragraph 16 unless (i) Landlord and Lender are included therein as named insureds, with loss payable as provided herein, and (ii) such separate insurance complies with the other provisions of this Paragraph 16. Tenant shall immediately notify Landlord of such separate insurance and shall deliver to Landlord the original policies or certified copies thereof.

               (g) Each policy (other than worker’s compensation coverage) shall contain an effective waiver by the carrier against all claims for payment of insurance premiums against Landlord and shall contain a full waiver of subrogation against the Landlord.

               (h) The proceeds of any insurance required under Paragraph 16(a) shall be payable as follows:

                    (i) proceeds payable under clauses (ii), (iii) and (iv) of Paragraph 16(a) and proceeds attributable to the general liability coverage of Builder’s Risk insurance under clause (vi) of Paragraph 16(a) shall be payable to the Person entitled to receive such proceeds; and

                    (ii) proceeds of insurance required under clause (i) of Paragraph 16(a) and proceeds attributable to Builder’s Risk insurance (other than its general liability coverage provisions) under clause (vi) of Paragraph 16(a) shall be payable to Landlord or Lender and applied as set forth in Paragraph 17 or, if applicable, Paragraph 18.

          17. Casualty and Condemnation.

               (a) If any Casualty occurs to any Related Premises occurs the insurance proceeds for which are reasonably estimated by Tenant to be equal to or in excess of Five Hundred Thousand Dollars ($500,000), Tenant shall give Landlord and Lender immediate notice thereof. So long as (i) no Event of Default exists and (ii) Tenant has not given a Termination Notice to Landlord, Tenant is hereby authorized to adjust, collect and compromise all claims under any of the insurance policies required by Paragraph 16(a) (except public liability insurance claims payable to a Person other than Tenant, Landlord or Lender) and to execute and deliver on behalf of Landlord all necessary proofs of loss, receipts, vouchers and releases required by the insurers and Landlord shall have the right to join with Tenant therein. Any final adjustment, settlement or compromise of any such claim which is reasonably estimated by Landlord to result in proceeds in excess of $500,000, shall be subject to the reasonable prior written approval of Landlord, and, with respect thereto, Landlord shall have the right to prosecute or contest, or to require Tenant to prosecute or contest, any such claim, adjustment, settlement or compromise. If any final adjustment, settlement or compromise of any such claim is reasonably estimated by Landlord to result in proceeds of less than or equal to $500,000 and so long as no Event of Default exists and Tenant has not given a Termination Notice to Landlord, then such adjustment, settlement or compromise shall not require the approval of Landlord. If an Event of Default exists, Tenant shall not be entitled to adjust, collect or compromise any such claim or to participate with Landlord in any adjustment, collection and compromise of the Net Award payable in connection with a Casualty. Tenant agrees to sign, upon the request of Landlord, all such proofs of loss, receipts, vouchers and releases. Each insurer is hereby authorized and directed to make payment under said policies, including return of unearned premiums, directly to Landlord or, if required by the Mortgage, to Lender instead of to Landlord and Tenant jointly, and Tenant hereby appoints each of Landlord and Lender as Tenant’s attorneys-in-fact to endorse any draft therefor. The rights of Landlord under this Paragraph 17(a) shall be extended to Lender if and to the extent that any Mortgage so provides.

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               (b) Tenant, immediately upon receiving a Condemnation Notice, shall notify Landlord and Lender thereof. So long as no Event of Default exists, Tenant is authorized to collect, settle and compromise the amount of any Net Award and Landlord shall have the right to join with Tenant herein. If an Event of Default exists, Landlord shall be authorized to collect, settle and compromise the amount of any Net Award and Tenant shall not be entitled to participate with Landlord in any Condemnation proceeding or negotiations under threat thereof or to contest the Condemnation or the amount of the Net Award therefor. No agreement with any condemnor in settlement or under threat of any Condemnation shall be made by Tenant without the written consent of Landlord. Subject to the provisions of this Paragraph 17(b), Tenant hereby irrevocably assigns to Landlord any award or payment to which Tenant is or may be entitled by reason of any Condemnation, whether the same shall be paid or payable for Tenant’s leasehold interest hereunder or otherwise; but nothing in this Lease shall impair Tenant’s right to any award or payment on account of Tenant’s Property, moving expenses or loss of business, if available, to the extent that and so long as (i) Tenant shall have the right to make, and does make, a separate claim therefor against the condemnor and (ii) such claim does not in any way reduce either the amount of the award otherwise payable to Landlord for the Condemnation of Landlord’s fee interest in the applicable Related Premises or the amount of the award (if any) otherwise payable for the Condemnation of Tenant’s leasehold interest hereunder. The rights of Landlord under this Paragraph 17(b) shall also be extended to Lender if and to the extent that any Mortgage so provides.

               (c) If any Partial Casualty (whether or not insured against) or Partial Condemnation shall occur to any Related Premises, this Lease shall continue with respect to the Leased Premises, notwithstanding such event, and there shall be no abatement or reduction of any Monetary Obligations. Promptly after such Partial Casualty or Partial Condemnation, Tenant, as required in Paragraph 12(a), shall commence and diligently continue to restore the applicable Related Premises as nearly as possible to their value, condition and character immediately prior to such event (assuming such Related Premises to have been in the condition required by this Lease, together with such Alterations as shall be permitted or approved pursuant to Paragraph 13). So long as no Event of Default exists, any Net Award paid to or on behalf of Landlord under Paragraph 16(a)(i), (iv) or (vi) which is up to and including $500,000 shall be paid by Landlord to Tenant and Tenant shall restore the applicable Related Premises in accordance with the requirements of Paragraph 13(b) of this Lease. Any Net Award paid to or on behalf of Landlord under Paragraph 16(a)(i), (iv) or (vi) which is in excess of $500,000 shall (unless such Casualty resulting in the Net Award is a Termination Event) be made available by Landlord (or Lender if the terms of the Mortgage so require) to Tenant for the restoration of any of the applicable Related Premises pursuant to and in accordance with and subject to the provisions of Paragraph 19 hereof. If any Casualty or Condemnation which is not a Partial Casualty or Partial Condemnation shall occur, Tenant shall comply with the terms and conditions of Paragraph 18.

          18. Termination Events.

               (a) If either (i) all of any Related Premises shall be taken by a Taking, or (ii) any substantial portion of any Related Premises shall be taken by a Taking and Tenant certifies and covenants to Landlord that it will forever abandon operations at the Related Premises, or (iii) all or any substantial portion of any Related Premises shall be totally or substantially damaged or destroyed by a Casualty, Tenant does not elect to treat such Casualty as a Partial Casualty and to restore the applicable Related Premises in accordance with Paragraph 17(c) above and Tenant certifies and covenants to Landlord that it will forever abandon operations at the Related Premises (any one or all of the Related Premises described in the above clauses (i), (ii) and (iii) above being hereinafter referred to as the “Affected Premises” and each of the events described in the above clauses (i), (ii) and (iii) shall hereinafter be referred to as a “Termination Event”), then (x) in the case of (i) above, Tenant shall be obligated, within thirty

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(30) days after Tenant receives a Condemnation Notice, and (y) in the case of (ii) and (iii) above, Tenant shall have the option, within thirty (30) days after Tenant receives a Condemnation Notice or thirty (30) days after the Casualty, as the case may be, to give to Landlord written notice in the form described in Paragraph 18(b) of the Tenant’s election to terminate this Lease as to the Affected Premises (a “Termination Notice”). If Tenant elects under clause (y) above not to give Landlord a Termination Notice, then Tenant shall rebuild or repair the Affected Premises in accordance with Paragraphs 17 and 19.

               (b) A Termination Notice shall contain:

                    (i) in the event of a Termination Notice pursuant to an event described in Paragraphs 18(a)(i) or (ii) above (a “Condemnation Termination Notice”), (A) notice of Tenant’s intention to terminate this Lease as to the Affected Premises on the first Basic Rent Payment Date which occurs at least thirty (30) days after delivery of the Condemnation Termination Notice (the “Termination Date”), and (B) if the Termination Event is an event described in Paragraph 18(a)(ii), the certification and covenants described therein; and

                    (ii) in the event of a Termination Notice pursuant to an event described in Paragraph 18(a)(iii) above (a “Casualty Termination Notice”), (A) notice of Tenant’s intention to terminate this Lease as to the Affected Premises on the first Basic Rent Payment Date which occurs at least thirty (30) days after delivery of the Casualty Termination Notice (also, a “Termination Date”), (B) a binding and irrevocable offer of Tenant to pay to Landlord the Termination Amount, and (C) the certification and covenants described in Paragraph 18(a)(iii).

               (c) If (x) Landlord shall reject such offer by Tenant to pay to Landlord the Termination Amount as to the Affected Premises pursuant to a Casualty Termination Notice above by written notice to Tenant (a “Rejection”), which Rejection shall contain the written consent of Lender to Landlord’s rejection of Tenant’s offer to pay the Termination Amount, not later than thirty (30) days after Landlord’s receipt of the Casualty Termination Notice, or (y) Tenant delivers a Condemnation Termination Notice, then this Lease shall terminate as to the Affected Premises on the Termination Date; provided, that if Tenant has not satisfied all Monetary Obligations which have arisen as to the Affected Premises (collectively, “Remaining Obligations”) on or prior to the Termination Date, then Landlord may, at its option, extend the date on which this Lease may terminate as to the Affected Premises to a date which is no later than the first Basic Rent Payment Date after the Termination Date on which Tenant has satisfied all Remaining Obligations. Upon such termination (i) all obligations of Tenant hereunder as to the Affected Premises shall terminate except for any Surviving Obligations, (ii) Tenant shall immediately vacate and shall have no further right, title or interest in or to any of the Affected Premises, and (iii) the Net Award shall be retained by Landlord.

               (d) Unless Tenant shall have received a Rejection (as consented to by Lender as aforesaid) not later than the thirtieth (30^th) day following Landlord’s receipt of the Casualty Termination Notice, Landlord shall be conclusively deemed to have accepted such offer from Tenant to pay the Termination Amount. If such offer from Tenant to pay the Termination Amount is accepted or deemed accepted by Landlord then, on the Termination Date, Tenant shall pay to Landlord the Termination Amount and all Remaining Obligations and, if requested by Tenant, Landlord shall convey to Tenant or its designee the Affected Premises or the remaining portion thereof, if any, all in accordance with Paragraph 20.

               (e) In the event of the termination of this Lease as to the Affected Premises as hereinabove provided, this Lease shall remain in full force and effect as to the Remaining Premises; provided, that the Basic Rent for the Remaining Premises to be paid after

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such termination shall be the Basic Rent otherwise payable hereunder with respect to the Leased Premises multiplied by the percentage set forth on Exhibit “F” for the Remaining Premises.

          19. Restoration.

               (a) If any Net Award is in excess of $500,000, Landlord (or Lender if required by any Mortgage) shall hold the Net Award in a fund (the “Restoration Fund”) and disburse amounts from the Restoration Fund only in accordance with the following conditions:

                    (i) prior to commencement of restoration, the architects, contracts, contractors, plans and specifications and a budget for the restoration which shall have been approved by Landlord and which may, at Tenant’s option, provide for Alterations and other upgrades to the Leased Premises, a so-called “cost savings” provision in favor of Tenant (which shall remain for Tenant’s sole benefit), an overhead cost allocation, and/or supervision and/or development fees to Tenant or any affiliate of Tenant;

                    (ii) at the time of any disbursement, no Event of Default shall exist and no mechanics’ or materialmen’s liens shall have been filed against any of the Leased Premises and remain undischarged or uncontested in accordance with Paragraph 14;

                    (iii) disbursements shall be made from time to time in an amount not exceeding the cost of the Work completed since the last disbursement, upon receipt of (A) satisfactory evidence, including architects’ certificates, of the stage of completion, the estimated total cost of completion and performance of the Work to date in a good and workmanlike manner in accordance with the contracts, plans and specifications, (B) partial waivers of liens, (C) contractors’ sworn statements as to completed Work and the cost thereof for which payment is requested, (D) a satisfactory bringdown of title insurance and (E) other reasonable and customary evidence of cost and payment so that Landlord and Lender can verify that the amounts disbursed from time to time are represented by Work that is completed, in place and free and clear of mechanics’ and materialmen’s lien claims;

                    (iv) each request for disbursement shall be accompanied by a certificate of an officer of Tenant, describing the Work for which payment is requested, stating the cost incurred in connection therewith, stating that Tenant has not previously received payment for such Work and, upon completion of the Work, also stating that the Work has been fully completed and complies with the applicable requirements of this Lease;

                    (v) any construction contract or agreement in connection with the restoration shall provide for a 10% retainage until the Work to be performed under such contract or agreement shall have been satisfactorily completed;

                    (vi) If the Restoration Fund is held by Landlord, the Restoration Fund shall not be commingled with Landlord’s other funds and shall bear interest at a rate agreed to by Landlord and Tenant; and

                    (vii) such other reasonable and customary conditions as Landlord or Lender may impose.

               (b) Prior to commencement of restoration and at any time during restoration, if the estimated cost of completing the restoration Work free and clear of all liens, as determined by Landlord, exceeds the amount of the Net Award available for such restoration, the amount of such excess shall, upon demand by Landlord, be paid by Tenant to Landlord to be added to the Restoration Fund. Any sum so added by Tenant which remains in the Restoration Fund upon completion of restoration shall be refunded to Tenant. For purposes of determining

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the source of funds with respect to the disposition of funds remaining after the completion of restoration, the Net Award shall be deemed to be disbursed prior to any amount added by Tenant.

               (c) If any sum remains in the Restoration Fund after completion of the restoration and any refund to Tenant pursuant to Paragraph 19(b), such sum shall be retained by Landlord or, if required by a Note or Mortgage, paid by Landlord to a Lender; provided, however, Landlord acknowledges and agrees that it is the intention of the parties that, subject to the other provisions of this Paragraph 19, the full amount of the Restoration Fund shall be made available to Tenant for the performance of the work contemplated under Paragraph 17(c).

          20. Procedures Upon Purchase.

               (a) If the Leased Premises or any of the Related Premises are purchased by Tenant pursuant to any provision of this Lease, Landlord need not convey any better title thereto than that which was conveyed to Landlord, and Tenant or its designee shall accept such title, subject, however, only to the Permitted Encumbrances and to all other exceptions and restrictions on, against or relating to any of the applicable Related Premises and to all applicable Laws, but free of the lien of and security interest created by any mortgage or assignment of leases and rents and any other liens, exceptions and restrictions on, against or relating to the applicable Related Premises which have been created by or resulted from acts of Landlord after the date of this Lease, unless the same are Permitted Encumbrances or customary utility easements benefiting the applicable Related Premises or were created with the concurrence of Tenant or as a result of a default by Tenant under this Lease.

