LEASE GUARANTY AND NEGATIVE
PLEDGE AGREEMENT
THIS LEASE
GUARANTY AND NEGATIVE PLEDGE AGREEMENT is dated as of June 1,
2008 (this “Guaranty”), by LIFE TIME FITNESS, INC., a
Minnesota corporation (“Guarantor”), whose mailing
address is 2902 Corporate Place, Chanhassen, MN 55317, in favor of
LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company,
its successors and assigns (“Landlord”), whose address
is 2902 Corporate Place, Chanhassen, MN 55317, with reference to
the recitals set forth below.
A. Landlord
has agreed to lease to LTF Club Operations Company, Inc., a
Minnesota corporation (“Tenant”), certain real property
and improvements thereon located on the real property legally
described on (i) Exhibit A-1 hereto (the “Minnesota
Premises”) pursuant to the Lease Agreement dated as of
June 13, 2008 (the “Minnesota Lease”) between
Landlord and Tenant and (ii) Exhibit A-2 hereto (the
“Kansas Premises”; the Minnesota Premises and the
Kansas Premises are collectively referred to herein as the
“Premises”) pursuant to the Lease Agreement dated as of
June 13, 2008 (the “Kansas Lease”; the Minnesota
Lease and the Kansas Lease are referred to herein individually as a
“Lease” and collectively as the “Leases”)
between Landlord and Tenant.
B. General
Electric Capital Corporation (“GECC”) has agreed to
issue an irrevocable direct pay letter of credit (the “Letter
of Credit”) for the account of Landlord pursuant to the terms
of the Reimbursement Agreement dated as of June 1, 2008 (the
“Reimbursement Agreement”) among GECC, Landlord and GE
Government Finance, Inc. As security for its reimbursement
obligations under the Reimbursement Agreement, Landlord has,
(i) pursuant to the terms of the Mortgage, Security Agreement,
Assignment of Leases and Rents, Financing Statement and Fixture
Filing of even date herewith, (a) granted a mortgage lien to
GECC on the Minnesota Premises and (b) assigned all of its
rights and interest in the Minnesota Lease to GECC, and
(ii) pursuant to the terms of the Mortgage, Security
Agreement, Assignment of Leases and Rents, Financing Statement and
Fixture Filing of even date herewith, (a) granted a mortgage
lien to GECC on the Kansas Premises and (b) assigned all of
its rights and interest in the Kansas Lease to GECC.
C. As a
condition precedent to issuing the Letter of Credit, GECC requires
that Tenant obtain the execution of this Guaranty by Guarantor, and
Landlord will be relying on the terms hereof in leasing the
Premises. As a condition precedent to GECC’s issuing the
Letter of Credit, GECC requires that Landlord assign its rights in
this Guaranty to GECC.
D. The
leasing of the Premises by Landlord to Tenant and the issuance of
the Letter of Credit are of value to Guarantor, are reasonably
expected to benefit Guarantor, directly or indirectly, and are in
furtherance of Guarantor’s interests.
In consideration
of Landlord’s leasing the Premises to Tenant, and as an
inducement to Landlord to do so, Guarantor hereby agrees, warrants
and covenants as follows:
1. Guarantor
hereby unconditionally, irrevocably and absolutely guarantees the
full and prompt payment when due, whether by acceleration or
otherwise, of (a) all rent and all other sums and charges
whatsoever payable by Tenant under the Leases, including, without
limitation, all costs of collection, attorneys’ fees, court
costs, and other advances and extensions thereunder, and
(b) the full, faithful and prompt performance and observance
of all the covenants, terms and conditions and agreements to be
performed and observed by Tenant under the Leases, all without
set-off, counterclaim, recoupment, or deduction of any amounts
owing or alleged to be owing by Landlord to Tenant. It is expressly
understood that this Guaranty covers, without limitation,
(y) any and all amendments, extensions, modifications,
rearrangements and renewals of the Leases; and (z) all
interest, default interest, late payment fees and other amounts
that would have accrued under the Leases but for the commencement
of a case under the Federal Bankruptcy Code or any other similar
federal or state law. Without limiting the foregoing, Guarantor
specifically guarantees payment of any judgment entered against the
Tenant and any damages that may be awarded in any action brought
against the Tenant by Landlord arising out of or relating to either
Lease. All of the indebtedness, obligations and liabilities
described in this paragraph are referred to herein collectively as
the “Guaranteed Obligations.” This Guaranty is a
guaranty of payment and not merely of collection.
