LEASE AGREEMENT

Exhibit 10.6

EXECUTION VERSION

LTF REAL ESTATE VRDN I, LLC

Landlord

TO

LTF CLUB OPERATIONS COMPANY, INC.

Tenant

LEASE AGREEMENT

DATED AS OF JUNE ___, 2008

Chanhassen, MN — Headquarters

TABLE OF CONTENTS

EXHIBIT A — Legal Description of Land
EXHIBIT B — Permitted Exceptions

 ii

LEASE AGREEMENT

DATED AS OF JUNE ___, 2008

from

LTF REAL ESTATE VRDN I, LLC

to

LTF CLUB OPERATIONS COMPANY, INC.

Article 1. REFERENCE DATA; DEFINITIONS

     1.2 Each reference in this Lease to any of the titles contained in Section 1.1 shall be construed to incorporate the data stated under that title.

     1.3 The following terms shall have the meanings set forth in this Section:

      Adjusted Basic Rent . A monthly rental amount equal to the amount necessary to amortize the outstanding principal amount of the Loan Obligations as of the Adjustment Date over the remaining term of the Notes at a finance rate factor based on an interest rate per annum equal to the sum of: (a) the “10-Year Interest Swap Rate” as published on the Federal Reserve Statistical Release H.15(519) on the day that is two business days prior to the Adjustment Date, and (b) 2.75%; provided, however, that if the First Mortgage has not been foreclosed by the First Mortgagee, Adjusted Basic Rent due on June 1, 2023 shall equal the outstanding Loan Obligations, including the interest thereon, and all other amounts payable under the Reimbursement Agreement and the other Loan Documents.

      Adjustment Date . As defined in Section 3.2.

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

      Basic Rent . The Basic Rent provided for in Section 3.2 of this Lease.

      Commencement Date . The date of this Lease.

      Contests . As defined in Section 23.1.

      Credit Issuer . General Electric Capital Corporation, and its successors and assigns.

      Environmental Activity . Any actual, suspected or threatened abatement, cleanup, disposal, generation, handling, manufacture, possession, release, remediation, removal, storage, transportation, treatment or use of any Hazardous Material, or the actual, suspected or threatened presence of any Hazardous Material, or the actual, suspected or threatened noncompliance with any Environmental Laws.

      Environmental Laws . All Legal Requirements pertaining to health, safety, protection of the environment, natural resources, conservation, wildlife, waste management, Environmental Activities and pollution.

      Event of Default . As defined in Section 17.1.

      Fair Market Value . The cash price which would be obtained for the Property in an arm’s length transaction between a willing buyer and a willing seller under no compulsion to buy or sell.

      Fair Rental Value . The annual base rent which would be obtained for the Property in an arm’s length transaction between a willing landlord and a willing tenant under no compulsion to lease.

      First Mortgage . Any first mortgage or deed of trust (together with the notes secured thereby and security instruments collateral thereto) of record now or hereafter placed against the Property by Landlord, any increase, amendment, extension, refinancing or recasting of a First Mortgage, and any provision of any other loan document which is secured by a First Mortgage. For the purposes hereof, a First Mortgage shall be deemed to continue in effect after foreclosure thereof and during any period of redemption therefrom.

      First Mortgagee . The holder from time to time of the First Mortgage, if any.

      First Offer Right . Tenant’s first offer right with respect to the Property granted pursuant to Article 27.

      Governmental Authorities . All federal, state, county, municipal and local governments, and all departments, commissions, boards, bureaus and officers thereof, having or claiming jurisdiction over the Property or Tenant’s use thereof.

      Guarantor . Life Time Fitness, Inc., and its successors and assigns.

      Guaranty . That certain Lease Guaranty and Negative Pledge Agreement dated as of June 1, 2008 executed by Guarantor for the benefit of Landlord.

      Hazardous Materials . Any by-product, chemical, compound, contaminant, pollutant, product, substance, waste or other material (a) that is hazardous or toxic, or (b) the abatement, cleanup, discharge, disposal, emission, exposure to, generation, handling, manufacture, possession, presence, release, removal, remediation, storage, transportation, treatment or use of which is controlled, prohibited or regulated by any Environmental Laws, including asbestos, petroleum and petroleum products and polychlorinated biphenyls.

