Lifetime Fitness 2008 Annual Report Download - page 24

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18
If our founder and chief executive officer leaves our company for any reason, it could have a material adverse
effect on us.
Our growth and development to date have been largely dependent upon the services of Bahram Akradi, our
Chairman of the Board of Directors, Chief Executive Officer and founder. If Mr. Akradi ceases to be Chairman of
the Board of Directors and Chief Executive Officer for any reason other than due to his death or incapacity or as a
result of his removal pursuant to our articles of incorporation or bylaws, we will be in default under the loan
documents for our 13 centers financed with TIAA. In addition, if Mr. Akradi fails to retain at least 1.8 million
unencumbered shares of our common stock, we will be in default under the loan documents. As a result, Mr. Akradi
may be able to exert disproportionate control over us because of the significant consequence of his departure. We do
not have any employment or non-competition agreement with Mr. Akradi.
We have significant operations concentrated in certain geographic areas, and any disruption in the operations of
our centers in any of these areas could harm our operating results.
We currently operate multiple centers in several metropolitan areas, including 24 in the Minneapolis/ St. Paul
market, nine in the Chicago market, eight in the Dallas market, and six in the Detroit market, with future continued
planned expansion in current and new markets. As a result, any prolonged disruption in the operations of our centers
in any of these markets, whether due to technical difficulties, power failures or destruction or damage to the centers
as a result of a natural disaster, fire or any other reason, could harm our operating results. In addition, our
concentration in these markets increases our exposure to adverse developments related to competition, as well as
economic and demographic changes in these areas.
If we cannot retain our key personnel and hire additional highly qualified personnel, we may not be able to
successfully manage our operations and pursue our strategic objectives.
We are highly dependent on the services of our senior management team and other key employees at both our
corporate headquarters and our centers, and on our ability to recruit, retain and motivate key personnel. Competition
for such personnel is intense, and the inability to attract and retain the additional qualified employees required to
expand our activities, or the loss of current key employees, could materially and adversely affect us.
We could be subject to claims related to health or safety risks at our centers.
Use of our centers poses potential health or safety risks to members or guests through exertion and use of our
equipment, swimming pools, rock climbing walls, waterslides and other facilities and services. We cannot assure
you that claims will not be asserted against us for injury or death suffered by someone using our facilities or
services. In addition, the child center services we offer at our centers expose us to claims related to child care.
Lastly, because we construct our own centers, we also face liability in connection with the construction of these
centers.
We are subject to extensive government regulation, and changes in these regulations could have a negative effect
on our financial condition and results of operations.
Various federal and state laws and regulations govern our operations, including:
x general rules and regulations of the Federal Trade Commission, state and local consumer protection agencies
and state statutes that prescribe certain forms and provisions of membership contracts and that govern the
advertising, sale and collection of our memberships;
x state and local health regulations;
x federal regulation of health and nutritional products; and,
x regulation of rehabilitation service providers.
Any changes in such laws could have a material adverse effect on our financial condition and results of operations.
We could be subject to claims related to our nutritional products.
The nutritional products industry is currently the source of proposed federal laws and regulations, as well as
numerous lawsuits. We advertise and offer for sale proprietary nutritional products within our centers and through
our Web site. We cannot assure you that there will be no claims against us regarding the ingredients in, manufacture