               (b) Upon the date fixed for any such purchase of any Related Premises pursuant to Paragraph 18 (any such date the “Purchase Date”), Tenant shall pay to Landlord, or to any Person to whom Landlord directs payment, the Termination Amount therefor specified herein, in Federal Funds, less a credit for any Net Award received and retained by Landlord or a Lender, and Landlord shall deliver to Tenant (i) a special warranty deed which describes the premises being conveyed and conveys the title thereto as provided in Paragraph 20(a), (ii) such other instruments as shall be necessary to transfer to Tenant or its designee any other property (or rights to any Net Award not yet received by Landlord or a Lender) then required to be sold by Landlord to Tenant pursuant to this Lease and (iii) any Net Award received by Landlord or Lender, not credited to Tenant against the Termination Amount; provided, that if any accrued Monetary Obligations remain outstanding on such date, then Landlord may deduct from the Net Award the amount of such Monetary Obligations; and further provided, that if any event has occurred which, in Landlord’s reasonable judgment, is likely to subject any Indemnitee to any liability which Tenant is required to indemnify against pursuant to Paragraph 15, then an amount shall be deducted from the Net Award which, in Landlord’s reasonable judgment, is sufficient to satisfy such liability, which amount shall be deposited in an escrow account with a financial institution reasonably satisfactory to Landlord and Tenant pending resolution of such matter. If on the Purchase Date any Monetary Obligations remain outstanding and no Net Award is payable to Tenant by Landlord or the amount of such Net Award is less than the amount of the accrued Monetary Obligations, then Tenant shall pay to Landlord on the Purchase Date the amount of such accrued Monetary Obligations. Upon the completion of such purchase, this Lease and all obligations and liabilities of Tenant hereunder with respect to the applicable Related Premises (but not with respect to the Remaining Premises) shall terminate, except any Surviving Obligations.

               (c) If the completion of such purchase shall be delayed after (i) the Termination Date, in the event of a purchase pursuant to Paragraph 18 or, (ii) the date scheduled for such purchase, in the event of a purchase under any other provision of this Lease then Rent shall continue to be due and payable until completion of such purchase.

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               (d) Any prepaid Monetary Obligations paid to Landlord shall be prorated as of the Purchase Date, and the prorated unapplied balance shall be deducted from the Termination Amount due to Landlord; provided, that no apportionment of any Impositions shall be made upon any such purchase.

          21. Assignment and Subletting: Prohibition against Leasehold Financing.

               (a) Except as otherwise expressly provided to the contrary in this Paragraph 21, Tenant may not (i) assign this Lease, voluntarily or involuntarily, whether by operation of law or otherwise (including through merger or consolidation) to any Person other than to a Person which is and continues throughout the Term to be a direct or indirect wholly-owned Subsidiary of Tenant or Guarantor or which is a Credit Entity, or (ii) sublet any of the Leased Premises at any time to any other Person other than to an Affiliate of Tenant or Guarantor (but only so long as such Person remains such an Affiliate) or to a Credit Entity, without the prior written consent of Landlord, which consent may be granted or withheld by Landlord in accordance with the provisions of Paragraphs 21(b) or 21(c) below, as applicable, and subject, in each case, to the provisions of Paragraphs 21(j) and 21(k) below. Any purported sublease or assignment in violation of this Paragraph 21 including an Affiliate transaction in violation of the provisions of Paragraphs 21(j) or 21(k) below shall be null and void. In addition, notwithstanding anything to the contrary contained in this Paragraph 21, Tenant shall not have the right to assign this Lease (voluntarily or involuntarily, whether by operation of law or otherwise), or sublet any of the Leased Premises to any Person at any time that an Event of Default shall exist. As used herein, a “Credit Entity” shall mean any Person that immediately following such assignment or subletting and having given effect thereto will have a publicly traded unsecured senior debt rating of “Baa3” or better from Moody’s or a rating of “BBB-” or better from S&P and is not on “Negative Credit Watch” by S&P or Moody’s (or, if such Person does not then have rated debt, a determination that by either of such rating agencies its unsecured senior debt would be so rated by such agency), and in the event both such rating agencies cease to furnish such ratings, then a comparable rating by any rating agency acceptable to Landlord and Lender.

               (b) If Tenant desires to assign this Lease, whether by operation of law or otherwise, to a Person (“Non-Preapproved Assignee”) that is not a wholly-owned subsidiary of Tenant or Guarantor or a Credit Entity or (each a “Non-Preapproved Assignment”) then Tenant shall, not less than ninety (90) days prior to the date on which it desires to make a Non-Preapproved Assignment, submit to Landlord and Lender information regarding the following with respect to the Non-Preapproved Assignee (collectively, the “Review Criteria”): (A) credit, (B) capital structure, (C) management, (D) operating history, (E) proposed use of the Leased Premises and (F) risk factors associated with the proposed use of the Leased Premises by the Non-Preapproved Assignee, taking into account factors such as environmental concerns, product liability and the like. Landlord and Lender shall review such information and shall approve or disapprove the Non-Preapproved Assignee applying prudent business judgment no later than the thirtieth (30^th) day following receipt of all such information, and Landlord and Lender shall be deemed to have acted reasonably in granting or withholding consent if such grant or disapproval is based on their review of the Review Criteria applying prudent business judgment. If a response is not received by Tenant by the expiration of such thirty (30) day period, such non-Preapproved Assignee shall be deemed disapproved.

               (c) Notwithstanding anything to the contrary in this Lease, Tenant shall have the right, upon thirty (30) days prior written notice to Landlord and Lender, but without the necessity of Landlord’s or Lender’s consent, to enter into (i) one or more subleases or licenses with any Affiliate of Tenant or Guarantor or Credit Entity and (ii) one or more subleases or licenses with any third parties that demise, in the aggregate, up to, but not to exceed thirty-three percent (33%) of the gross leasable area of the Improvements at any Related

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Premises, with no consent or approval of Landlord being required or necessary (each, a “Preapproved Sublet”). Other than pursuant to Preapproved Sublets, at no time during the Term shall subleases exist for more than thirty-three percent (33%) of the gross leasable area of the Improvements at any Related Premises without the prior written consent of Landlord, which consent shall be granted or withheld based on a review of the Review Criteria as they relate to the proposed sublessee and the terms of the proposed sublease. Landlord and Lender shall be deemed to have acted reasonably in granting or withholding consent if such grant or disapproval is based on their review of the Review Criteria applying prudent business judgment. In addition to the foregoing, Landlord and Tenant acknowledge that, contemporaneously with the execution of this Lease, Tenant has entered into separate sublease agreements with LTF Club Operations Company, Inc., a Minnesota corporation and Affiliate of Tenant, with regard to each of the Related Premises, copies of which subleases have been provided to and approved by Landlord.

               (d) 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, actual or contingent, including obligations of Tenant which may have arisen on or prior to the date of such assignment, by a written instrument delivered to Landlord at the time of such assignment and shall also provide any certification reasonably required by Landlord related to the USA Patriot Act. Each sublease of any of the Leased Premises shall (A) be expressly subject and subordinate to this Lease and any Mortgage encumbering the Leased Premises; (B) not extend beyond the then current Term minus one day; (C) terminate upon any termination of this Lease, unless Landlord elects in writing, to cause the sublessee to attorn to and recognize Landlord as the lessor under such sublease, whereupon such sublease shall continue as a direct lease between the sublessee and Landlord upon all the terms and conditions of such sublease; and (D) bind the sublessee to all covenants contained in Paragraph 4(a), 10 and 12 with respect to subleased premises to the same extent as if the sublessee were the Tenant. No assignment or sublease shall affect or reduce any of the obligations of Tenant hereunder (or of the Guarantor under the Guaranty), and all such obligations of Tenant 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, except that, if Tenant assigns this Lease to a Person that, immediately following such assignment (including, without limitation, as contemplated by Paragraphs 21(j) or 21(k) below) and after having given effect thereto, is a Release Credit Entity, then the transferor Tenant shall be released from all liabilities and obligations under this Lease with respect to matters that first arose, occurred or accrued after the date of such assignment. No assignment or sublease shall impose any additional obligations on Landlord under this Lease. For purposes of this Paragraph 21(d), “Release Credit Entity” shall mean any Person that immediately following such assignment (other than an assignment, whether voluntary or involuntary, by operation of law, including, without limitation, a consolidation or merger) and having given effect thereto shall have a publicly traded unsecured senior debt rating of “Baa1” or better from Moody’s or a rating of “BBB+” or better from S&P and is not on “Negative Credit Watch” by S&P or Moody’s (or, if such Person does not then have rated debt, a determination that by either of such rating agencies its unsecured senior debt would be so rated by such agency), and in the event both such rating agencies cease to furnish such ratings, then a comparable rating by any rating agency acceptable to Landlord and Lender.

               (e) Tenant shall, within ten (10) days after the execution and delivery of any assignment or sublease, deliver a duplicate original copy thereof to Landlord which, in the event of an assignment, shall be in recordable form. With respect to any Preapproved Assignment or any Preapproved Sublet, at least thirty (30) days prior to the effective date of such assignment or sublease, Tenant shall provide to Landlord information reasonably required by Landlord to establish that the Person involved in any such proposed assignment or sublet satisfies the criteria set forth in this Lease for a Preapproved Assignment or Preapproved Sublet.

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               (f) 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 now in existence or hereafter entered into for any or all of the Leased Premises, 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 Leased Premises; provided, however, that Landlord shall have the absolute right at any time and 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; provided, further, however, that Landlord’s right to revoke said license and to collect such rents and sums of money and to retain the same shall only be applicable with regard to any Preapproved Sublet pursuant to Paragraph 21(c)(ii) while there’s an uncured Event of Default. Any amounts collected shall be applied to Rent payments next due and owing. Tenant shall not accept any rents more than one (1) month in advance of the accrual thereof nor do nor permit anything to be done, the doing of which, nor omit or refrain from doing anything, the omission of which, will or could be a breach of or default in the terms of any of the subleases.

               (g) Notwithstanding anything to the contrary contained in Paragraphs 21 (j) or (k) below, Tenant shall not have the power to mortgage, pledge or otherwise encumber its interest under this Lease or any sublease of the Leased Premises, and any such mortgage, pledge or encumbrance made in violation of this Paragraph 21 shall be void and of no force and effect.

               (h) Notwithstanding any provision in this Paragraph 21 or elsewhere in this Lease to the contrary, including any right or option Tenant may have to assign this Lease or sublease all or any portion of the Leased Premises without Landlord’s consent, Tenant shall, upon the request of Landlord, provide and cause such assignee or sublessee to provide, such information (including, without limitation, any certification) as to any proposed assignee or sublessee and its principals as may be required for Landlord and Tenant to comply with regulations administered by the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury, codified at 31 C.F.R. Part 500 (including those named on OFAC’s Specially Designated and Blocked Persons list) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action regarding persons or entities with whom U.S. persons or entities are restricted from doing business (including persons or entities who have violated the U.S. Foreign Corrupt Practices Act 15 U.S.C. §§78dd-1, 78dd-2 and 78dd-3)

               (i) Subject to the provisions of Paragraph 35 hereof (Tenant’s right of first offer), Landlord may sell or transfer subject to this Lease the Leased Premises at any time without Tenant’s consent to any third party (each a “Third Party Purchaser”). In the event of any such transfer, Tenant shall attorn to any Third Party Purchaser as Landlord so long as such Third Party Purchaser and Landlord notify Tenant in writing of such transfer. At the request of Landlord, Tenant will execute such documents confirming the agreement referred to above and such other agreements as Landlord may reasonably request, provided that such agreements do not increase the liabilities and obligations of Tenant hereunder.

               (j) Tenant shall not, in a single transaction or series of related transactions (including any interim merger or consolidation), enter into an agreement to sell or convey, transfer, abandon or lease or sell or convey, transfer or lease all or substantially all of its assets (an “Asset Transfer”) to any Person, and any such Asset Transfer shall be deemed an assignment in violation of this Lease; except that, Tenant shall have the right to conduct an Asset Transfer to a Person without Landlord’s consent if the following conditions are met: (i) the Asset Transfer is to a Person that (A) immediately following such transaction or transactions, taken in the aggregate, is (or would be, on a pro forma basis) a Credit Entity, (B) is a wholly owned

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Subsidiary of Tenant or Guarantor (but only for so long as such Person shall remain a wholly owned Subsidiary of Tenant or Guarantor), or (C) is approved in writing by Landlord under the Review Criteria as a Non-Preapproved Assignee in accordance with the provisions of Paragraph 21(b) of this Lease; and (ii) this Lease is assigned to and assumed by such Person as a part of such Asset Transfer. In the event of an Asset Transfer to a wholly-owned Subsidiary of Tenant or Guarantor, any subsequent sale of the assets of the original Tenant named herein by such wholly-owned Subsidiary of Tenant or Guarantor shall be governed by the requirements of this subparagraph (j) irrespective of whether or not such sale would be considered a sale of all or substantially all of the assets of the wholly-owned Subsidiary of Tenant or Guarantor; further provided, however, neither the granting by Tenant or Guarantor or any Subsidiary of either thereof of any mortgage, pledge, collateral assignment or encumbrance with respect to any or all of its assets for the purposes of obtaining, modifying or refinancing a senior loan facility (including, without limitation, Guarantor’s current senior loan facility with U. S. Bank National Association ), nor the foreclosure, exercise or other realization on any such mortgage, pledge, assignment or encumbrance, shall be or be deemed to be an assignment or an Asset Transfer for purposes of this Section 21(j) or the other provisions of this Lease.