      Improvements . All buildings, structures, improvements, parking areas, landscaping and fixtures erected or located on or attached to the Land (excluding any trade fixtures and fixtures used in the operation of the businesses from time to time conducted on the Property); all heating, air conditioning, manufacturing and incinerating apparatus and equipment; all boilers, engines, motors, dynamos, generating equipment, piping and plumbing fixtures, water heaters, walk-in refrigerators and freezers, cooling (other than freestanding fans and supplemental cooling equipment), ventilating, sprinkling and vacuum cleaning systems, fire extinguishing apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding, elevators, escalators, mantels, built-in mirrors, window shades, blinds, draperies, screens, storm sash, awnings, and outdoor shrubbery and plants located on the Land; and all alterations and additions thereto and replacement thereof, including by reason of Restoration. The Improvements shall be and remain the property of Landlord, subject to this Lease.

      Indenture . The Indenture of Trust dated as of the date hereof between Landlord and Trustee, as amended from time to time.

      Land . The land, but not any Improvements thereto, legally described on Exhibit A .

      Lease . This Lease Agreement, including the following exhibits attached hereto and hereby made a part hereof:

Exhibit A — Legal Description of the Land
Exhibit B — Permitted Exceptions

      Legal Requirements . All laws, statutes, codes, acts, ordinances, orders, judgments, decrees, injunctions, directions and requirements of all Governmental Authorities which now or at any time hereafter may be applicable to or required in connection with the Property or any part thereof, or any use or condition of the Property or any part thereof.

      Life Time . Life Time Fitness, Inc.

      Life Time Affiliate . Life Time and all Life Time Subsidiaries which are consolidated with Life Time for financial reporting purposes under generally accepted accounting principles.

      Life Time Subsidiary . With respect to Life Time, any corporation, partnership, joint venture, limited liability company, association or other entity, the management of which is,

directly or indirectly, controlled by, or of which an aggregate of more than 50% of the outstanding voting stock or other equity interests is, at the time, owned or controlled directly or indirectly by, Life Time or one or more Life Time Subsidiaries.

      Loan . That certain financing consisting of the loans evidenced by the Notes, together with Landlord’s obligations to reimburse Credit Issuer for any and all payments made by Credit Issuer under the Letter of Credit (as defined and described in the Indenture) as set forth and described in the Reimbursement Agreement.

      Loan Obligations . Collectively, but without duplication, the following: (a) “Obligations” as defined in the Reimbursement Agreement; (b) all Credit Enhancement Fees (as defined in the Reimbursement Agreement) and drawing fees due and owing to Credit Issuer under the Reimbursement Agreement; (c) all remarketing fees due and owing to Remarketing Agent; (d) all fees due and owing to Trustee; (e) all fees due and owing to any Rating Agency (as defined in the Indenture) required to maintain the rating on the Notes; and (f) all other fees, expenses, costs and reimbursement obligations payable by Landlord in connection with the Loan.

      Notes . Landlord’s $34,235,000 Variable Rate Demand Notes Series 2008, issued under the Indenture.

      Other Lease . That certain Lease Agreement of even date between Landlord, as landlord, and Tenant, as tenant, relating to the lease of certain improved real property owned by Landlord and commonly known as 6800 West 138 ^th Street, Overland Park, Kansas.

      Permitted Exceptions . The liens, documents and other matters listed on Exhibit B .

      Post-Default Rate . The sum of (a) 3.00% and (b) the annual prime rate of interest announced from time to time in The Wall Street Journal, Eastern Edition.

      Property . The Land and the Improvements, collectively.

      Reimbursement Agreement . The Reimbursement Agreement dated as of June 1, 2008 among Landlord, GE Government Finance, Inc., and Credit Issuer, as amended from time to time.

      Remarketing Agent . Dougherty & Company LLC, or any other successor remarketing agent under the Remarketing Agreement.

      Remarketing Agreement . The Remarketing Agreement dated as of the date hereof between Landlord and Remarketing Agent.

      Remodeling . Remodeling, refurbishing, expansion, demolition and other improvement work performed by or on behalf of Tenant to the interior or exterior of the Property including without limitation the replacement of floor coverings or wall coverings, constructing, renovating or reconfiguring office, retail or other spaces of the Property,

upgrading mechanical systems including but not limited to electrical, plumbing and HVAC systems, and constructing, modifying or otherwise installing improvements customarily found in other properties owned or leased by any affiliate of Life Time Fitness, Inc. that does not: (a) reduce the interior square footage of the Improvements by more than 5% in the aggregate; (b) affect the structural elements of any of the Improvements; (c) demonstrably lessen the Fair Market Value or the Fair Rental Value of the Property (taken together as an integrated whole); or (d) cost more than the applicable Threshold Amount to complete.