2. This
Guaranty shall take effect when received by Landlord without the
necessity of any acceptance by Landlord or of any notice to
Guarantor or to Tenant, shall be continuing and irrevocable, and
shall remain in full force and effect until all the Guaranteed
Obligations are fully and finally paid. If payment is made by
Tenant, whether voluntarily or otherwise, or by any third party, on
the Guaranteed Obligations and thereafter Landlord is forced to
remit, rescind or restore the amount of that payment under any
federal or state bankruptcy law or law for the relief of debtors or
for any other reason, (a) the amount of such payment shall be
considered to have been unpaid at all times for the purposes of
enforcement of this Guaranty and (b) the obligations of Tenant
guaranteed herein shall be automatically reinstated to the extent
of such payment.
3. The
obligations of Guarantor hereunder are separate and independent of
the obligations of Tenant. Guarantor expressly agrees that a
separate action may be brought against Guarantor whether or not
Tenant is joined in such action.
4. Guarantor
represents, warrants, and covenants to Landlord that
(a) Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Minnesota; (b) Guarantor is in good standing and is duly
licensed or qualified to transact business in the State of
Minnesota and the State of Kansas; (c) Guarantor expects to
derive financial and other advantages and benefits, directly or
indirectly, from the making of this Guaranty; (d) Guarantor
executed this Guaranty without any intent to hinder, delay, or
defraud any current or future creditor of Guarantor;
(e) Guarantor is not insolvent and will not become insolvent
as a result of the execution of this Guaranty; (f) Guarantor
is not engaged, and is not about to engage, in any business or
transaction for which any property remaining with Guarantor has an
unreasonably small capital or for which the remaining assets of
Guarantor are unreasonably small in relation to the business of
Guarantor or the transaction contemplated by this Guaranty;
(g) Guarantor does not intend to incur, and does not believe
and has no reason to believe, that Guarantor will incur, debts
beyond Guarantor’s ability to pay such debts as they become
due; (h) no representations or agreements of any kind have
been made to Guarantor which would limit or qualify in any way the
terms of this
2
Guaranty;
(i) Landlord has made no representation to Guarantor as to
the creditworthiness of Tenant; (j) Guarantor has established
adequate means of obtaining from Tenant on a continuing basis
information regarding Tenant’s financial condition;
(k) Guarantor will keep adequately informed of any facts,
events or circumstances which might in any way affect
Guarantor’s risks under this Guaranty; (l) this Guaranty
shall not be affected by Landlord’s failure to disclose to
Guarantor any information or documents (financial or otherwise)
heretofore or hereafter acquired by Landlord in the course of its
relationship with Tenant; (m) Guarantor has been fully
authorized to execute, deliver and perform this Guaranty, and to
incur the obligations herein provided for, under the terms and
provisions of the resolutions of its board of directors, or by
other appropriate official approval, and further represents,
covenants and warrants that all requirements have been met, and
procedures have occurred in order to ensure the enforceability of
this Guaranty and this Guaranty has been duly authorized, executed
and delivered; (n) the officer of Guarantor executing this
Guaranty has been duly authorized to execute and deliver this
Guaranty under the terms and provisions of a resolution of
Guarantor’s board of directors, or by other appropriate
official approval; (o) this Guaranty constitutes a valid and
legally binding obligation of Guarantor enforceable against
Guarantor in accordance with its terms, except to the extent
limited by bankruptcy, reorganization or other laws of general
application relating to effecting the enforcement of
creditors’ rights; (p) the execution and delivery of
this Guaranty, the consummation of the transactions contemplated
hereby and the fulfillment of the terms and conditions hereof do
not and will not violate any law, rule, regulation or order,
conflict with or result in a breach of any of the terms or
conditions of the articles of incorporation or bylaws of Guarantor
or of any agreement or instrument to which Guarantor is now a party
and does not and will not constitute a default under any of the
foregoing or result in the creation or imposition of any liens,
charges or encumbrances of any nature upon any of the property or
assets of Guarantor contrary to the terms of any instrument or
agreement to which Guarantor is a party or by which it is bound;
and (q) Guarantor’s federal tax identification number is
41-1689746.
5. Guarantor
agrees that all terms and conditions of agreements heretofore or
hereafter made between Landlord and the Tenant (including, without
limitation, the Leases) shall not affect Guarantor’s
obligations under this Guaranty and further agrees that any of the
following actions of the Landlord taken without further consent of
or disclosure or notice to Guarantor, and without affecting or
releasing the obligations of Guarantor hereunder, and accordingly
Landlord may, without affecting Guarantor’s obligations under
this Guaranty: (a) surrender, exchange, release, assign, or
sell any collateral or waive, release, assign, sell, or subordinate
any security interest, in whole or in part; (b) waive, delay
the exercise of, release, compromise, or grant
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