               (k) At no time during the Term shall any Person or “group” (within the meaning of Section 13(d) or Section 14(d) of the Securities Exchange Act of 1934, as amended) pursuant to a single transaction or series of related transactions (i) acquire, directly or indirectly, more than 50% of the voting stock, partnership interests, membership interests or other equitable and/or beneficial interests of Tenant (“Control”) or (ii) obtain, directly or indirectly, the power (whether or not exercised) to elect a majority of the directors of Tenant or voting control of any partnership or limited liability company or other entity acting as its general partner or managing member (including through a merger or consolidation of Tenant with or into any other Person), unless the purchaser of such Control or Person who acquires such voting power shall: (A) after taking into account the transaction that resulted in the acquisition of such Control or voting power, be a Credit Entity and such Person shall enter into a guaranty satisfactory to Landlord pursuant to which it guarantees the payment and performance of the obligations of Tenant under this Lease, or (B) be approved in writing by Landlord under the Review Criteria as a Non-Preapproved Assignee in accordance with the provisions of Paragraph 21(b) above. Except as permitted in this Paragraph 21(k) above, any such change of Control or voting power (by operation of law, merger, consolidation or otherwise) shall be deemed as an assignment of this Lease to a Non-Preapproved Assignee and the approval of Landlord and Lender shall be required as set forth in Paragraph 21(b) above and any consummation of such assignment absent such approval shall be in violation of this Lease; provided, however, that a deemed assignment pursuant to the transfer of the outstanding capital stock of Tenant, Guarantor or any Subsidiary of either thereof shall not be deemed to include the sale of such stock by persons or parties through the “over-the-counter market” or through any recognized stock exchange, other than by those deemed to be a “control-person” within the meaning of the Securities Exchange Act of 1934; further provided, however, neither the granting by Tenant or Guarantor or any Subsidiary of either thereof of any mortgage, pledge, collateral assignment or encumbrance with respect to any or all of its assets for the purposes of obtaining, modifying or refinancing a senior loan facility (including, without limitation, Guarantor’s current senior loan facility with U. S. Bank National Association ), nor the foreclosure, exercise or other realization on any such mortgage, pledge, assignment or encumbrance, shall be or be deemed to be an assignment or change in Control for purposes of this Section 21(k) or the other provisions of this Lease.

          22. Events of Default.

               (a) The occurrence of any one or more of the following (after expiration of any applicable cure period as provided in Paragraph 22(b)) shall, at the sole option of Landlord, constitute an “Event of Default” under this Lease:

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                    (i) a failure by Tenant to make any payment of any Monetary Obligation on or prior to its due date, regardless of the reason for such failure;

                    (ii) a failure by Tenant duly to perform and observe, or a violation or breach of, any other provision hereof not otherwise specifically mentioned in this Paragraph 22(a);

                    (iii) any representation or warranty made by Tenant herein or in any certificate, demand or request made pursuant hereto proves to be incorrect, now or hereafter, in any material respect;

                    (iv) a default beyond any applicable notice and cure period by (A) Tenant in its capacity as lessee under the terms of that certain Lease Agreement, dated as of July 26, 2006, with Well-PROP (MULTI) LLC, a Delaware limited liability company, as landlord (the “2006 Lease”), or (B) LIFE TIME FITNESS INC., a Minnesota corporation (“LTF”), under the terms of that certain Lease Agreement, dated as of September 30, 2003, between LTF, as tenant, and LT FITNESS (DE) QRS 15-53, INC., a Delaware corporation, as landlord (the “2003 Lease” and, together with the 2006 Lease, collectively, the “Existing Leases”), in either case, other than any such default under Paragraph 22 (a)(iv) of each of the Existing Leases;

                    (v) Tenant shall (A) voluntarily be adjudicated a bankrupt or insolvent, (B) seek or consent to the appointment of a receiver or trustee for itself or for any of the Related Premises, (C) file a petition seeking relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, (D) make a general assignment for the benefit of creditors, or (E) be unable to pay its debts as they mature;

                    (vi) a court shall enter an order, judgment or decree appointing, without the consent of Tenant, a receiver or trustee for it or for any of the Related Premises or approving a petition filed against Tenant which seeks relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, and such order, judgment or decree shall remain undischarged or unstayed sixty (60) days after it is entered;

                    (vii) any Related Premises shall have been (A) vacated in its entirety (i.e., neither Tenant nor any sublessee or licensee shall be in possession of any portion thereof), provided that Tenant shall have the right to vacate either one or both of the Related Premises for up to six (6) months and, so long as Tenant has retained a third party broker and during such initial six (6) month period Tenant has diligently attempted to sublet such Related Premises, for an additional six (6) months, or (B) abandoned;

                    (viii) Tenant shall be liquidated or dissolved or shall begin proceedings towards its liquidation or dissolution;

                    (ix) the estate or interest of Tenant in any of the Related Premises shall be levied upon or attached in any proceeding and such estate or interest is about to be sold or transferred or such process shall not be vacated or discharged within sixty (60) days after it is made;

                    (x) a failure by Tenant to perform or observe, or a violation or breach of, or a misrepresentation by Tenant under, any provision of any Assignment or any other document between Tenant and Lender or from Tenant to Lender, if such failure, violation, breach or misrepresentation gives rise to a default beyond any applicable cure period with respect to any Loan;

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                    (xi) Tenant shall violate the provisions of Paragraph 21 (j) or (k), or otherwise cause or permit an assignment or sublease in violation of Paragraph 21 hereof;

                    (xii) a Non-Preapproved Assignment shall occur and Tenant shall have failed to comply with the provisions of Paragraph 21(b), if applicable;

                    (xiii) Tenant shall fail to deliver the estoppel described in Paragraph 25 within the time period specified therein;

                    (xiv) an Event of Default (as defined in the Guaranty) beyond any applicable cure period shall occur under the Guaranty, or

                    (xv) Tenant shall enter into an Asset Transfer or change of Control in violation of Paragraph 21.

               (b) No notice or cure period shall be required in any one or more of the following events: the occurrence of an Event of Default under clause (i) (except as otherwise set forth below), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii), (xiii), (xiv) or (xv) of Paragraph 22(a). If the default consists of the failure to comply with any insurance required by Paragraph 16, then the applicable cure period shall be three (3) days from the date on which notice is given, but Landlord shall not be obligated to give notice of, or allow any cure period for, any such default more than one (1) time within any Lease Year. If the default consists of the failure to pay Basic Rent, then applicable cure period shall be five (5) days from the date on which notice is given, but Landlord shall not be obligated to give notice of, or allow any cure period for, any such default more than one (1) time within any Lease Year. If the default consists of the failure to pay any Monetary Obligation except Basic Rent, then the applicable cure period shall be ten (10) days from the date on which notice is given but Landlord shall not be obligated to give notice of, or allow any cure period for, the same default more than one (1) time in any Lease Year. If the default consists of a default under clauses (ii) or (iii) (but with respect to (iii), if and only if same is reasonably susceptible of being cured) of Paragraph 22(a), other than the events specified in clause (B) of the first sentence of this Paragraph 22(b), the applicable cure period shall be thirty (30) days from the date on which notice is given or, if the default cannot be cured within such thirty (30) day period and delay in the exercise of a remedy would not (in Landlord’s reasonable judgment) cause any material adverse harm to Landlord or any of the Leased Premises, the cure period shall be extended for the period required to cure the default (but such cure period, including any extension, shall not in the aggregate exceed ninety (90) days), provided that Tenant shall commence to cure the default within the said thirty-day period and shall actively, diligently and in good faith proceed with and continue the curing of the default until it shall be fully cured..

          23. Remedies and Damages Upon Default.

               (a) If an Event of Default shall have occurred and is continuing beyond the expiration of any applicable notice and/or cure period, then Landlord shall have the right, at its sole option, then or at any time thereafter upon not less than three (3) days prior written notice to Tenant, to exercise its remedies and to collect damages from Tenant in accordance with this Paragraph 23 and subject in all events to any conditions and limitations (including any additional notice requirements) of applicable Law, without demand upon or notice to Tenant except as otherwise provided in Paragraph 22(b) and this Paragraph 23.

                    (i) Landlord may terminate this Lease by giving Tenant written notice thereof; such termination to be effective as of the date specified in such notice unless a longer notice period is prescribed by applicable Law (in which event, such longer period shall deemed set forth in such notice and shall control). Upon such date, this Lease, the estate

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hereby granted and all rights of Tenant hereunder shall expire and terminate and Tenant shall immediately surrender and deliver possession of the Leased Premises to Landlord in accordance with and in the condition required by Paragraph 26 hereof . If Tenant does not so surrender and deliver possession of all of the Leased Premises, Landlord may re-enter and repossess any of the Leased Premises not surrendered, with or without legal process, by peaceably entering any of the Leased Premises and changing locks or by summary proceedings, ejectment or any other lawful means or procedure.

                    (ii) Landlord may terminate Tenant’s right of possession (but not this Lease) and may repossess the Leased Premises by any available legal process without thereby releasing Tenant from any liability hereunder and without demand or notice of any kind to Tenant and without terminating this Lease.

                    (iii) Upon or at any time after taking possession of any of the Leased Premises pursuant to Paragraph 23(a)(i) or 23(a)(ii), Landlord may, by peaceable means or legal process, remove any Persons or property therefrom. Landlord shall be under no liability for or by reason of any such entry, repossession or removal. Notwithstanding such entry or repossession, Landlord may collect the damages set forth in Paragraph 23(b)(i) and 23(b)(ii).

                    (iv) After repossession of any of the Leased Premises pursuant to clause (i) or (ii) above, Landlord shall have the right to relet any of the Leased Premises to such tenant or tenants, for such term or terms, for such rent, on such conditions and for such uses as Landlord in its sole discretion may determine, and collect and receive any rents payable by reason of such reletting. Landlord may make such Alterations in connection with such reletting as it may deem advisable in its sole discretion. Notwithstanding any such termination of Tenant’s right of possession of the Leased Premises, Landlord may at any time thereafter elect to terminate this Lease and in such event Landlord shall have the right and remedies specified in Paragraph 23 (a) (iii).

               (b) The following constitute damages to which Landlord shall be entitled if Landlord exercises its remedies under Paragraph 23(a)(i), (ii) and (iii):

                    (i) If Landlord exercises its remedy under Paragraphs 23(a)(i) or (ii) but not its remedy under Paragraph 23(a)(iv) (or attempts to exercise such remedy and is unsuccessful in reletting the Leased Premises) then, upon written demand from Landlord, Tenant shall pay to Landlord, as liquidated and agreed final damages for Tenant’s default and in lieu of all current damages beyond the date of such demand (it being agreed that it would be impracticable or extremely difficult to fix the actual damages), an amount equal to the Present Value of the excess, if any, of (A) all Basic Rent allocated for each Related Premises based on Exhibit “F” from the date of such demand to the date on which the Term is scheduled to expire hereunder in the absence of any earlier termination, re-entry or repossession over (B) the then fair market rental value of each Related Premises for the same period. Tenant shall also pay to Landlord all of Landlord’s Costs in connection with the repossession of the Leased Premises and any attempted reletting thereof, including all brokerage commissions, legal expenses, reasonable attorneys’ fees, employees’ expenses, costs of Alterations and expenses and preparation for reletting.

                    (ii) If Landlord exercises its remedy or remedies under Paragraphs 23(a)(i), (ii), (iii) or (iv), then Tenant shall, until the end of what would have been the Term in the absence of the termination of the Lease, and whether or not any of the Leased Premises shall have been relet, be liable to Landlord for, and shall pay to Landlord, as liquidated and agreed current damages all Monetary Obligations which would be payable under this Lease by Tenant in the absence of such termination less the net proceeds, if any, of any reletting pursuant to Paragraph 23(a)(iv), after deducting from such proceeds all of Landlord’s Costs

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(including the items listed in the last sentence of Paragraph 23(b)(i) hereof) incurred in connection with such repossessing and reletting; provided, that if Landlord has not relet the Leased Premises, such Costs of Landlord shall be considered to be Monetary Obligations payable by Tenant. Tenant shall be and remain liable for all sums aforesaid, and Landlord may recover such damages from Tenant and institute and maintain successive actions or legal proceedings against Tenant for the recovery of such damages. Nothing herein contained shall be deemed to require Landlord to wait to begin such action or other legal proceedings until the date when the Term would have expired by its own terms had there been no such Event of Default.

                    (iii) Tenant shall be and remain liable for all sums aforesaid, and Landlord may recover such damages from Tenant and institute and maintain successive actions or legal proceedings against Tenant for the recovery of such damages. Nothing herein contained shall be deemed to require Landlord to wait to begin such action or other legal proceedings until the date when the Term would have expired by its own terms had there been no such Event of Default.

               (c) Notwithstanding anything to the contrary herein contained, in lieu of or in addition to any of the foregoing remedies and damages, Landlord may exercise any remedies and collect any damages available to it at law or in equity. If Landlord is unable to obtain full satisfaction pursuant to the exercise of any remedy, it may pursue any other remedy which it has hereunder or at law or in equity.

               (d) Notwithstanding anything to the contrary contained herein, Landlord shall use reasonable efforts to mitigate any damages hereunder following any termination of this Lease or any termination of Tenant’s possession of the Premises and Landlord shall be deemed to have acted reasonably if Landlord has, within a reasonable time after such termination, retained a third party broker to relet the Leased Premises on such terms as shall be recommended by such third party broker. If any Law shall validly limit the amount of any damages provided for herein to an amount which is less than the amount agreed to herein, Landlord shall be entitled to the maximum amount available under such Law.

               (e) No termination of this Lease, repossession or reletting of any of the Leased Premises, exercise of any remedy or collection of any damages pursuant to this Paragraph 23 shall relieve Tenant of any Surviving Obligations.

               (f) WITH RESPECT TO ANY REMEDY OR PROCEEDING OF LANDLORD OR TENANT HEREUNDER, TENANT HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY.

               (g) Upon the occurrence of any Event of Default, Landlord shall have the right (but no obligation) to perform any act required of Tenant hereunder and, if performance of such act requires that Landlord enter the Leased Premises, Landlord may enter the Leased Premises for such purpose

               (h) No failure of Landlord (i) to insist at any time upon the strict performance of any provision of this Lease or (ii) to exercise any option, right, power or remedy contained in this Lease shall be construed as a waiver, modification or relinquishment thereof. A receipt by Landlord of any sum in satisfaction of any Monetary Obligation with knowledge of the breach of any provision hereof shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision hereof shall be deemed to have been made unless expressed in a writing signed by Landlord.

               (i) Tenant hereby waives and surrenders, for itself and all those claiming under it, including creditors of all kinds, any right and privilege which it or any of them

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may have under any present or future Law to redeem any of the Leased Premises or to have a continuance of this Lease after termination of this Lease or of Tenant’s right of occupancy or possession pursuant to any court order or any provision hereof.

               (j) Except as otherwise provided herein, all remedies are cumulative and concurrent and no remedy is exclusive of any other remedy. Each remedy may be exercised at any time an Event of Default has occurred and is continuing and may be exercised from time to time. No remedy shall be exhausted by any exercise thereof.