      Rent . Collectively, Basic Rent and all other sums owing from Tenant to Landlord pursuant to this Lease.

      Restore or Restoration . The repair, restoration or rebuilding of the Property or any part thereof following any Taking, damage to or destruction of the same by fire or other casualty or cause as nearly as possible to its size, type and character immediately prior to such Taking, damage or destruction, in accordance with all Legal Requirements, with such Alterations as may be determined by Tenant, together with any temporary repairs and property protection pending completion of the work.

      Set-Off . As defined in Section 3.4.

      Supervised Alteration . Any Alteration that is not Remodeling.

      Taking . A taking of all or any part of the Property, or any interest therein or right accruing thereto, including, without limitation, any right of access thereto existing on the date of this Lease, as the result of or in lieu or in anticipation of the exercise of the right of condemnation or eminent domain. The Taking shall be deemed to occur on the date on which the condemning authority takes possession.

      Taxes . All real estate taxes and special assessments levied against or imposed on the Property.

      Tenant’s Property . As defined in Section 29.1.

      Term . The term of this Lease as provided in Article 2, including without limitation extensions of the initial term pursuant to Section 2.2.

      Threshold Amount . During the period from the Commencement Date through and July 31, 2013, inclusive, the sum of $3,000,000 (in the aggregate for the Property); during the period from August 1, 2013 through July 31, 2018, inclusive, the sum of $4,000,000 (in the aggregate for the Property); and, during the period from August 1, 2018 through July 31, 2023, inclusive, the sum of $5,000,000 (in the aggregate for the Property). During the first Extended Term, the Threshold Amount is $6,000,000 (in the aggregate for the Property), increasing by $1,000,000 on the first day of each subsequent Extended Term.

      Trustee . Manufacturers and Traders Trust Company, or any successor trustee under the Indenture.

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

Article 2. DEMISE OF PROPERTY; TERM; EXTENSIONS OF TERM

     2.1 Landlord, for and in consideration of the rents hereinafter reserved and the covenants and agreements hereinafter contained on the part of Tenant to be paid, kept and performed, does hereby demise and lease to Tenant, and Tenant does hereby take and lease from Landlord, upon and subject to the terms and conditions of this Lease, the Property for an initial term commencing on the Commencement Date and ending on July 31, 2023.

     2.2 Tenant shall have the right, subject to the provisions hereinafter provided, to renew the Term for five (5) periods of five (5) years each (each, an “Extended Term”), such periods to commence at the expiration of the initial Term or the first Extended Term, as applicable. The Extended Terms shall be upon the same terms, covenants and conditions as provided in this Lease; provided, however, the annual Basic Rent for such Extended Terms shall be ninety-five percent (95%) of the Fair Rental Value anticipated to be in effect on the commencement of the applicable Extended Term.

     2.3 Tenant may exercise each of its options to extend the Term by giving written notice thereof to Landlord on or before the date occurring twelve (12) months prior to the expiration of the initial Term or preceding Extended Term, as the case may be. If Tenant fails to give such notice within the time permitted, Tenant shall have waived its right to extend the Term.

     2.4 The exercise of an extension option as herein provided shall operate as an extension of the Term, so that this Lease and each and every covenant, agreement and provision thereof shall be and remain in full force and effect during the Term as extended and with the same force and effect as if the Term were originally for such extended period.

Article 3. RENT

     3.1 Tenant covenants and agrees to pay to Landlord, without demand, setoff or abatement except as provided in this Lease, the Basic Rent set forth in Section 3.2.

