UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 13, 2008
Life Time Fitness, Inc.
(Exact name of Registrant as specified in its charter)
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| Minnesota
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001-32230
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41-1689746 |
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.) |
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| 2902 Corporate Place |
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| Chanhassen, Minnesota
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55317 |
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| (Address of principal executive offices)
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(Zip Code) |
Registrant’s telephone number, including area code (952) 947-0000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
The disclosure set forth in Item 2.03 below is incorporated in this Item 1.01 by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
On June 13, 2008, LTF Real Estate VRDN I, LLC (the “Borrower”), a subsidiary of Life Time Fitness,
Inc. (the “Company”), issued variable rate demand notes in the principal amount of $34,235,000 (the
“Notes”). The Notes were issued under an Indenture of Trust dated as of June 1, 2008 between the
Borrower and Manufacturers and Traders Trust Company, as trustee (the “Trustee”). The proceeds
will be used to provide permanent financing for the Company’s corporate headquarters in Chanhassen,
Minnesota and a fitness center in Overland Park, Kansas (the “Properties”).
The Notes mature on July 1, 2033; however, the Borrower has agreed to make certain scheduled
optional redemption payments to the Trustee, which payments may be applied from time to time to
optionally redeem a portion of the Notes prior to maturity. The interest rate applicable to the
Notes is a variable rate that is adjusted weekly by the remarketing agent, and interest payments
are due on the first business day of each month. At the option of the Borrower, the Notes may be
converted to a fixed interest rate. The initial interest rate is 2.38%.
The principal and interest due on the Notes is paid by periodic draws on an irrevocable, direct pay
letter of credit issued by General Electric Capital Corporation (“GECC”) in the amount of
$35,090,875 (the “Letter of Credit”) for the account of the Borrower. Under a Reimbursement
Agreement dated as of June 1, 2008 between GECC and the Borrower, the Borrower agrees to reimburse
GECC for each draw made on the Letter of Credit. The Letter of Credit expires on June 1, 2023, and
the Borrower will be required to obtain an extension of the Letter of Credit or a replacement
letter of credit prior to such expiration as long as the Notes are outstanding. The Borrower also
pays an annual fee of 1.40% of the maximum amount available under the Letter of Credit, payable
semi-annually in advance commencing June 1, 2009 (the annual fee for the period from June 13, 2008
to May 31, 2008 was paid at closing), and certain drawing and remarketing fees.
The Borrower’s obligations under the Reimbursement Agreement will be funded through rent payments
from LTF Club Operations Company, Inc., a subsidiary of the Company (the “Lessee”), that are made
to the Borrower under leases for each of the Properties. The Borrower’s obligations under the
leases are guaranteed by the Company pursuant to the terms of a Lease Guaranty dated as of June 1,
2008 (the “Guaranty”). The obligations of the Borrower are secured by a Mortgage, Security
Agreement, Assignment of Leases and Rents and Fixture Filings dated as of June 1, 2008 recorded
against each of the Properties (the “Security Instruments”). The Lessee and the Borrower executed
a Subordination, Attornment and Lessee-Lessor Estoppel Agreement dated as of June 1, 2008 for each
of the Properties to confirm certain matters and to subordinate the respective lease and the
Lessee’s interest in the respective Property to the lien in the respective Security Instrument.
In the event of the Borrower’s failure to make any payment when due under the Reimbursement
Agreement, the Borrower’s failure to comply with certain covenants, the voluntary or involuntary
bankruptcy of the Borrower, the Lessee or the Company, certain changes of control of the Borrower
or Lessee, or the occurrence of certain other events, and the expiration of any applicable cure or
grace period (each an “Event of Default” as defined in the Reimbursement Agreement and the
Guaranty), GECC may, among other things, accelerate the reimbursement obligations of the Borrower,
forcing a draw on the Letter of Credit for up to the full amount of the Letter of Credit, and, if
not paid when due, exercise all rights and remedies available to it under the Security Instruments
and related agreements, including foreclosure of its liens on the Properties.