          24. Notices. All notices, demands, requests, consents, approvals, offers, statements and other instruments or communications required or permitted to be given pursuant to the provisions of this Lease shall be in writing and shall be deemed to have been given and received for all purposes when delivered in person or by Federal Express or other reliable 24-hour delivery service or five (5) business days after being deposited in the United States mail, by registered or certified mail, return receipt requested, postage prepaid, addressed to the other party at its address stated on page one of this Lease or when delivery is refused. Notices sent to Landlord shall be to the attention of Director, Asset Management, and notices sent to Tenant shall be to the attention of Tenant’s General Counsel. A copy of any notice given by Tenant to Landlord shall simultaneously be given by Tenant to Reed Smith LLP, 599 Lexington Avenue, 29^th Floor, New York, New York, 10022, Attention: Chairman, Real Estate Department. For the purposes of this Paragraph, any party may substitute another address stated above (or substituted by a previous notice) for its address by giving fifteen (15) days’ notice of the new address to the other party, in the manner provided above.

          25. Estoppel Certificate. At any time upon not less than ten (10) days’ prior written request by either Landlord or Tenant (the “Requesting Party”) to the other party (the “Responding Party”), the Responding Party shall deliver to the Requesting Party a statement in writing, executed by an authorized officer of the Responding Party, certifying (a) that, except as otherwise specified, this Lease is unmodified and in full force and effect, (b) the dates to which Basic Rent, Additional Rent and all other Monetary Obligations have been paid, (c) that, to the knowledge of the signer of such certificate and except as otherwise specified, no default by either Landlord or Tenant exists hereunder, (d) such other matters as the Requesting Party may reasonably request, and (e) if Tenant is the Responding Party that, except as otherwise specified, there are no proceedings pending or, to the knowledge of the signer, threatened, against Tenant before or by a court or administrative agency which, if adversely decided, would materially and adversely affect the financial condition and operations of Tenant. Any such statements by the Responding Party may be relied upon by the Requesting Party, any Person whom the Requesting Party notifies the Responding Party in its request for the Certificate is an intended recipient or beneficiary of the Certificate, any Lender or their assignees and by any prospective purchaser or mortgagee of any of the Leased Premises. Any certificate required under this Paragraph 25 and delivered by Tenant shall state that, in the opinion of each person signing the same, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to the subject matter of such certificate, and shall briefly state the nature of such examination or investigation. In no event shall any person signing a Certificate be personally liable hereunder.

          26. Surrender. Upon the expiration or earlier termination of this Lease, Tenant shall peaceably leave and surrender the Leased Premises or Affected Premises, as is applicable, to Landlord in the same condition in which the Leased Premises or Affected Premises, as applicable, was at the commencement of this Lease, except as repaired, rebuilt, restored, altered, replaced or added to as permitted or required by any provision of this Lease, ordinary wear and tear and damage from any Casualty or Condemnation excepted; provided, however, that with respect to any Casualty Tenant has paid to Landlord the deductible under Paragraph 16(a)(i) or, if applicable, Landlord has received the Termination Amount. Upon such

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surrender, Tenant shall (a) remove from the Leased Premises or Affected Premises, as applicable, Tenant’s Property and Alterations required to be removed pursuant to Paragraph 13 hereof, and (b) repair any damage caused by such removal. Property not so removed shall become the property of Landlord, and Landlord may thereafter cause such property to be removed from the Leased Premises or Affected Premises, as applicable. The cost of removing and disposing of such property and repairing any damage to any of the Leased Premises or Affected Premises, if applicable, caused by such removal shall be paid by Tenant to Landlord upon demand. Landlord shall not in any manner or to any extent be obligated to reimburse Tenant for any such property which becomes the property of Landlord pursuant to this Paragraph 26. Notwithstanding anything to the contrary in this Lease, Tenant shall be under no obligation to patch, repair or replace finish work, such as wallcoverings, paint and carpeting, or to patch, repair or cover holes in the walls or floor left by the removal of any Alteration or Tenant’s property to the extent such removal was performed in a reasonable or normal manner.

          27. No Merger of Title. There shall be no merger of the leasehold estate created by this Lease with the fee estate in any of the Leased Premises by reason of the fact that the same Person may acquire or hold or own, directly or indirectly, (a) the leasehold estate created hereby or any part thereof or interest therein and (b) the fee estate in any of the Leased Premises or any part thereof or interest therein, unless and until all Persons having any interest in the interests described in (a) and (b) above which are sought to be merged shall join in a written instrument effecting such merger and shall duly record the same.

          28. Books and Records.

               (a) Tenant shall keep adequate records and books of account with respect to the finances and business of Tenant generally and with respect to the Leased Premises, in accordance with generally accepted accounting principles (“GAAP”) consistently applied, and shall permit Landlord and Lender by their respective agents, accountants and attorneys to visit and inspect the Leased Premises and examine (and make copies of) at Tenant’s main offices the records and books of account and to discuss the finances and business with the officers of Tenant, at such reasonable times as may be requested by Landlord, upon not less than ten (10) days’ prior notice to Tenant. Upon the request of Lender or Landlord (either telephonically or in writing), Tenant shall provide within ten (10) days’ the requesting party with copies of any information to which such party would be entitled in the course of a personal visit.

               (b) If at any time during the Term, Guarantor ceases to be a publicly traded company and/or its financial reports and statements (i.e. 10-K and 10-Q reports) are no longer available to Landlord via Edgar or other online reporting sources without material cost to Landlord, then, for so long as Tenant is a direct or indirect wholly-owned subsidiary of Guarantor, Tenant shall deliver to Landlord and to Lender (i) within one hundred twenty (120) days of the close of each fiscal year of Guarantor, annual audited financial statements of the Tenant Group certified by a nationally recognized firm of independent certified public accountants, and (ii) within forty-five (45) days after the end of each of the three remaining quarters unaudited financial statements and all other quarterly reports of the Tenant Group, certified by the Guarantor’s chief financial officer, and all filings, if any, of Form 10-K, Form 10-Q and other required filings with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934, as amended, or any other similar Law. If, at any time during the Term Tenant is not a direct or indirect wholly-owned subsidiary of Guarantor, Tenant shall deliver to Landlord and to Lender (ii) within one hundred twenty (120) days of the close of each fiscal year of Tenant annual audited financial statements of Tenant prepared by nationally recognized independent certified public accountants and (ii) within forty-five (45) days after the end of each of the three remaining quarters unaudited financial statements and all other quarterly reports of Tenant, certified by Tenant’s chief financial officer, and all filings, if any, of Form 10-K, Form 10-Q and other required filings with the Securities and

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Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934, as amended, or any other similar Law. All financial statements of Tenant shall be prepared in accordance with GAAP consistently applied. All annual financial statements shall be accompanied (i) by an opinion of said accounting firm stating that (A) there are no qualifications as to the scope of the audit and (B) the audit was performed in accordance with GAAP and (ii) by the affidavit of the president or a vice president of Tenant, dated within five (5) days of the delivery of such statement, stating that (C) the affiant knows of no Event of Default, or event which, upon notice or the passage of time or both, would become an Event of Default which has occurred and is continuing hereunder or, if any such event has occurred and is continuing, specifying the nature and period of existence thereof and what action Tenant has taken or proposes to take with respect thereto and (D) except as otherwise specified in such affidavit, that Tenant has fulfilled all of its obligations under this Lease which are required to be fulfilled on or prior to the date of such affidavit; provided that no such affidavit shall be a personal obligation or, or create any liability to, the affiant.

          29. Tenant’s Property.

               (a) The following property (collectively, “Tenant’s Property”), whether or not located in or on the Leased Premises, does not constitute a portion of the Leased Premises and shall at all times during and after the Term be the property of Tenant:

                    (i) All items of personal property, equipment and trade fixtures (so long as same are not necessary for the operation of the Leased Premises as opposed to the business from time to time conducted at the Leased Premises) about the Leased Premises, and whether or however attached to the Improvements, at any time that are necessary or incidental to the business from time to time conducted at the Leased Premises, 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 central HVAC and other building systems (other than telecommunications equipment, which shall be deemed the personal property of Tenant), walls (other than demountable walls or partitions), doors, trim, floor and wall coverings, ceiling lights and tile, window shades and the like;

                    (ii) All furniture, inventory, machinery (so long as same is not necessary for the operation of the Leased Premises as opposed to the business from time to time conducted at the Leased Premises), racking, shelving, and other personal property;

                    (iii) Any personal property, equipment or trade fixtures (so long as same are not necessary for the operation of the Leased Premises as opposed to the business from time to time conducted at the Leased Premises) which is either not owned by Landlord or Tenant or is on consignment to Tenant, including any personal property owned by Tenant’s, subtenant’s, employees or invitees;

                    (iv) All signs and other forms of business identification; and

                    (v) Any other items of personal property whatsoever.

               (b) (b) Tenant and each permitted subtenant at either Related Premises shall have the right in its sole and absolute discretion from time to time to install, alter, remove and/or replace their respective Tenant’s Property as it shall deem to be useful or desirable in connection with its business in the Leased Premises. Tenant further shall have the

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right to enter into such agreements and assignments with respect to the Tenant’s Property as Tenant or any permitted subtenant at either Related Premises in their sole discretion shall deem advisable, including financing and similar arrangements.

               (c) Landlord agrees that, upon the request of any Person that shall be Tenant’s senior secured lender or an equipment lender or equipment lessor of Tenant, Landlord shall negotiate in good faith for the purpose of executing and delivering a commercially reasonable waiver of Landlord’s statutory lien rights, if any, and a consent and agreement with respect to the respective rights of Landlord and such Person regarding the security interests in, and the timing and removal of, any inventory, equipment or other collateral in which such Person has a secured interest (the “Collateral”), in form and substance reasonably acceptable to Landlord and such Person, so long as such waiver and agreement (i) provides for the indemnification of Landlord against any claims by Tenant or any Person claiming through Tenant, and against any physical damage caused to the Leased Premises, in connection with the removal of any of the Collateral by such Person, (ii) expressly excludes any claim by such Person to any right, title or interest in or to any of the Equipment as defined in this Lease, (iii) provides for a reasonable, but in no event more than sixty (60) days, time frame for the removal of such Collateral by such Person after the expiration of which same shall be deemed abandoned, and (iv) provides for the per diem payment of Basic Rent due hereunder by such Person for each day following the date of the expiration or termination of this Lease that Landlord permits such Person’s Collateral to remain in the Leased Premises.

          30. Non-Recourse as to Landlord. Anything contained herein to the contrary notwithstanding, any claim based on or in respect of any liability of Landlord under this Lease shall be limited to actual damages and shall be enforced only against the Leased Premises and not against any other assets, properties or funds of (a) Landlord, (b) any director, member, officer, general partner, limited partner, employee or agent of Landlord, or any general partners or shareholders of Landlord (or any legal representative, heir, estate, successor or assign of any thereof), (c) any predecessor or successor partnership or corporation (or other entity) of Landlord, or any of its general partners, either directly or through Landlord or its general partners or any predecessor or successor partnership or corporation or their shareholders, officers, directors, employees or agents (or other entity), or (d) any other Person (including Carey Property Advisors, Carey Asset Management Corp., W. P. Carey & Co., LLC, Carey Management Securities, Inc. and any Person affiliated with any of the foregoing, or any director, officer, employee or agent of any thereof.

          31. Financing.

               (a) Tenant agrees to pay, not later than three (3) business days following written request from Landlord (or upon the date of this Lease with respect to costs and expenses incurred as of such date): (i) all costs and expenses incurred by Landlord in connection with the initial purchase and leasing of the Leased Premises, including, without limitation, transfer taxes and recording fees and charges, the cost of appraisals, environmental reports, property condition report and zoning reports; UCC and related searches; owner’s title insurance charges and premiums (including endorsements), the cost of surveys; the costs of any updates to any of the foregoing or any reliance letters required in connection therewith; and the fees and expenses of Landlord’s counsel, and (ii) all costs and expenses incurred by Landlord in connection with the financing of the initial Loan, including without limitation, any “points”, application charges, commitment fees, costs of updates or additions to searches or any of the reports identified under clause (i) hereof or any reliance letters required in connection therewith, Lender’s title charges and premiums (including endorsements), and the fees and expenses of Lender’s counsel.

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               (b) Tenant agrees to pay, within three (3) business days of written demand thereof, any cost, charge or expense (other than the principal of the Note and interest thereon at the contract rate of interest specified therein) imposed upon Landlord by Lender pursuant to the Note, the Mortgage or the Assignment which is not caused solely by the gross negligence or willful misconduct of Landlord and which is not otherwise reimbursed by Tenant to Landlord pursuant to any other provision of this Lease.

               (c) If Landlord desires to obtain or refinance any Loan, Tenant shall negotiate in good faith with Landlord concerning any request made by any Lender or proposed Lender for changes or modifications in this Lease. In particular, Tenant shall agree, upon request of Landlord, to supply any such Lender with such notices and information as Tenant is required to give to Landlord hereunder and to extend the rights of Landlord hereunder to any such Lender and to consent to such financing if such consent is requested by such Lender. Tenant shall provide any other consent or statement and shall execute any and all other documents that such Lender reasonably requires in connection with such financing, including any environmental indemnity agreement and subordination, non-disturbance and attornment agreement which complies with Paragraph 32 hereof, so long as the same do not materially adversely affect any right, benefit or privilege of Tenant under this Lease or materially increase Tenant’s obligations under this Lease. Such subordination, nondisturbance and attornment agreement may require Tenant to confirm that (i) Lender and its assigns will not be liable for any misrepresentation, act or omission of Landlord and (ii) Lender and its assigns will not be subject to any counterclaim, demand or offsets which Tenant may have against Landlord.

          32. Subordination, Non-Disturbance and Attornment.

               (a) This Lease and Tenant’s interest hereunder shall be subordinate to any Mortgage or other security instrument hereafter placed upon the Leased Premises by Landlord, and to any and all advances made or to be made thereunder, to the interest thereon, and all renewals, replacements and extensions thereof, provided that any such Mortgage or other security instrument (or a separate instrument in recordable form duly executed by the holder of any such Mortgage or other security instrument and delivered to Tenant) shall provide for the recognition and non-disturbance of this Lease and all Tenant’s rights hereunder unless and until an Event of Default exists or Landlord shall have the right to terminate this Lease pursuant to any applicable provision hereof.

          33. Tax Treatment; Reporting. Landlord and Tenant each acknowledge that each shall treat this transaction as a true lease for state law purposes and shall report this transaction as a lease for Federal income tax purposes. For Federal income tax purposes each shall report this Lease as a true lease with Landlord as the owner of the Leased Premises and Equipment and Tenant as the lessee of such Leased Premises and Equipment including: (i) treating Landlord as the owner of the property eligible to claim depreciation deductions under Section 167 or 168 of the Internal Revenue Code of 1986 (the “Code”) with respect to the Leased Premises and Equipment, (ii) Tenant reporting its Rent payments as rent expense under Section 162 of the Code, and (iii) Landlord reporting the Rent payments as rental income. For the avoidance of doubt, nothing in this Lease shall be deemed to constitute a guaranty, warranty or representation by either Landlord or Tenant as to the actual treatment of this transaction for state law purposes and for federal law purposes.