     3.2 For as long as the Loan or any Loan Obligation is outstanding, Basic Rent for each month in the Term is an amount equal to forty-nine percent (49%) of the Loan Obligations (which amount shall increase to 100% if the Other Lease expires or terminates for any reason, whether voluntarily or involuntarily, or to the extent Tenant fails to pay any Basic Rent (as defined in the Other Lease) thereunder) which becomes due and payable since the last date on which Basic Rent was due hereunder; provided, however, on the date the entire outstanding principal balance of the Loan becomes due and payable in full by Landlord as a result of the occurrence of an “Event of Default” (as such term is defined in the Reimbursement Agreement) (the “Adjustment Date”), Basic Rent will automatically adjust to an amount equal to the greater

of (a) 100% of the Fair Rental Value (determined as of the date of the adjustment) or (b) the product of (i) 49% (or if the Other Lease expires or is terminated for any reason, or to the extent Tenant fails to pay any Basic Rent (as defined in the Other Lease) thereunder, 100%) and (ii) the Adjusted Basic Rent. Upon the indefeasible payment of the Loan and all Loan Obligations in full, Basic Rent will automatically adjust to an amount equal to 95% of the Fair Rental Value (determined as of the date of the adjustment) and remain at that amount for the remainder of the Term.

     3.3 Tenant shall pay installments of Basic Rent to Landlord on the dates and at the times that the Loan Obligations are due and owing, at the address of Landlord, or to such other address as Landlord may direct by notice to Tenant. Upon the indefeasible payment of the Loan and Loan Obligations in full, and the adjustment of Basic Rent as set forth in Section 3.2, Landlord may elect by delivering written notice thereof to Tenant at any time thereafter, to require Tenant to pay installments of Basic Rent in advance on the first day of each month during the remainder of the Term. Additionally, if Basic Rent is ever adjusted to Adjusted Basic Rent as provided in Section 3.2 above, then such Basic Rent shall be due and payable on the first day of each calendar month commencing with the first full calendar month after the Adjustment Date and continuing on the first day of each calendar month thereafter.

     3.4 This is a net lease and all monetary obligations shall be paid without notice or demand and without set-off, counterclaim, recoupment, abatement, suspension, deferment, diminution, deduction, reduction or defense (collectively, a “Set-Off”). This Lease and the rights of Landlord and the obligations of Tenant under this Lease shall not be affected by any event or for any reason or cause whatsoever foreseen or unforeseen. The obligations of Tenant under this Lease shall be separate and independent covenants and agreements, all monetary obligations shall continue to be payable in all events (or, in lieu thereof, Tenant shall pay amounts equal thereto), and the obligations of Tenant under this Lease shall continue unaffected. All Rent payable by Tenant hereunder shall constitute “rent” for all purposes (including Section 502(b)(6) of the Federal Bankruptcy Code).

     3.5 If any Rent or other amount due hereunder is not paid when due, whether at the end of the Term or otherwise, then and in such event, Tenant shall pay or shall cause to be paid interest thereon from and after the date on which such payment first becomes due (regardless of whether an Event of Default has occurred) at the Post-Default Rate, and such interest shall be due and payable, on demand, at such rate until the entire amount due is paid, whether or not any action shall have been taken or proceeding commenced to recover the same. Nothing contained in this Section 3.5 shall in any way extend the time for the payment of any amounts payable hereunder.

     3.6 In the event Tenant fails to pay any amounts due and payable under this Lease when due, Landlord may, at its option, whether immediately or at the time of final payment of such amounts, impose a late charge on Tenant equal to five percent of the amount of each and every such past due payment notwithstanding the date on which such payment is actually paid to Landlord. Any late charge imposed by Landlord in accordance with this Section 3.6 shall be due and payable on demand and shall be in addition to any interest due hereunder at the Post-Default

Rate, and to the exercise by Landlord of its rights and remedies hereunder following an Event of Default.

Article 4. TAXES

     4.1 Subject to Section 4.2, Tenant shall pay, or cause to be paid, all Taxes on the Property before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof; provided, however, that:

     4.1.1 If, by law, any Tax may, at the option of the taxpayer or party obligated, be paid in installments, Tenant may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Tax) in installments and, in such event, subject to the provisions of subsection 4.1.2 hereof, shall pay only such installments as may become due during the Term as the same respectively become due in the ordinary course and before any fine, penalty, further interest or cost may be added thereto; and

     4.1.2 Any Tax due and payable, including any installments thereof, in the year of commencement or in the final year of the Term shall be prorated between Landlord and Tenant as of the commencement or the expiration of the Term, as the case may be.

     4.2 Upon termination of any Contest brought by Tenant pursuant to Article 23 with respect to the amount or validity of any Tax, or if Tenant shall so elect, at any time prior thereto, Tenant shall pay the amount of such Tax or part thereof as finally determined in such proceeding.

