EXHIBIT 10.2
EXECUTION COPY
GUARANTY AND SURETYSHIP AGREEMENT
          THIS GUARANTY AND SURETYSHIP AGREEMENT (this “Guaranty”), dated as of
the 26th day of July 2006, made by LIFE TIME FITNESS, INC., a Minnesota
corporation (“Guarantor”), to WELL-PROP (MULTI) LLC, a Delaware limited
liability company (“Landlord”).
W I T N E S S E T H:
     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
Bloomington, MN, Eden Prairie, MN (2 locations), Fridley, MN, St. Louis Park, MN
and Boca Raton, FL (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 and duties 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

 

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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;
          (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 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;

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          (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, which release, discharge or accord and
satisfaction has not been expressly approved in writing by Landlord;
          (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).

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          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 irrevocably waives and releases any and all rights it may have,
until 185 days following the date on which the Guaranteed Obligations are paid
or performed, whether arising directly or indirectly, by operation of law,
contract or otherwise, to assert 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 and all rights that would result in Guarantor
being deemed a “creditor” under the United States Bankruptcy Code of Tenant or
any other person or entity. Every claim or demand which Guarantor may have
against Tenant shall be fully subordinate to all Guaranteed Obligations.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
          Section 2.01 Intentionally Omitted.
          Section 2.02 Estoppel Certificates. At any time upon not less than ten
(10) days’ prior written request by either Landlord or Lender, Guarantor shall
deliver to the requesting party a statement in writing, executed by an
authorized officer of Guarantor, certifying (a) that, except as otherwise
specified, this Guaranty is unmodified and in full force and effect, (b) that,
to the knowledge of the signer of such certificate and except as otherwise
specified, no default by Guarantor exists hereunder, (d) such other matters as
the requesting party

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may reasonably request, and (e) except as otherwise specified, there are no
proceedings pending or, to the knowledge of the signer, threatened, against
Guarantor before or by a court or administrative agency which, if adversely
decided, would materially and adversely affect the financial condition and
operations of Guarantor. Any such statements by Guarantor may be relied upon by
the requesting party, any Person whom the requesting party notifies the
Guarantor 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 Section 2.02 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 thereunder.
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 beyond the applicable notice and cure periods set forth in the
Lease with respect to the underlying facts giving rise to such failure (or, if
the underlying facts do not independently give rise to a default under the
Lease, thirty (30) days after the giving of written notice of such failure by
Landlord to Guarantor, which period may be extended for up to ninety (90) days
after the giving of written notice of such failure by Landlord to Guarantor so
long as Guarantor is diligently attempting to cure prior to the expiration of
the initial thirty (30) day period and such default is reasonably susceptible of
cure);
          (c) any representation or warranty made by Guarantor in any
certificate, demand or request made pursuant hereto proves to be untrue or
incorrect as of the time made in any material respect and remains uncured thirty
(30) days following the date Landlord gives Guarantor written notice of such
default, which initial thirty (30) day period may be extended for up to a total
ninety (90) days so long as Guarantor is diligently attempting to cure prior to
the expiration of the initial thirty (30) day period and such default is
reasonably susceptible of cure;
          (d) a default beyond any applicable cure period by Guarantor in any
payment of principal or interest on any obligations for borrowed money having a
then-outstanding principal balance of $10,000,000 or more, and either (x) such
payment is a payment at maturity or a final payment and the obligee with respect
thereto shall have commenced exercising its remedies in connection therewith, or
(y) such obligation has been accelerated prior to its stated maturity;
          (e) 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;

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          (f) 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;
          (g) Guarantor shall be liquidated or dissolved or shall begin
proceedings towards its liquidation or dissolution; or
          (h) Guarantor shall sell or transfer or enter into an agreement to
sell or transfer all or substantially all of its assets (an “Asset Transfer”)
unless (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 Subsidiary of Guarantor (but
only for so long as such Person shall remain a wholly-owned Subsidiary of
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 Guaranty 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 Guarantor, any subsequent sale of the assets of the
original Guarantor named herein by such wholly-owned Subsidiary of Guarantor
shall be governed by the requirements of this subparagraph (h) 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 Guarantor.
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.

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          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, demands, requests, consents,
approvals, offers, statements and other instruments or communications required
or permitted to be given pursuant to 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 overnight
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 by any such method is refused. Notices sent to Landlord
shall be to the attention of Director, Asset Management, and notices sent to
Guarantor shall be to the attention of Guarantor’s General Counsel. A copy of
any notice given by Guarantor to Landlord shall be addressed to the attention of
Director, Asset Management and shall simultaneously be given by Tenant to Reed
Smith LLP, One Liberty Place, Philadelphia, PA 19103, Attention: Chairman, Real
Estate Department. For the purposes of this Section 4.05, 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.
          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

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executed, shall be deemed an original, but all such counterparts shall
constitute but one and the same instrument.
          Section 4.10 Governing Law. 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.
          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 may be assigned to Lender and upon such
assignment Lender shall have all of the rights and benefits of Landlord
hereunder.
          IN WITNESS WHEREOF, Guarantor has duly executed and delivered this
Guaranty as of the date first above written.

                  ATTEST:   LIFE TIME FITNESS, INC., a Minnesota corporation    
 
               
By:
      By:        
 
 
 
     
 
   
 
               
Title:
      Title:        
 
 
 
     
 
   

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