          34. Right of First Offer.

               (a) If Landlord decides to offer the Leased Premises for sale to any third party, Landlord shall first offer by written notice (the “Offer”) to sell the Leased Premises

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to Tenant for a specific purchase price (the “ROFO Purchase Price”) and, upon such terms and conditions as Landlord, in Landlord’s sole discretion, would otherwise intend to offer to sell the Leased Premises, prior to Landlord’s offering to sell the Leased Premises to any such third party except that the terms and conditions of any such sale to Tenant shall be (i) consistent with the terms and provisions of this Paragraph 34 and (ii) the sale to Tenant shall be “AS IS”, “WHERE IS”, without representation or warranty by Landlord. If Landlord shall make the Offer, then, whether or not Tenant has accepted the Offer, Landlord shall have the unilateral right, in Landlord’s sole discretion, to revoke the Offer if an Event of Default exists under this Lease on the date on which Landlord shall give, or would otherwise be required to give, Tenant the Offer.

               (b) Tenant shall have the right to accept the Offer only by giving Landlord written notice of such acceptance (the “ROFO Notice”) within thirty (30) days after delivery by Landlord to Tenant of the Offer. Time shall be of the essence with respect to said thirty (30) day period and delivery of the ROFO Notice by Tenant. If Tenant shall accept the Offer, Tenant shall execute any documentation reasonably required by Landlord to reflect Tenant’s acceptance of the Offer. Notwithstanding anything to the contrary contained in this Lease, upon the delivery of the ROFO Notice by Tenant, no event or circumstances affecting the Leased Premises including, but not limited to, a Condemnation or Casualty, shall give Tenant any right or option of Tenant to cancel, surrender or otherwise terminate this Lease, and any other right or option of Tenant under the Lease to acquire the Leased Premises, shall automatically be deemed to have been waived by Tenant for all purposes under this Lease.

               (c) If Tenant does not accept, or fails to accept, the Offer in accordance with the provisions herein, then, except as provided below, Landlord shall be under no further obligation with respect to such Offer pursuant to the terms contained herein, and Tenant shall have forever waived and relinquished its right to such Offer, and Landlord shall for a period of one (1) year after Tenant’s rejection of the Offer or the expiration of the thirty (30) day period specified in Paragraph 34(b) above be entitled to market the Leased Premises to others upon such terms and conditions as Landlord in its sole discretion may determine, except that if the price (“Third Party Price”) for which Landlord enters into a letter of intent or a binding contract (“Third Party Contract”) to sell the Leased Premises is less than ninety percent (90%) of the ROFO Purchase Price, Tenant shall have fifteen (15) days in which to accept the Third Party Price and if it is between ninety percent (90%) and ninety-five percent (95%), Tenant shall have three (3) days in which to accept the Third Party Price. Tenant shall, within five (5) days after Landlord’s request therefor, deliver an instrument in form reasonably satisfactory to Landlord confirming the aforesaid waiver, but no such instrument shall be necessary to make the provisions hereof effective. If at the expiration of such one (1) year period Landlord shall not have sold the Leased Premises, Tenant shall again have the rights under this Paragraph 34.

               (d) If Tenant does not timely deliver the ROFO Notice and the Leased Premises are 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. At the request of Landlord, Tenant will execute such documents confirming the agreement referred to above and such other agreements as Landlord may reasonably request, provided that such agreements do not increase the liabilities and obligations of Tenant hereunder.

               (e) Notwithstanding anything to the contrary contained herein, the provisions of this Paragraph 34 shall not apply to or prohibit (i) any mortgaging, subjection to deed of trust or other hypothecation of Landlord’s interest in the Leased Premises, (ii) any sale of the Leased Premises pursuant to a private power of sale under or judicial foreclosure of any Mortgage or other security instrument or device to which Landlord’s interest in the Leased Premises is now or hereafter subject, (iii) any transfer of Landlord’s interest in the Leased Premises to a Lender, beneficiary under deed of trust or other hold of a security interest therein or their designees by deed in lieu of foreclosure, (iv) any transfer of the Leased Premises to any

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governmental or quasi-governmental agency with power of condemnation, (v) any transfer of the Leased Premises or any interest therein or in Landlord to any affiliate of Corporate Property Associates 17 — Global Incorporated (“CPA:17”) or Corporate Property Associates 16 — Global Incorporated (“CPA:16”) or to any entity for whom W.P. Carey & Co. LLC or any of its Affiliates or subsidiaries provides management or advisory services or investment advice, (vi) a transfer to any Person or entity to whom CPA:17 or CPA:16 sells all or substantially all of its assets, (vii) any transfer of the interest of CPA:17 or CPA:16 in Landlord to any Affiliate of CPA:17 or CPA:16, or (viii) any transfer of the Leased Premises to any of the successors or assigns of any of the persons or entities referred to in the foregoing clauses (i) through (vii).

               (f) If the Leased Premises is purchased by Tenant pursuant to this Paragraph 34, Landlord need not convey any better title thereto than that which was conveyed to Landlord, and Tenant shall accept such title, subject, however, to the Permitted Encumbrances and to all other exceptions and restrictions on, against or relating to any of the Leased Premises and to all applicable Laws, but free of the lien of and security interest created by any mortgage or assignment of leases and rents and any other liens, exceptions and restrictions on, against or relating to the Leased Premises which have been created by or resulted solely from acts of Landlord after the date of this Lease, unless the same are Permitted Encumbrances or customary utility easements benefiting the Leased Premises or were created with the concurrence of Tenant or as a result of a default by Tenant under this Lease.

               (g) Upon the date fixed for a purchase of the Leased Premises pursuant to this Paragraph 34 which shall be a date mutually acceptable to Landlord and Tenant which shall be no later than either sixty (60) days following acceptance of the Offer or the date specified in the Third Party Contract, if applicable, (the “Purchase Date”), Tenant shall pay to Landlord, or to any Person or entity to whom Landlord directs payment, the ROFO Purchase Price and all other sums payable by Tenant under the Offer, in Federal Funds, and Landlord shall deliver to Tenant or its designee (i) special warranty deeds or their equivalent which describe the Leased Premises being conveyed and conveys the title thereto as provided in Paragraph 34(f) above and (ii) such other instruments as shall be necessary to transfer the Leased Premises to Tenant or its designee. Upon the completion of such purchase by Tenant or its designee, this Lease and all obligations and liabilities of Tenant hereunder shall terminate, except any Monetary Obligations of Tenant and any other obligations of Tenant under this Lease, actual or contingent, which arise on or prior to the expiration or termination of this Lease and which survive such expiration or termination by their own terms. Any prepaid Monetary Obligations paid to Landlord shall be prorated as of the Purchase Date, and the prorated unapplied balance shall be deducted from the ROFO Purchase Price due to Landlord; provided, that no apportionment of any Impositions shall be made upon any such purchase.

               (h) If the completion of the purchase by Tenant or its designee pursuant to this Paragraph 34 shall be delayed after the date scheduled for such purchase, Basic Rent and Additional Rent shall continue to be due and payable until completion of such purchase.

          35. State Specific Provisions.

               Notwithstanding anything to the contrary contained in this Lease, the following provisions shall be applicable to the extent the Laws of the jurisdiction in which a corresponding Related Premises is located are determined to be applicable to this Lease, and Tenant hereby expressly acknowledges and agrees to the application of same; provided that, (i) nothing herein is intended or shall be deemed to supersede or diminish the provisions of Paragraph 37(l) hereof with the respect to the parties choice of law governing this Lease, and (ii) nothing herein is intended to or shall be construed as superseding or diminishing any express

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waiver by Tenant contained in this Lease, each of which shall be enforced to the fullest extent permitted by the Laws of the applicable jurisdiction:

               (a) Arizona Provisions: None

               (b) Maryland Provisions: None

          36. Post-Closing Obligations.

               Tenant shall use commercially reasonable efforts to obtain and deliver to Landlord, within ninety (90) days of the date of this Lease, fully executed originals (or copies, if indicated) of the following:

                    (i) Estoppel Certificate by The Columbia Association, Inc., a Maryland Non-Profit Membership Corporation, regarding Deed, Agreement and Declaration of Covenants, Easements, Charges And Liens recorded in Liber 463, Folio 158, Howard County, Maryland; as amended by Agreement and Declaration of Annexation dated 12/1/04, recorded 2/22/05 in Liber 8998, Folio 239.

                    (ii) Estoppel Certificate of Compliance by The Howard Research and Development Corporation, a Maryland Corporation, regarding Columbia Gateway, Declaration of Covenants, Conditions and Restrictions recorded in Liber 1503, Folio 235, as amended by Declaration of Annexation by The Howard Research and Development Corporation dated 12/9/04, recorded 2/22/05 in Liber 8998, Folio 243.

                    (iv) Copies of the registrations for the 6 onsite dry wells located at the Leased Premises.

               (a) Pursuant to that certain property condition assessment of the Leased Premises (“PCR”) performed by IVI DUE DILIGENCE SERVICES, INC., dated August 27, 2008, Tenant shall complete, repair or obtain, or cause to be completed, repaired or obtained within ninety (90) days of the date of this Lease, the following items (the “Post Closing Obligations”):

                    (i) The damaged rubber seal for one window at the second story on the rear façade and any work incidental thereto. (Estimated Cost: $400.00)

                    (ii) Malfunctioning fire alarm detection device and any related items to be repaired in order to ensure proper operation of the fire alarm system at the Columbia Premises. (Estimated Cost: $1,300.00)

                    (iii) Exterior painting at the Columbia Premises, as identified in the PCR. (Estimated Cost: $7,540.00)

                    (iv) Exterior painting at the Scottsdale Premises, as identified in the PCR. (Estimated Cost: $7,540.00)

               (b) If Tenant shall fail to timely complete each of the Post Closing Obligations, Landlord shall have the option as its sole and exclusive remedy (but not the obligation) to satisfy the Post Closing Obligations, at Tenant’s sole cost and expense, as

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Additional Rent hereunder, payable on demand within five (5) days after Tenant’s receipt of such demand.

               (c) Tenant shall provide all communications regarding the Post Closing Obligations including Tenant’s proof of satisfactory completion of these obligations to Landlord with, in the case of item (a)(iv) above, a copy addressed to:

Louis A. Naugle, Esq.
Reed Smith LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Telephone: 412-288-8586
Fax: 412-288-3063
E-mail: lnaugle@reedsmith.com

               (d) Tenant agrees to reasonably consult with Landlord in connection with the its Post-Closing Obligation set forth above, including providing drafts of reports or agency submittals, if any, incorporating Landlord’s comments to the extent practicable, providing copies of any material agency correspondence; and providing advance notice of any meetings with agency representatives. Landlord agrees to timely review any drafts provided and, if Landlord fails to provide comments within the comment period specified by Tenant, Tenant may proceed to act without further delay.

          37. Miscellaneous.

               (a) The Paragraph headings in this Lease are used only for convenience in finding the subject matters and are not part of this Lease or to be used in determining the intent of the parties or otherwise interpreting this Lease.

               (b) As used in this Lease, the singular shall include the plural and any gender shall include all genders as the context requires and the following words and phrases shall have the following meanings: (i) “including” shall mean “including without limitation”; (ii) “provisions” shall mean “provisions, terms, agreements, covenants and/or conditions”; (iii) “lien” shall mean “lien, charge, encumbrance, title retention agreement, pledge, security interest, mortgage and/or deed of trust”; (iv) “obligation” shall mean “obligation, duty, agreement, liability, covenant and/or condition”; (v) “any of the Leased Premises” shall mean “the Leased Premises or any part thereof or interest therein”; (vi) “any of the Land” shall mean “the Land or any part thereof or interest therein”; (vii) “any of the Improvements” shall mean “the Improvements or any part thereof or interest therein”; (viii) “any of the Equipment” shall mean “the Equipment or any part thereof or interest therein”; and (ix) “any of the Adjoining Property” shall mean “the Adjoining Property or any part thereof or interest therein”.

               (c) Any act which Landlord is permitted to perform under this Lease may be performed at any time and from time to time by Landlord or any person or entity designated by Landlord. Each appointment of Landlord as attorney-in-fact for Tenant hereunder is irrevocable and coupled with an interest. Landlord shall not unreasonably withhold or delay its consent whenever such consent is required under this Lease, except as otherwise provided herein and except that with respect to any assignment of this Lease or subletting of any Related Premises not expressly permitted by the terms of this Lease, Landlord may withhold its consent in accordance with the standards set forth in Paragraph 21. In any instance in which Landlord agrees not to act unreasonably, Tenant hereby waives any claim for damages against or liability of Landlord which is based upon a claim that Landlord has unreasonably withheld or

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unreasonably delayed any consent or approval requested by Tenant, and Tenant agrees that its sole remedy shall be an action for declaratory judgment. If with respect to any required consent or approval Landlord is required by the express provisions of this Lease not to unreasonably withhold or delay its consent or approval, and if it is determined in any such proceeding referred to in the preceding sentence that Landlord acted unreasonably, the requested consent or approval shall be deemed to have been granted; however, Landlord shall have no liability whatsoever to Tenant for its refusal or failure to give such consent or approval. Tenant’s sole remedy for Landlord’s unreasonably withholding or delaying, consent or approval shall be as provided in this Paragraph. Time is of the essence with respect to the performance by Tenant of its obligations under this Lease.

               (d) Landlord shall in no event be construed for any purpose to be a partner, joint venturer or associate of Tenant or of any subtenant, operator, concessionaire or licensee of Tenant with respect to any of the Leased Premises or otherwise in the conduct of their respective businesses.

               (e) This Lease and any documents which may be executed by Tenant on or about the effective date hereof at Landlord’s request constitute the entire agreement between the parties and supersede all prior understandings and agreements, whether written or oral, between the parties hereto relating to the Leased Premises and the transactions provided for herein. Landlord and Tenant are business entities having substantial experience with the subject matter of this Lease and have each fully participated in the negotiation and drafting of this Lease. Accordingly, this Lease shall be construed without regard to the rule that ambiguities in a document are to be construed against the drafter.

               (f) This Lease may be modified, amended, discharged or waived only by an agreement in writing signed by the party against whom enforcement of any such modification, amendment, discharge or waiver is sought.

               (g) The covenants of this Lease shall run with the land and bind Tenant, its successors and assigns and all present and subsequent encumbrancers and subtenants of any of the Leased Premises, and shall inure to the benefit of Landlord, its successors and assigns. If there is more than one Tenant, the obligations of each shall be joint and several.