     4.3 If, pursuant to the terms of any First Mortgage, Landlord is obligated to make deposits with First Mortgagee of amounts to pay Taxes and any other impositions, then upon notice delivered to Tenant by Landlord or First Mortgagee, Tenant shall commence to deposit such amounts with First Mortgagee, and such deposits, when and to the extent made, will be in satisfaction of Tenant’s obligations pursuant to this Article 4 to provide for payment of Taxes to the extent of the amount of deposits available therefor.

Article 5. REPAIRS AND MAINTENANCE

     5.1 Throughout the Term, Tenant, at its sole cost and expense, shall take good care of the Property, all appurtenances of the Property, all alleyways and passageways and all sidewalks, curbs and vaults adjoining the Property, and shall at all times keep the same in a good order and condition, ordinary wear excepted, and make all necessary repairs thereto, interior and exterior, structural and non-structural, ordinary and extraordinary and foreseen and unforeseen.

     5.2 The term “repairs” as used in this Lease shall include, but not be limited to, all necessary or appropriate replacements. The necessity for and adequacy of the repairs to the Property made or required to be made pursuant to Section 5.1 shall be measured by the requirements of buildings of similar construction and age containing similar facilities which are

prudently managed and operated with due regard for both short term and long term considerations.

     5.3 All repairs by Tenant shall be effected with all due diligence and in a workmanlike manner in compliance with all Legal Requirements and shall be promptly and fully paid for by Tenant.

Article 6. INSURANCE

     6.1 Tenant, at its expense, shall procure and maintain or cause to be procured and maintained during the Term:

     6.1.1 Insurance with respect to the Property against loss or damage by fire, lightning, windstorm, tornado, hail and such other casualty as is customarily covered by extended coverage and “all risk” endorsements and such other risks as Landlord may from time to time reasonably require, in each case in the full replacement value of the Property. The term “full replacement value” as used in this Section and in other Sections of this Article 6 shall mean 100% of the actual replacement cost including the cost of all debris removal, exclusive, however, of costs of excavations, foundations and footings below the lowest floor. Whenever appropriate, while any Alterations are in the course of being made, the aforesaid fire and extended coverage insurance shall be carried by Tenant in builder’s risk form written on a completed value basis. Such insurance shall name Landlord, Tenant and, if required by the First Mortgagee or Landlord, the First Mortgagee, as insureds, as their interest may appear;

     6.1.2 Commercial general public liability insurance against claims for bodily injury, death or property damage, occurring on, in or about the Property in a combined single limit of not less than Two Million Dollars ($2,000,000), naming Landlord and the First Mortgagee as additional insureds;

     6.1.3 If requested by Landlord at any time, boiler and pressure vessel and miscellaneous equipment insurance, including pressure pipes, air conditioning systems, electric motors, air tanks, compressors and pumps, in such amounts as Landlord may reasonably require;

     6.1.4 If the Property is at any time determined to be in a flood hazard area, flood insurance;

     6.1.5 During the entire period of making of any Alterations, (a) owner’s contingent or protective liability insurance covering claims not covered by or under the terms or provisions of the above-mentioned comprehensive general public liability insurance policy, and (b) adequate Worker’s Compensation Insurance covering all persons employed on or in connection with such Alterations; and

     6.2 All insurance policies provided for in this Article 6 shall:

     6.2.1 be valid and enforceable policies, in such forms and, where not expressly provided for above, in such amounts, as may from time to time be reasonably satisfactory to Landlord and the First Mortgagee, issued by financially sound and responsible insurance companies authorized to do business in the jurisdiction where the Property is located, reasonably satisfactory to Landlord;

     6.2.2 except for worker’s compensation insurance, name Landlord, Tenant and, if required by the First Mortgage, the First Mortgagee as loss payee and as an additional insured as their respective interests may appear;

     6.2.3 provide that such policies shall not be changed or cancelled without at least thirty (30) days’ prior written notice to Landlord;

     6.2.4 provide that losses shall be adjusted with the insurers and/or underwriters by the Landlord and Tenant; and

     6.2.5 provide that, except in the case of public liability and worker’s compensation insurance, all insurance proceeds shall be payable to Landlord and Tenant, as their respective interests may appear.

