Lifetime Fitness 2010 Annual Report Download - page 25

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19
If our chairman 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, President, Chief Executive Officer and founder. Until July 1, 2011 when our
Starwood financing arrangement is scheduled to expire, 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
10 centers financed with Starwood. In addition, if Mr. Akradi fails to retain at least 1.0 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 could be subject to claims related to health or safety risks at our centers and off-premises activities and
events.
Use of our centers and participation in off-premises activities and events poses potential health or safety risks to
members or guests through exertion and use of our equipment, swimming pools, rock climbing walls, waterslides,
endurance events and other facilities and services. Claims may be asserted against us for injury or death suffered by
someone using our facilities, services, activities and events. In addition, the child center services we offer at our
centers expose us to claims related to child care. Lastly we also face liability in connection with our construction and
remodel of our 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.
Our operations are subject to various federal and state laws and regulations, including but not limited to the
following:
xfederal and state consumer protection laws related to the advertising, marketing and sale of our products and
services;
xstate statutes that regulate the sale and terms of our membership contracts;
xstate and local health or safety regulations related to various center operations, such as Life Café, Life Spa or
Aquatics;
xfederal and state regulation of ancillary health and wellness-related products and services;
xstate licensing or other regulation of our service providers, such as cosmetologists, massage therapists and
registered dieticians;
xfederal and state laws and regulations governing privacy and security of information.
Any changes in such laws or regulations could have a material adverse effect on our financial condition and results
of operations.
We could be subject to claims related to our ancillary health and wellness-related offerings, and the value of our
brand may suffer.
We offer directly or through third parties a variety of ancillary health and wellness-related products and services,
such as nutritional products, blood screenings and other wellness assessments, chiropractic services, and medi-spa
services. These products and services are or may be subject to legal and regulatory requirements. We cannot assure
you that there will be no claims against us regarding the ingredients in, manufacture of or results of using our
nutritional products, or any claims against us regarding our provision of other health and wellness-related services or
our relationships with third parties. Furthermore, we cannot assure you that any rights we have under
indemnification provisions and/or insurance policies will be sufficient to cover any losses that might result from
such claims. Any publicity surrounding such claims may negatively impact the value of our brand.