               (h) Notwithstanding any provision in this Lease to the contrary, all Surviving Obligations of Tenant shall survive the expiration or termination of this Lease with respect to any Related Premises.

               (i) If any one or more of the provisions contained in this Lease shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

               (j) All exhibits attached hereto are incorporated herein as if fully set forth.

               (k) Tenant is not, nor will Tenant become (i) a Person with whom U.S. persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons list) or under any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action or (ii) a Person who violates the U.S. Foreign Corrupt Practices Act 15 U.S.C. §§78dd-1, 78dd-2

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and 78dd-3 and Tenant not will engage in any dealings or transactions or be otherwise associated with such persons or entities.

               (l) Each of Landlord and Tenant hereby agree that the State of Maryland has a substantial relationship to the parties and to the underlying transaction embodied hereby, and in all respects (including, without limiting the generality of the foregoing, matters of construction, validity and performance) this Lease and the obligations arising hereunder shall be governed by, and construed in accordance with, the laws of the State of Maryland applicable to contracts made and performed therein and all applicable law of the United States of America. To the fullest extent permitted by law, Tenant hereby unconditionally and irrevocably waives any claim to assert that the law of any other jurisdiction governs this Lease. Any legal suit, action or proceeding against Tenant arising out of or relating to this Lease may be instituted in any federal or state court sitting in the County of Howard, State of Maryland, and Tenant waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding in such County and State, and Tenant hereby expressly and irrevocably submits to the jurisdiction of any such court in any suit, action or proceeding. Notwithstanding the foregoing, nothing herein shall prevent or prohibit Landlord from instituting any suit, action or proceeding in any other proper venue or jurisdiction in which Tenant is located or where service of process can be effectuated.

               (m) This Lease may be executed in a number of counterparts and by different parties hereto in separate counterparts each of which, when so executed, shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement.

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     IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly executed under seal as of the day and year first above written.

LANDLORD: LT FIT (AZ-MD) LLC, a Delaware limited liability company
By:	CPA:17 LIMITED PARTNERSHIP,
	a Delaware limited partnership, its sole
	managing member
By:	CORPORATE PROPERTY
	ASSOCIATES 17 — GLOBAL
	INCORPORATED, a Maryland corporation, its general partner
By:
	Gino M. Sabatini,
	Executive Director
TENANT: LTF REAL ESTATE COMPANY, INC., a Minnesota corporation
By:	/s/ Eric J. Buss
	Eric J. Buss, Secretary

SIGNATURE PAGE TO LEASE AGREEMENT FOR LIFE TIME FITNESS, INC. 2008 LEASE

     IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be duly executed under seal as of the day and year first above written.

LANDLORD: LT FIT (AZ-MD) LLC, a Delaware limited liability company
By:	CPA:17 LIMITED PARTNERSHIP,
	a Delaware limited partnership, its sole
	managing member
By:	CORPORATE PROPERTY
	ASSOCIATES 17 — GLOBAL
	INCORPORATED, a Maryland corporation, its general partner
By:	/s/ Gino M. Sabatini
	Gino M. Sabatini,
	Executive Director
TENANT: LTF REAL ESTATE COMPANY, INC., a Minnesota corporation
By:
	Eric J. Buss, Secretary

SIGNATURE PAGE TO LEASE AGREEMENT FOR LIFE TIME FITNESS, INC. 2008 LEASE

EXHIBIT A

PREMISES

     COLUMBIA, MARYLAND

     Real property in the City of Columbia, County of Howard, State of Maryland, described as follows:

     Being all that piece of land situate, lying and being in the Sixth (6th) Election District of Howard County, Maryland, being all of the Parcel ‘U-7’ as shown on Plats of Subdivision entitled “COLUMBIA GATEWAY, PARCELS ‘U-7’ & ‘U-8’ AND LOT 15, A RESUBDIVISION OF COLUMBIA GATEWAY PARCEL ‘U-3’, P.N. 14900, PARCELS ‘U-5’ & ‘U-6’, P.N. 15269, AND A REVISION TO COLUMBIA GATEWAY, LOT 15, P.N. 14341 & 14342, SHEETS 1 THROUGH 4 OF 4” and recorded December 8, 2004, among the Land Records of Howard County, Maryland as Plat Nos. 17098, 17099, 17100 and 17101.

     SCOTTSDALE, ARIZONA

     PARCEL 1:

     A PORTION OF LOT C AS SHOWN ON THE FINAL PLAT FOR CHAUNCEY RANCH, RECORDED IN BOOK 619 OF MAPS, PAGE 50, MARICOPA COUNTY RECORDS (M.C.R.), LYING WITHIN SECTION 34, TOWNSHIP 4 NORTH, RANGE 4 EAST, OF THE GILA AND SALT RIVER BASE AND MERIDIAN, MARICOPA COUNTY, ARIZONA, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

     COMMENCING AT THE NORTH QUARTER CORNER OF SAID SECTION 34, A G.L.O. BRASS CAP, FROM WHICH THE CENTER OF SAID SECTION, A 1/2-INCH REBAR WITH CAP RLS 15573, BEARS SOUTH 00º00’02” EAST (BASIS OF BEARING), A DISTANCE OF 2642.04 FEET;

     THENCE ALONG THE NORTH-SOUTH MID-SECTION LINE OF SAID SECTION 34 AND ALONG THE NORTHERLY PROLONGATION OF THE WESTERLY LINE OF SAID LOT C, SOUTH 00º00’02” EAST, A DISTANCE OF 660.47 FEET, TO THE POINT OF BEGINNING;

     THENCE LEAVING SAID NORTH-SOUTH MID-SECTION LINE AND SAID WESTERLY LINE NORTH 89º59’58” EAST, A DISTANCE OF 639.69 FEET; THENCE SOUTH 00º00’02” EAST, A DISTANCE OF 621.09 FEET, TO THE SOUTHERLY LINE OF SAID LOT C AND THE NORTHERLY RIGHT-OF-WAY LINE OF CHAUNCEY LANE AS SHOWN ON THE MAP OF DEDICATION (M.O.D.) FOR CHAUNCEY RANCH INFRASTRUCTURE, RECORDED IN BOOK 587, PAGE 37, M.C.R.;

     THENCE ALONG SAID SOUTHERLY LINE AND SAID NORTHERLY LINE, NORTH 89º57’07” WEST, A DISTANCE OF 596.91 FEET;

EXHIBIT A TO LEASE AGREEMENT FOR LIFE TIME FITNESS, INC. 2008 LEASE — 1

     THENCE NORTH 44º58’34” WEST, A DISTANCE OF 60.52 FEET, TO SAID NORTH-SOUTH MID-SECTION LINE AND SAID WESTERLY LINE;

     THENCE LEAVING SAID SOUTHERLY LINE AND SAID NORTHERLY LINE, ALONG SAID NORTH-SOUTH MID-SECTION LINE AND SAID WESTERLY LINE, NORTH 00º00’02” WEST, A DISTANCE OF 577.77 FEET, TO THE POINT OF BEGINNING; EXCEPT 1/16TH OF ALL OIL, GAS, OTHER HYDROCARBON SUBSTANCES, HELIUM OR OTHER SUBSTANCES OF A GASEOUS NATURE, COAL, METALS, MINERALS, FOSSILS, FERTILIZER OF EVERY NAME AND DESCRIPTION, TOGETHER WITH ALL URANIUM, THORIUM, OR ANY OTHER MATERIAL WHICH IS OR MAY BE DETERMINED BY THE LAWS OF THE UNITED STATES, OR OF THE STATE OF ARIZONA, OR DECISIONS OF COURT, TO BE PECULIARLY ESSENTIAL TO THE PRODUCTION OF FISSIONABLE MATERIALS, WHETHER OR NOT OF COMMERCIAL VALUE, AS RESERVED TO THE STATE OF ARIZONA IN THE PATENT TO SAID LAND RECORDED IN DOCKET 16343, PAGE 1147, RECORDS OF MARICOPA COUNTY, ARIZONA.

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EXHIBIT B

MACHINERY AND EQUIPMENT

All fixtures, machinery, apparatus, equipment, fittings and appliances of every kind and nature whatsoever now or hereafter affixed or attached to or installed in any of the Leased Premises (except as hereafter provided), including all electrical, anti-pollution, heating, lighting (including hanging fluorescent lighting), incinerating, power, air cooling, air conditioning, humidification, sprinkling, plumbing, lifting, cleaning, fire prevention, fire extinguishing and ventilating systems, devices and machinery and all engines, pipes, pumps, tanks (including exchange tanks and fuel storage tanks), motors, conduits, ducts, steam circulation coils, blowers, steam lines, compressors, oil burners, boilers, doors, windows, loading platforms, lavatory facilities, stairwells, fencing (including cyclone fencing), passenger and freight elevators, overhead cranes and garage units, together with all additions thereto, substitutions therefor and replacements thereof required or permitted by this Lease, but excluding Tenant’s Property.

EXHIBIT B TO LEASE AGREEMENT FOR LIFE TIME FITNESS, INC. 2008 LEASE

EXHIBIT C

PERMITTED ENCUMBRANCES

SCOTTSDALE, ARIZONA

1.	Real estate taxes not yet due and payable for the 2nd half 2008 and thereafter, a lien not yet due and payable.
2.	Right of entry to the State of Arizona and its lessees in connection with the mineral estate and the production of oil and gas and set forth in Arizona Revised Statutes and in the Patent to said land recorded in Docket 16343, Page 1147.
3.	Dedications, easements and other matters shown on the plat of Chauncey Ranch, as recorded in Plat Book 619 of Maps, Page(s) 50 as it relates to the subject land, excepting therefrom the easement for electric lines and incidental purposes in the document recorded June 18, 1982 as Docket 16126, Page 940, which has been released by Release of Easement recorded in 2004-0606647 of Official Records, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status or national origin to the extent such covenants, conditions or restrictions violate 42 USC 3604(c).
4.	Declaration of Covenants, Conditions and Restrictions recorded December 21, 2004 as 2004-1497044 of Official Records and First Amendment recorded as 2005-1441352 of Official Records, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status or national origin to the extent such covenants, conditions or restrictions violate 42 USC 3604(c).
5.	The terms and provisions contained in the document entitled “Multi-Use Easement Agreement” recorded December 06, 2000 as 2000-0933323 of Official Records and thereafter Amended and Restated Multi-Use Easement Agreement recorded December 21, 2004 as 2004-1497042 of Official Records.
6.	Memorandum of Pre-Annexation and Development Agreement” recorded March 05, 2001 as 2001-0169234 of Official Records.
7.	The terms and provisions contained in the document entitled “Reciprocal Easement Agreement” recorded December 21, 2004 as 2004-1497046 of Official Records and Amended and Restated Agreement recorded March 11, 2005 as 2005-0298617 of Official Records.
8.	The terms and provisions contained in the document entitled “Declaration of Parking and Access Easement” recorded December 20, 2004 as 2004-1495815 of Official Records and re-recorded December 21, 2004 as 2004-1498677 of Official Records.
9.	All matters as set forth in Map of Dedication for “Chauncey Ranch Infrastructure”, recorded as Book 587 of Maps, Page 37 as it relates to the subject land.

EXHIBIT C TO LEASE AGREEMENT FOR LIFE TIME FITNESS, INC. 2008 LEASE

10.	All matters as set forth in Record of Survey for Chauncey Ranch — Parcel C, recorded March 09, 2005 as Book 733 of Maps, Page 32 as it relates to the subject land.
11.	All matters set forth in Declaration of Roadway and Utility Easement, recorded December 28, 2005 as 2005-1949714 of Official Records.
12.	An easement for fire hydrant and incidental purposes in the document recorded as 2001-1111627 of Official Records.
13.	An easement for fire hydrant and incidental purposes in the document recorded as 2001-1111628 of Official Records.
14.	An easement for fire hydrant and incidental purposes in the document recorded as 2001-1111629 of Official Records.
15.	An easement for utility and incidental purposes in the document recorded as 2006-1216741 of Official Records.
16.	A document entitled Ordinance S-32712 accepting permanent easements for sidewalk purposes for dedication, recorded March 6, 2006 as 2006-301993 of Official Records.
17.	Water rights, claims or title to water, whether or not shown by the public records.

COLUMBIA MARYLAND

1.	State, County and Municipal Taxes and other charges (including, but not limited to, assessments by any State, County, Municipality, Metropolitan District or Commission) subsequent to June 30, 2009, and possible future tax levies and/or front foot benefit assessments, which are a lien not yet due and payable.
2.	Subject to the following matters as shown on plat entitled “Columbia Gateway, Parcels “U-5” & “U-6”, a Resubdivision of Columbia Gateway, Parcel ‘U-4’ as shown on Plat No. 14900,” as recorded among the Land Records of Howard County, Maryland in Plat MDR No. 15269:

a.	Ex sewer & Utility Easement
b.	5’ x 40’ Revertible Turnaround Easement
c.	Minimum BLD Restriction Line as set forth in owners dedication, the establishment of which refers to the purposes of meeting zoning requirements, not for creating a restriction of title or covenant, as set forth in General Note 6 of said Plat.

2

3.	Subject to the terms and provisions contained in Agreement recorded among the Land Records of Howard County, Maryland in Liber 468, folio 239 unto the Baltimore Gas and Electric Company, granting easement for utility lines and equipment.
4.	Subject to the following matters as shown on plat entitled “Columbia Gateway, Parcels ‘U-3’ & ‘U-4’ A Resubdivision of Columbia Gateway, Parcels ‘U-1’ and ‘U-2’ as shown on plat no. 14341,” which plat is recorded among the Land records of Howard County, Maryland as Plat No. 14900:

a.	20’ sewer & utility easement;
b.	ex. 20’ sewer & utility easement;

5.	Terms and conditions of an easement for storm drainage purposes as contained in Declaration of Storm Drain Easement dated October 4, 2004, recorded October 18, 2004, in Liber 8704, Page 430.
6.	Terms and conditions of Declaration of Landscaping Easement dated October 4, 2004, recorded October 18, 2004, in Liber 8704, Page 436, as amended by Amended and Restated Declaration of Landscaping Easement dated December 8, 2004, recorded February 22, 2005, in Liber 08998, Folio 246.
7.	Subject to the following matters as shown on Plat entitled “Columbia, Gateway Parcels ‘U-7’ & ‘U-8’ and Lot 15, A Resubdivision of Columbia Gateway, Parcel ‘U-3’, P.N. 14900, Parcels ‘U-5 & ‘U-6’, P.N. 15269, and a revision to Columbia Gateway Lot 15, P.N. 14341 & 14342, Sheet 1, 2, 3 and 4 of 4” which plat is recorded December 8, 2004, among the Land Records of Howard County, Maryland as Plat Nos. 17098, 17099, 17100 and 17101:

a.	Ex. 20’ sewer and utility easement, p.n. 11895
b.	Ex. 20’ sewer & utility easement, p.n. 14900
c.	Ex. 10’ Bell Atlantic-Maryland Easement (Liber 3708, Folio 594)
d.	Ex. private storm drain easement (Liber 8794, folio 430)

8.