     6.3 On or before the Commencement Date, and thereafter prior to the expiration dates of the expiring policies theretofore furnished pursuant to this Article 6, copies of the policies (or, in the case of liability insurance, certificates of the insurers) shall be delivered by Tenant to Landlord.

     6.4 If Tenant is delayed in receiving any insurance proceeds as a result of Landlord’s unreasonable failure or refusal to approve an insurance adjustment, such delay shall be taken into account in determining whether Tenant has fulfilled its obligations under Article 9 hereof with reasonable diligence. All costs and expenses of collecting or recovering any insurance proceeds under such policies shall be paid by Tenant.

     6.6 Notwithstanding anything to the contrary in this Article 6, proceeds of any insurance carried by Tenant on Tenant’s Property or any other property of Tenant shall be payable directly to Tenant, and Tenant shall have the exclusive right to adjust and settle losses with respect thereto.

     6.7 Notwithstanding anything to the contrary in this Article 6, Tenant shall maintain all insurance required by any First Mortgage and shall otherwise comply with the insurance requirements of any First Mortgage for so long as any such First Mortgage is outstanding.

Article 7. UTILITIES

     During the Term, Tenant shall pay all charges for water, sewer, electricity, heating, air conditioning and all other utilities with respect to the Property.

Article 8. ALTERATIONS

     8.1 General . Tenant, at its sole cost and expense, shall have the right from time to time during the Term to perform Alterations, subject in all cases to the further provisions of this Article 8 and to all other applicable provisions of this Lease.

     8.2 Consent Required . Tenant may not make any Supervised Alteration to the Property without obtaining Landlord’s prior written consent, which consent may not be unreasonably withheld or delayed.

     8.3 Plans and Specifications, etc . All Supervised Alterations shall be made (a) under the supervision of an architect or engineer selected by Tenant and approved by Landlord (which approval may not be unreasonably withheld); (b) in accordance with detailed plans and specifications prepared by such architect or engineer; and (c) pursuant to a contract therefor approved by Landlord between Tenant and a general contractor engaged by Tenant which incorporates such plans and specifications. Copies of all such plans and specifications shall be delivered by Tenant to Landlord, and shall be subject to Landlord’s prior approval.

     8.4 Other Requirements . No Alteration shall be made except in compliance with, and Tenant hereby covenants that it will comply with, each of the following provisions:

     8.4.1 All Alterations shall be made with reasonable diligence and dispatch (subject to Unavoidable Delays) in a first class manner and with first class materials and workmanship.

     8.4.2 Before any Alteration has begun, Tenant shall procure, at its expense, all necessary licenses, permits, approvals and authorizations from all Governmental Authorities for such Alteration and shall, on demand, deliver photocopies thereof to Landlord. Upon Tenant’s request, Landlord shall join in the application for such licenses, permits, approvals and authorizations whenever such action is necessary, and Tenant covenants that Landlord will not suffer, sustain or incur any cost, expense or liability by reason thereof.

     8.4.3 All Alterations shall be made and completed in accordance with all governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of governmental authorities (including Environmental Laws) affecting either Tenant or the Property or any portion of or the construction, ownership, use, alteration or operation of, or any portion of any Property (whether now or hereafter enacted and in force), and all permits, licenses and authorizations and regulations relating thereto and insurance requirements under this Lease.

     8.4.4 No Alteration shall create any encroachment upon any street, easement, setback line or open yard requirement or upon any adjacent premises.

     8.4.5 To the extent that any Alteration materially alters the footprint of any of the Improvements, Tenant shall, on written demand, promptly deliver to Landlord and the First Mortgagee a copy of a final survey of the Property, certified to Landlord and the First Mortgagee, showing the completed Alteration.

     8.4.6 No Alteration shall be made which would in the opinion of the Landlord render title to the Property or any part thereof unmarketable.

     8.4.7 No Alteration shall be performed which would tie in or connect any building or structure on the Property with any other building or structure located outside the boundary lines of the Property without the prior written consent of Landlord.

     8.4.8 All Alterations shall be performed in compliance with any and all restrictive or protective covenants affecting the Property.

     8.4.9 All expenses of Landlord in respect of the First Mortgage incurred by reason of the Alteration in question shall be reimbursed by Tenant, as additional Rent, upon demand.

     8.5 No Request or Consent by Landlord . Nothing contained in this Lease shall constitute any consent or request by Landlord, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof, nor as giving Tenant any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against Landlord in respect thereof.