Terms and conditions of Deed, Agreement and Declaration of Covenants, Easements, Charges and Liens recorded in Liber 463, Folio 158, as amended by Agreement and Declaration of Annexation by and between The Columbia Association, Inc., a Maryland non-profit membership corporation, and GEAPE Land Holdings II, Inc., a Maryland corporation, dated December 1, 2004, recorded February 22, 2005, in Liber 08998, Folio 239.

9.

Terms and conditions of Columbia Gateway Declaration of Covenants, Conditions and Restrictions recorded in Liber 1503, Folio 235, as amended by Declaration of Annexation by and between The Howard Research and Development Corporation, a Maryland

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corporation, and GEAPE Land Holdings II, Inc., a Maryland corporation, dated December 9, 2004, recorded February 22, 2005, in Liber 08998, Folio 243.

10. Right of Way Easement dated January 12, 2006 and recorded among the aforesaid land records in Liber 9928, folio 252 by and between LTF Real Estate Company, Inc. and Verizon Maryland, Inc.

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EXHIBIT D

BASIC RENT PAYMENTS

A. INITIAL TERM AND ALL RENEWAL TERMS.— FOR BOTH PROPERTIES

Rent year	Annual Rent		Quarterly rent
1	$	5,658,029.36	$	1,414,507,.34
2	$	5,771,189.95	$	1,442,797.49
3	$	5,886,613.75	$	1,471,653,44
4	$	6,004,346.02	$	1,501,086.51
5	$	6,124,432.94	$	1,531,108.24
6	$	6,246,921.60	$	1,561,730.40
7	$	6,371,860.03	$	1,592,965.01
8	$	6,499,297.23	$	1,624,824.31
9	$	6,629,283.18	$	1,657,320.79
10	$	6,761,868.84	$	1,690,467.21
11	$	6,897,106.22	$	1,724,276.55
12	$	7,035,048.34	$	1,758,762.09
13	$	7,175,749.31	$	1,793,937.33
14	$	7,319,264.30	$	1,829,816.07
15	$	7,465,649.58	$	1,866,412.40
16	$	7,614,962.57	$	1,903,740.64
17	$	7,767,261.83	$	1,941,815.46
18	$	7,922,607.06	$	1,980,651.77
19	$	8,081,059.20	$	2,020,264.80
20	$	8,242,680.39	$	2,060,670.10
21	$	8,407,533.99	$	2,101,883.50
22	$	8,575,684.67	$	2,143,921.17
23	$	8,747,198.36	$	2,186,799.59
24	$	8,922,142.33	$	2,230.535.58
25	$	9,100,585.18	$	2,275,146.29
26	$	9,282,596.88	$	2,320,649.22
27	$	9,468,248.82	$	2,367,062.20
28	$	9,657,613.79	$	2,414,403.45
29	$	9,850,766.07	$	2,462,691.52
30	$	10,047,781.39	$	2,511,945.35
31	$	10,248,737.02	$	2,562,184.25
32	$	10,453,711.76	$	2,613,427.94
33	$	10,662,786.00	$	2,665,696.50
34	$	10,876,041.72	$	2,719,010.43
35	$	11,093,562.55	$	2,773,390.64
36	$	11,315,433.80	$	2,828,858.45
37	$	11,541,742.48	$	2,885,435.62
38	$	11,772,577.33	$	2,943,144.33
39	$	12,008,028.87	$	3,002,007.22
40	$	12,248,189.45	$	3,062,047.36

EXHIBIT D TO LEASE AGREEMENT FOR LIFE TIME FITNESS, INC. 2008 LEASE

     Pro rata Basic Rent for the period from the date hereof through the last day of October, 2008 shall be paid on the date hereof.

B. DEFINITIONS.

     “Rent Year” shall mean with respect to the first Rent Year the period from November 1, 2008 through October 31, 2009 and with respect to each successive Rent Year the period from November 1, through October 31.

EXHIBIT D TO LEASE AGREEMENT LIFE TIME FITNESS, INC. 2008 LEASE-2

EXHIBIT E

TERMINATION AMOUNT SCHEDULE

Lease Year	Scottsdale Premises		Columbia Premises
1 — 5	$	34,414,662.71	$	30,217,752.63
6 — 10	$	35,426,858.68	$	31,106,510.06
11 — 15	$	33,739,865.41	$	29,625,247.68
16 — 20	$	32,052,872.14	$	28,143,985.29
1st Renewal Period	$	30,365,878.87	$	26,662,722.91
2nd Renewal Period	$	30,365,878.87	$	26,662,722.91
3rd Renewal Period	$	30,365,878.87	$	26,662,722.91

EXHIBIT E TO LEASE AGREEMENT FOR LIFE TIME FITNESS, INC. 2008 LEASE

EXHIBIT F

PREMISES PERCENTAGE ALLOCATION OF BASIC RENT

Scottsdale Premises	53.25	%
Columbia Premises	46.75	%
	100	%

If any Related Premises ceases to be subject to this Lease, the percentage shown on this Exhibit F for each of the Related Premises which remains subject to this Lease shall be adjusted proportionately so that the total of such percentages shall be 100%.

EXHIBIT F to Well-Prop and Starmark Camhood Amended and Restated Lease Agreement -1

EX-10.5

Exhibit 10.5

EXECUTION COPY

GUARANTY AND SURETYSHIP AGREEMENT

     THIS GUARANTY AND SURETYSHIP AGREEMENT (this “Guaranty”), dated as of the 26 day of September, 2008, made by LIFETIME FITNESS, INC., a Minnesota corporation (“Guarantor”), to LT FIT (AZ-MD) LLC, a Delaware limited liability company (“Landlord”).

WITNESSETH:

     WHEREAS, Landlord, as lessor, has entered into a Lease Agreement of even date herewith (the “Lease”), in which Landlord leased to LTF Real Estate Company, Inc., a Minnesota corporation (“Tenant”), certain premises situate in Columbia, Maryland and Scottsdale, Arizona (collectively, the “Leased Premises”);

     WHEREAS, all of the issued and outstanding stock of Tenant is owned by Guarantor; and

     WHEREAS, the execution and delivery by Guarantor of this Guaranty is a material inducement to Landlord to execute the Lease, and Guarantor expects to derive financial benefit from the Lease.

     NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt of which is hereby acknowledged by Guarantor, and intending to be legally bound, Guarantor hereby covenants and agrees as follows:

ARTICLE I
GUARANTEE

     Section 1.01 Guaranteed Obligations. Guarantor hereby absolutely unconditionally and irrevocably guarantees to and becomes surety for Landlord and its successors and assigns for the due, punctual and full payment, performance and observance of, and covenants with Landlord to duly, punctually and fully pay and perform, the following (collectively, the “Guaranteed Obligations”):

     (a) the full and timely payment of all Rent and all other amounts due or to become due to Landlord from Tenant under the Lease or any other agreement or instrument executed in connection therewith, whether now existing or hereafter arising, contracted or incurred (collectively, the “Monetary Obligations”); and

     (b) all covenants, agreements, terms, obligations and conditions, undertakings, duties representations and warranties contained in the Lease to be observed, performed by or imposed upon Tenant under the Lease, whether now existing or hereafter arising, contracted or incurred (collectively, the “Performance Obligations”),

as and when such payment, performance or observance shall become due (whether by acceleration or otherwise) in accordance with the terms of the Lease, which terms are

incorporated herein by reference. The Guaranteed Obligations shall not be affected by the Tenant’s voluntary or involuntary bankruptcy, assignment for the benefit of creditors reorganization or similar proceeding affecting the Tenant. If for any reason any Monetary Obligation shall not be paid promptly when due, Guarantor shall, immediately upon demand, pay the same to Landlord when due under the terms of the Lease. If for any reason Tenant shall fail to perform or observe any Performance Obligation, Guarantor shall, immediately upon demand, perform and observe the same or cause the same to be performed or observed. If, by reason of any bankruptcy, insolvency or similar laws affecting the rights of creditors, Landlord shall be prohibited from exercising any of Landlord’s rights and remedies, including, but not limited to, enforcement of the terms of the Lease against the Tenant, then as to Guarantor such prohibition shall be of no force and effect, and Landlord shall have the right to make demand upon, and receive payment and/or performance from Guarantor of all Guaranteed Obligations and Guarantor’s obligation in this respect shall be primary and not secondary. Guarantor acknowledges and agrees that the Monetary Obligations include, without limitation, Rent and other sums accruing and/or becoming due under the Lease following the commencement by or against Tenant of any action under the United States Bankruptcy Code or other similar statute. Guarantor shall pay all Monetary Obligations to Landlord at the address and in the manner set forth in the Lease or at such other address as Landlord shall notify Guarantor in writing.

     Section 1.02 Guarantee Unconditional. The obligations of Guarantor hereunder are continuing, absolute and unconditional, irrespective of any circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a guarantor or surety. Without limiting the generality of the foregoing, the obligations of Guarantor hereunder shall remain in full force and effect without regard to, and shall not be released, discharged, abated, impaired or in any way affected by:

     (a) any amendment, modification, extension, renewal or supplement to the Lease or any termination of the Lease or any interest therein;

     (b) any assumption by any party of Tenant’s or any other party’s obligations under, or Tenant’s or any other party’s assignment of any of its interest in, the Lease;

     (c) any exercise or nonexercise of or delay in exercising any right, remedy, power or privilege under or in respect of this Guaranty or the Lease or pursuant to applicable law (even if any such right, remedy, power or privilege shall be lost thereby), including, without limitation, any so-called self-help remedies, or any waiver, consent, compromise, settlement, indulgence or other action or inaction in respect thereof;

     (d) any change in the financial condition of Tenant, the voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the assets, marshalling of assets and liabilities, receivership, conservatorship, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding affecting Landlord, Tenant or Guarantor or any of their assets or any impairment, modification, release or limitation of liability of Landlord, Tenant or Guarantor or their respective estates in bankruptcy or of any remedy for the enforcement of such liability resulting from the operation of any present or future provision of the United States Bankruptcy Code or other similar statute or from the decision of any court;

     (e) any extension of time for payment or performance of the Guaranteed Obligations or any part thereof;

     (f) the genuineness, invalidity or unenforceability of all or any portion or provision of the Lease;

     (g) any defense that may arise by reason of the failure of Landlord to file or enforce a claim against the estate of Tenant in any bankruptcy or other proceeding;

     (h) the release or discharge of or accord and satisfaction with of Tenant or any other person or entity from performance or observance of any of the agreements, covenants, terms or conditions contained in the Lease by operation of law or otherwise;

     (i) the failure of Landlord to keep Guarantor advised of Tenant’s financial condition, regardless of the existence of any duty to do so;

     (j) any assignment by Landlord of all of Landlord’s right, title and interest in, to and under the Lease and/or this Guaranty as collateral security for any Loan;

     (k) any present or future law or order of any government (de jure or de facto) or of any agency thereof purporting to reduce, amend or otherwise affect the Guaranteed Obligations or any or all of the obligations, covenants or agreements of Tenant under the Lease (except by payment in full of all Guaranteed Obligations) or Guarantor under this Guaranty (except by payment in full of all Guaranteed Obligations);

     (l) the default or failure of Guarantor fully to perform any of its obligations set forth in this Guaranty;

     (m) any actual, purported or attempted sale, assignment or other transfer by Landlord of the Lease or the Leased Premises or any part thereof or of any of its rights, interests or obligations thereunder;

     (n) any merger or consolidation of Tenant into or with any other entity, or any sale, lease, transfer or other disposition of any or all of Tenant’s assets or any sale, transfer or other disposition of any or all of the shares of capital stock or other securities of Tenant or any affiliate of Tenant to any other person or entity;

     (o) Tenant’s failure to obtain, protect, preserve or enforce any rights in or to the Lease or the Leased Premises or any interest therein against any party or the invalidity or unenforceability of any such rights; or

     (p) any other event, action, omission or circumstances which might in any manner or to any extent impose any risk to Guarantor or which might otherwise constitute a legal or equitable release or discharge of a guarantor or surety.

all of which may be given or done without notice to, or consent of, Guarantor.

No setoff, claim, reduction or diminution of any obligation, or any defense of any kind or nature which Tenant or Guarantor now has or hereafter may have against Landlord shall be available hereunder to Guarantor against Landlord.

     Section 1.03 Disaffirmance of Lease. Guarantor agrees that, in the event of rejection or disaffirmance of the Lease by Tenant or Tenant’s trustee in bankruptcy pursuant to the United States Bankruptcy Code or any other law, Guarantor will, if Landlord so requests, assume all obligations and liabilities under the express terms of the Lease, to the same extent as if Guarantor had been originally named instead of Tenant as a party to the Lease and there had been no rejection or disaffirmance; and Guarantor will confirm such assumption in writing at the request of Landlord on or after such rejection or disaffirmance. Guarantor, upon such assumption, shall have all rights of Tenant under the Lease (to the extent permitted by law).

     Section 1.04 No Notice or Duty to Exhaust Remedies. Guarantor hereby waives notice of any default in the payment or non-performance of any of the Guaranteed Obligations (except as expressly required hereunder), diligence, presentment, demand, protest and all notices of any kind. Guarantor agrees that liability under this Guaranty shall be primary and hereby waives any requirement that Landlord exhaust any right or remedy, or proceed first or at any time, against Tenant or any other guarantor of, or any security for, any of the Guaranteed Obligations. Guarantor hereby waives notice of any acceptance of this Guaranty and all matters and rights which may be raised in avoidance of, or in defense against, any action to enforce the obligations of Guarantor hereunder. Guarantor hereby waives any and all suretyship defenses or defenses in the nature thereof without in any manner limiting any other provision of this Guaranty. This Guaranty constitutes an agreement of suretyship as well as of guaranty, and Landlord may pursue its rights and remedies under this Guaranty and under the Lease in whatever order, or collectively, and shall be entitled to payment and performance hereunder notwithstanding any action taken by Landlord or inaction by Landlord to enforce any of its rights or remedies against any other guarantor, person, entity or property whatsoever. This Guaranty is a guaranty of payment and performance and not merely of collection.

Landlord may pursue its rights and remedies under this Guaranty notwithstanding any other guarantor of or security for the Guaranteed Obligations or any part thereof. Guarantor authorizes Landlord, at its sole option, without notice or demand and without affecting the liability of Guarantor under this Guaranty, to terminate the Lease, either in whole or in part, in accordance with its terms.

Each default on any of the Guaranteed Obligations shall give rise to a separate cause of action and separate suits may be brought hereunder as each cause of action arises or, at the option of Landlord any and all causes of action which arise prior to or after any suit is commenced hereunder may be included in such suit.

     Section 1.05 Subrogation. Notwithstanding any payments made or obligations performed by Guarantor by reason of this Guaranty (including but not limited to application of funds on account of such payments or obligations), Guarantor hereby covenants and agrees it shall not assert, enforce or otherwise exercise (and acknowledges that it shall have no right to so assert, enforce, or exercise) any and all rights it may have, at any time, whether arising directly or indirectly, by operation of law, contract or otherwise, or any claim against Tenant or any other

person or entity or against any direct or indirect security on account of payments made or obligations performed under or pursuant to this Guaranty, including without limitation any and all rights of subrogation, reimbursement, exoneration, contribution or indemnity, and any rights that would result in Guarantor being deemed a “creditor” under the United States Bankruptcy Code of Tenant or any other person or entity until a date which is the later of (i) 1 day after the date on which the Guaranteed Obligations have been fully paid and discharged or (ii) 366 days following the date on which the Guaranteed Obligations have been fully paid and discharged if the assertion, enforcement, or exercise of such rights prior to such date could or would cause any payments made by Tenant under the Lease to be avoided as voidable preferences under the Bankruptcy Code. If any payment shall be paid to Guarantor on account of any subrogation rights, each and every amount so paid shall immediately be paid to Landlord to be credited and applied upon any of the Guaranteed Obligations, whether or not then due and payable.

ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS

     Section 2.01 Representations and Warranties. The representations and warranties made by Guarantor in that certain Guarantor’s Certificate of even date herewith made by Guarantor in favor of Landlord are hereby incorporated by reference herein (with all related definitions). Guarantor hereby represents and warrants to Landlord as provided therein.

     Section 2.02 Financial Statements; Books and Records.

     (a) Guarantor shall keep adequate records and books of account with respect to the finances and business of Guarantor generally and with respect to the Leased Premises, in accordance with generally accepted accounting principles (“GAAP”) consistently applied, and shall permit Landlord and Lender by their respective agents, accountants and attorneys, upon reasonable notice to Guarantor, to examine (and make copies of) the records and books of account and to discuss the finances and business with the officers of Guarantor, at such reasonable times as may be requested by Landlord or Lender. Upon the request of Lender or Landlord (either telephonically or in writing), Guarantor shall provide the requesting party with copies of any information to which such party would be entitled in the course of a personal visit.

     (b) Guarantor shall deliver to Landlord and to Lender within ninety (90) days of the close of each fiscal year, annual audited financial statements of Guarantor prepared by nationally recognized independent certified public accountants. Guarantor shall also furnish to Landlord within forty-five (45) days after the end of each of the three remaining fiscal quarters unaudited financial statements and all other quarterly reports of Guarantor, certified by Guarantor’s chief financial officer, and all filings, if any, of Form 10-K, Form 10-Q and other required filings with the Securities and Exchange Commission pursuant to the provisions of the Securities Exchange Act of 1934, as amended, or any other Law. All financial statements of Guarantor shall be prepared in accordance with GAAP consistently applied. All annual financial statements shall be accompanied (i) by an opinion of said accountants stating that (A) there are no qualifications as to the scope of the audit and (B) the audit was performed in accordance with GAAP and (ii) by the affidavit of the president or a vice president of Guarantor, dated within five (5) days of the delivery of such statement, stating that (C) the affiant knows of no Event of Default, or event which, upon notice or the passage of time or both, would become an Event of

Default which has occurred and is continuing hereunder or, if any such event has occurred and is continuing, specifying the nature and period of existence thereof and what action Guarantor has taken or proposes to take with respect thereto and (D) except as otherwise specified in such affidavit, that Guarantor has fulfilled all of its obligations under this Guaranty which are required to be fulfilled on or prior to the date of such affidavit.

     Section 2.03 Notice of Certain Events. Promptly upon becoming aware thereof, Guarantor shall give Landlord notice of (i) the commencement, existence or threat of any proceeding by or before any duly constituted governmental authority or agency against or affecting Guarantor which, if adversely decided, would have a material adverse effect on the business, operations or condition, financial or otherwise, of Guarantor or on its ability to perform its obligations hereunder or (ii) any material adverse change in the business, operations or condition, financial or otherwise, of Guarantor.

     Section 2.04 Estoppel Certificates. Guarantor shall, at any time upon not less than ten (10) days’ prior written request by Landlord or Lender, deliver to the party requesting the same a statement in writing, executed by the president or a vice president of Guarantor, certifying (i) that, except as otherwise specified, this Guaranty is unmodified and in full force in effect, (ii) that Guarantor is not in default hereunder and that no event has occurred or condition exists which with the giving of notice or the passage of time or both would constitute a default hereunder, (iii) that Guarantor has no defense, setoff or counterclaim against Landlord arising out of or in any way related to this Guaranty, (iv) that, except as otherwise specified, there are no proceedings pending or, to the knowledge of Guarantor, threatened against Guarantor before any court, arbiter or administrative agency which, if adversely decided, could have a material adverse effect on the business, operations or conditions, financial or otherwise, of Guarantor or on its ability to perform its obligations hereunder and (v) such other matters as Landlord or Lender may reasonably request.

ARTICLE III
EVENTS OF DEFAULT

     Section 3.01 Events of Default. The occurrence of any one or more of the following shall constitute an “Event of Default” under this Guaranty:

     (a) a failure by Guarantor to make any payment of any Monetary Obligation after the expiration of any applicable notice and cure periods under the Lease, if any, regardless of the reason for such failure;

     (b) a failure by Guarantor duly to perform and observe, or a violation or breach of, any other provision hereof not otherwise specifically mentioned in this Section 3.01;

     (c) any representation or warranty made by Guarantor herein or in any certificate, demand or request made pursuant hereto proves to be untrue or incorrect, now or hereafter, in any material respect;

     (d) Guarantor shall (A) voluntarily be adjudicated a bankrupt or insolvent, (B) seek or consent to the appointment of a receiver for itself or its assets, (C) file a petition seeking relief under the bankruptcy or other similar laws of the United States, any state or any

jurisdiction, (D) make a general assignment for the benefit of creditors, or (E) be unable to pay its debts as they mature;

     (e) a court shall enter an order, judgment or decree appointing, without the consent of Guarantor, a receiver or trustee for it or approving a petition filed against Guarantor which seeks relief under the bankruptcy or other similar laws of the United States, any state or any jurisdiction, and such order, judgment or decree shall remain undischarged or unstayed sixty (60) days after it is entered;

     (f) Guarantor shall be liquidated or dissolved or shall begin proceedings towards its liquidation or dissolution; or

     (g) Guarantor shall sell or transfer or enter into an agreement to sell or transfer all or substantially all of its assets (an “Asset Transfer”); provided that, the granting by the Guarantor and/or any of its Subsidiaries of any mortgage, pledge, collateral assignment or similar encumbrance with respect to any or all of its assets for the purposes of obtaining, modifying or refinancing a senior loan facility (including, without limitation, its current senior loan facility with U. S. Bank National Association) shall not be deemed an Asset Transfer; provided that nothing hereunder is intended to overwrite the provisions set forth in Paragraph 21(g) of the Lease.

ARTICLE IV
MISCELLANEOUS

     Section 4.01 Effect Of Bankruptcy Proceedings. This Guaranty shall continue to be effective, or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by Landlord as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made. Guarantor hereby agrees to indemnify Landlord against, and to save and hold Landlord harmless from any required return by Landlord, or recovery from Landlord, of any such payment because of its being deemed preferential under applicable bankruptcy, receivership or insolvency laws, or for any other reason. If an Event of Default at any time shall have occurred and be continuing or exist and declaration of default or acceleration under or with respect to the Lease shall at such time be prevented by reason of the pendency against Tenant of a case or proceeding under any bankruptcy or insolvency law, Guarantor agrees that, for purposes of this Guaranty and its obligations hereunder, the Lease shall be deemed to have been declared in default or accelerated with the same effect as if the Lease had been declared in default and accelerated in accordance with the terms thereof, and Guarantor shall forthwith pay and perform the Guaranteed Obligations in full without further notice or demand.

     Section 4.02 Further Assurances. From time to time upon the request of Landlord, Guarantor shall promptly and duly execute, acknowledge and deliver any and all such further instruments and documents as Landlord may deem necessary or desirable to confirm this Guaranty, to carry out the purpose and intent hereof or to enable Landlord to enforce any of its rights hereunder.

     Section 4.03 Amendments, Waivers, Etc. This Guaranty cannot be amended, modified, waived, changed, discharged or terminated except by an instrument in writing signed by the party against whom enforcement of such amendment, modification, waiver, change, discharge or termination is sought.

     Section 4.04 No Implied Waiver; Cumulative Remedies. No course of dealing and no delay or failure of Landlord in exercising any right, power or privilege under this Guaranty or the Lease shall affect any other or future exercise thereof or exercise of any other right, power or privilege; nor shall any single or partial exercise of any such right, power or privilege or any abandonment or discontinuance of steps to enforce such a right, power or privilege preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies of Landlord under this Guaranty are cumulative and not exclusive of any rights or remedies which Landlord would otherwise have under the Lease, at law or in equity.

     Section 4.05 Notices. All notices, requests, demands, directions and other communications (collectively “notices”) under the provisions of this Guaranty shall be in writing and shall be deemed to have been given and received for all purposes when delivered in person or by Federal Express or other reliable 24-hour delivery service or five (5) business days after being deposited in the United States mail, by registered or certified mail, return receipt requested, postage prepaid, addressed to the other party or when delivery is refused. All notices shall be sent to the applicable party addressed, if to Landlord, at the address set forth in the Lease, and, if to Guarantor, at 2902 Corporate Place, Chanhassen, Minnesota 55317, or in accordance with the last unrevoked written direction from such party to the other party.

     Section 4.06 Expenses. Guarantor agrees to pay or cause to be paid and to save Landlord harmless against liability for the payment of all reasonable out-of-pocket expenses, including fees and expenses of counsel for Landlord, incurred by Landlord from time to time arising in connection with Landlord’s enforcement or preservation of rights under this Guaranty or the Lease, including but not limited to such expenses as may be incurred by Landlord in connection with any default by Guarantor of any of its obligations hereunder or by Tenant of any of its obligations under the Lease.

     Section 4.07 Survival. All obligations of Guarantor to make payments to or indemnify Landlord shall survive the payment and performance in full of the Guaranteed Obligations.

     Section 4.08 Severability. If any term or provision of this Guaranty or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Guaranty, or the application of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Guaranty shall be valid and enforceable to the fullest extent permitted by law.

     Section 4.09 Counterparts. This Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.

     Section 4.10 Governing Law. (a) This Guaranty was negotiated in New York, and accepted by Landlord in the State of New York, which State the parties agree has a substantial relationship to the parties and to the underlying transaction embodied hereby, and in all respects, including, without limiting the generality of the foregoing, matters of construction, validity and performance, this Guaranty and the obligations arising hereunder shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contract made and performed in such State and any applicable law of the United States of America. To the fullest extent permitted by law, Guarantor hereby unconditionally and irrevocably waives any claim to assert that the law of any other jurisdiction governs this Guaranty, and the Guaranty shall be governed by and construed in accordance with the laws of the State of New York pursuant to § 5-1401 of the New York General Obligations Law.

          (b) Any legal suit, action or proceeding against Guarantor or Landlord arising out of or relating to this Guaranty shall be instituted in any federal or state court in New York, New York, pursuant to § 5-1402 of the New York General Obligations Law, and Guarantor waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding and hereby irrevocably submits to the jurisdiction of any such court in any suit, action or proceeding. Guarantor does hereby designate and appoint National Registered Agents, 100 Canal Pointe Blvd., Suite 108, Princeton, NJ 08540, as its authorized agent to accept and acknowledge on its behalf service of any and all process which may be served in any such suit, action or proceeding in any federal or state court in New York, New York, and agrees that service of process upon said agent at said address (or at such other office in New York, New York as may be designated by Guarantor from time to time in accordance with the terms hereof), and written notice of said service of Guarantor mailed or delivered to Guarantor in the manner provided herein shall be deemed in every respect effective service of process upon Guarantor, in any such suit, action or proceeding in the State of New York. Guarantor (i) shall give prompt notice to the Landlord of any change of address of its authorized agent hereunder, (ii) may at any time and from time to time designate a substitute authorized agent with an office in New York, New York (which office shall be designated as the address for service of process), and (iii) shall promptly designate such a substitute if its authorized agent ceases to have an office in New York, New York or is dissolved without leaving a successor.

     Section 4.11 Jury Trial. GUARANTOR HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS GUARANTY. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY GUARANTOR, AND GUARANTOR ACKNOWLEDGES THAT THE LANDLORD HAS NOT MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. GUARANTOR FURTHER ACKNOWLEDGES THAT GUARANTOR HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS CONTAINED HEREIN BY INDEPENDENT LEGAL COUNSEL, SELECTED BY GUARANTOR, AND GUARANTOR HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

     Section 4.12 Successors and Assigns; Joint and Several. This Guaranty shall bind Guarantor and its successors and assigns, and shall inure to the benefit of Landlord and its successors and assigns. The obligations and liabilities of each Guarantor under this Guaranty

shall be joint and several. As used in this Guaranty, the singular shall include the plural and vice-versa.

     Section 4.13 Incorporation of Recitals; Definitions. The recitals set forth on page 1 of this Guaranty are hereby specifically incorporated into the operative terms of this Guaranty as if fully set forth. Terms not otherwise specifically defined herein shall have the meanings set forth in the Lease.

     Section 4.14 Rights of Lender. Guarantor acknowledges that the rights of Landlord under this Guaranty have been assigned to Lender and Lender shall have all of the rights and benefits of Landlord hereunder.

SIGNATURE PAGE TO
GUARANTY AND SURETYSHIP AGREEMENT

     IN WITNESS WHEREOF, Guarantor has duly executed and delivered this Guaranty as of the date first above written.

LIFE TIME FITNESS, INC., a Minnesota corporation
By:	/s/ Eric J. Buss
	Title: Secretary

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Bahram Akradi, 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: November 10, 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, 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: November 10, 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: November 10, 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