     8.6 Notice of Non-Responsibility . Before any Alteration has begun, Landlord shall have the right to post and maintain on the Property and to record in the County Recorder’s office in the County in which the Property is located any notices of non-responsibility provided for under applicable law.

Article 9. DAMAGE TO OR DESTRUCTION OF THE IMPROVEMENTS

     9.1 In case of any damage to or destruction of the Property or any part thereof, Tenant shall give prompt notice thereof to Landlord, and, unless this Lease is amended pursuant to Section 9.4, Tenant shall promptly and with reasonable diligence (subject to Unavoidable Delays), commence and complete Restoration within six months after such damage or destruction, all in accordance with plans and specifications therefor first approved by Landlord, which approval shall not be unreasonably withheld. The replacement building(s) to be constructed shall have an area which is not less than the area of the Improvements being replaced, and shall be of a quality not less than the quality of the Improvements, as the same existed immediately prior to such damage or destruction, and assuming compliance with the maintenance requirements in this Lease.

     9.2 Unless an Event of Default has occurred and is continuing, insurance proceeds received by Landlord in accordance with Section 6.2.5 on account of any damage to or

destruction of the Property or any part thereof (less the costs, fees and expenses incurred by Tenant in the collection thereof, which shall be paid out of such proceeds) shall be paid to Tenant as Restoration progresses, to pay for the cost of Restoration, upon written request of Tenant accompanied by evidence satisfactory to Landlord that an amount equal to the amount requested is then due and payable or has been paid and is properly a part of such cost and that the net insurance proceeds not yet advanced will be sufficient for the completion of the Restoration. Upon receipt by Landlord of evidence satisfactory to them that Restoration has been completed and the cost thereof paid in full, and that there are no mechanic’s or similar liens for labor or materials supplied in connection therewith, the balance, if any, of such insurance proceeds (and any amount so made available by Landlord) shall be paid to Landlord, without reduction in the Basic Rent. Upon the expiration or sooner termination of this Lease, any insurance proceeds not theretofore applied to the cost of Restoration shall be paid to Landlord.

     9.3 Except as provided in Section 9.4, no destruction of or damage to the Property, or any part thereof, whether such damage or destruction be partial or total or otherwise, shall entitle or permit Tenant to surrender or terminate this Lease or shall relieve Tenant from its liability to pay in full the Basic Rent and other sums and charges payable by Tenant hereunder, or from any of its other obligations under this Lease, and Tenant hereby waives any rights now or hereafter conferred upon it by statute or otherwise to surrender this Lease or quit or surrender the Property or any part thereof, or to receive any suspension, diminution, abatement or reduction of the Basic Rent or other sums and charges payable by Tenant hereunder on account of any such destruction or damage.

     9.4 In case of any damage to or destruction of the Property which occurs during the last two (2) years of the Term in respect of which the cost of Restoration is reasonably estimated to exceed forty percent (40%) of the replacement cost of the Property and/or for which substantial completion of Restoration cannot occur until more than six (6) months following such damage or destruction, as such cost of Restoration and/or date of substantial completion is estimated in good faith by a reputable general contractor promptly selected by Tenant and approved by Landlord, which approval may not be unreasonably withheld or delayed, Tenant may terminate this Lease by giving written notice thereof to Landlord within forty-five (45) days after the date of such damage or destruction. Such termination shall be effective on the date such notice is given. In case of any such termination, Tenant shall not have any obligation to repair or restore the Property, provided however Landlord shall receive insurance proceeds attributable to the Improvements at the Property, including any Alterations.

Article 10. CONDEMNATION

     10.1 In the event of a Taking of the whole or substantially all of the Property, either Tenant or Landlord may terminate this Lease, and if either party elects to terminate the Lease due to such Taking, the Basic Rent and all other sums and charges required to be paid by Tenant hereunder shall be paid to the date of such Taking. In the event of any such Taking and notwithstanding the termination of this Lease, Landlord and Tenant shall together make one claim for an award for their combined interests in the Property and, subject to the requirements of the First Mortgage, the net award received (after deduction of reasonable fees and expenses of

collection, including, but not limited to, reasonable attorneys’ and experts’ fees) shall be paid as follows and in the following order:

     10.1.1 Tenant shall be entitled to the portion of the award made for the value of its leasehold esta