Deed of Trust Note

Exhibit 10.19


DEED OF TRUST NOTE


SIC Loan No. 961227O2


DO NOT DESTROY THIS NOTE: When paid, this Note, with the Deed of Trust securing it, must be surrendered to Trustee to enable the lien of the Deed of Trust securing this Note to be released or partially released, as applicable, from record.


$1,35O,OOO.OO February 1O, 1997


1. Payment; Interest Calculations. FOR VALUE RECEIVED, the undersigned ("Maker"), jointly and severally, promises to pay in lawful money of the United States, to the order of STANDARD INSURANCE COMPANY, an Oregon corporation ("Holder"), at its office in Portland, Oregon, or such other place as Holder may designate, the principal of a loan of one Million Three Hundred Fifty Thousand and No/lOOths Dollars ($1,35O,OOO.OO) obtained from Holder, and interest thereon, in Sixty (6O) equal monthly payments of Eleven Thousand Five Hundred Three and No/lOOths Dollars ($11,5O3.OO) payable on the first day of each month, commencing with the first day of April, 1997, together with such other sums as may become due hereunder or under any instrument securing this Note, until the entire indebtedness is fully paid, except that any remaining indebtedness if not sooner paid shall be finally due and payable on the first day of March, 2OO2, which is the maturity date of this Note. The interest included in the aforesaid payments, unless increased as otherwise provided in this Note, shall be calculated at the rate of Eight and one-quarter (8.25%) percent per annum (the "Note Rate"), based on a 36O-day year, upon the unpaid balance of principal of this Note. Maker, jointly and severally, also promises to pay interest at the Note Rate from the date of disbursement of the loan proceeds evidenced by this Note (the "Disbursement Date") to the date from which interest is included in the first payment previously described. Every payment received with respect hereto shall be applied, in any order that may be determined by Holder in its sole discretion, to sums under this Note, including, without limitation: (a) late charges; (b) expenses paid or funds advanced by Holder with interest thereon at the Default Rate when applicable (as hereinafter defined); (c) any prepayment premiums due with respect to any payment and any other premiums which may remain unpaid; (d) accrued interest on the principal balance from time to time remaining unpaid; and (e) subject to the prepayment provisions herein, the principal balance hereunder.


2. Waiver. To the extent permitted by law, each and every maker, surety, guarantor, endorser or signator to this Note and any other party now or hereafter liable for the payment of this Note, in whatever capacity, whether in whole or in part hereby (a) waives notice of intent to demand, presentment for payment, notice of demand, demand, notice of nonpayment, protest, notice of protest, notice of dishonor, notice of intent to


accelerate, notice of acceleradon, and all other notices, filing of suit, and diligence in collecting this Note and/or enforcing any of the security herefor; (b) agrees that Holder shall not be required first to institute suit or exhaust its remedies against Maker or others liable or to become liable hereon or against the Trust Property (as hereinafter defined), it being understood that Holder may exercise its rights hereunder and pursue its remedies in any order and at any time it desires, and may, without notice to or consent of any such person, and without in any way diminishing the obligations of any such person; (c) consents to Holder dealing with any such person with reference to this Note by way of forbearance, extension, modificadon, compromise or otherwise; (d) consents and agrees to any and all extensions, releases, renewals, partial payments, surrenders, exchanges, subsitutions of security herefor, compromises, discharges or modifications and any other indulgence with respect to any of any right or obligation secured by or provided by the Deed of Trust securing this Note (the "Deed of Trust") or any other instrument securing this Note, before or after the maturity of this Note, without notice thereof to any of them; or (e) take any other action which Holder may deem reasonably appropriate to protect its security interest in the property securing this Note (the "Trust Property"). Any such acdon(s) taken under the preceding sentence may be taken against one, all, or some of such persons, and Holder may take any such action against one differently than another of such persons, in Holder's sole discretion.


3. Default; Default Rate. Time is material and of the essence hereof with respect to the payment of any sums of any nature by and the performance of all duties or obligations of the Maker. Each of the following shall be an Event of Default under this Note: (a) failure to make any payment of principal and/or interest or any other payment required by the provisions of this Note or of any instrument securing this Note on the date such payment or payments are due; (b) failure to perform any other provision of this Note or of any instrument securing this Note; or (c) falsity in any material respect of the warranties in the Deed of Trust or of any representation, warranty or informadon furnished by Maker or its agents to Holder in connecdon with the loan evidenced by this Note (the "Loan"). Upon the occurrence of any Event of Default, any sum not paid as provided in this Note or in any instrument securing this Note, shall, at the option of Holder, without notice, bear interest from such due date at a rate of interest (the "Default Rate") equal to four (4) percentage points per annum greater than the Note Rate, or the maximum rate of interest permitted by law, whichever is the lesser, and, at the option of Holder, the unpaid balance of principal, accrued interest, plus any other sums due under this Note, or under any instrument securing this Note shall at once become due and payable, without nodce except as described in paragraph 11, and shall bear interest at the Default Rate. If an Event of Default occurs during a period of time in which prepayment is permitted only on payment of a prepayment charge, such charge shall be computed as if the sum declared due on default were a prepayment and shall be added to the sums due and payable hereunder.


4. Late Charges. If any payment is not received by Holder (or by the correspondent if a correspondent has been designated by Holder to receive payments) within five (5) calendar days after its due date, Holder, at its option, may assess a late charge equal to five cents for each $1.OO of each overdue payment or the maximum late charge permitted by the laws of the state in which the Trust Property is located, whichever is less. Such late charge shall be due and payable on demand, and Holder, at its option, may (a) refuse to accept any late payment or any subsequent payment unless accompanied by such late charge, (b) add such late charge to the principal balance of this Note or (c) treat the failure to pay such late charge as demanded as an Event of Default hereunder. If such late charge is added to the principal balance of this Note, it shall bear interest at the Default Rate. The late charge is compensation for damages suffered by Holder and does not constitute interest.


5. Prepayment Restrictions, CHARGES. Additional charges for the privilege of prepaying sums owing hereunder will be imposed in the following amounts, or in such amounts as permitted by law, whichever is less:
(a) During the first five (5) Loan Years, amounts paid during any one (1) Loan Year in excess of ten percent (1O%) of the original principal Loan balance shall include an additional payment equal to one (l) year's interest on such excess amount; and
(b) Thereafter, amounts paid during any one (1) Loan Year in excess of 1O% of the original principal loan balance shall include an additional payment equal to six (6) months' interest on such excess amount. As used in this Note, "Loan Year" means a period of time beginning on the Disbursement Date or on any anniversary of the Disbursement Date and ending one year thereafter. Notwithstanding the foregoing, Maker may prepay all sums owing under this Note without the imposition of a prepayment charge at any time within one Hundred Eighty (18O) days of the maturity date of this Note.


6. Acknowledgments Regarding Default Rate, Late Charges and Prepayment Charges.


(a) Maker acknowledges and agrees that (i) a default in making the payments herein agreed to be paid when due will result in the Holder incurring additional expense in servicing the loan, loss to Holder of the use of the money due, and frustration to Holder in meeting its other commitments, (ii) if for any reason it fails to pay any amounts due hereunder, Holder shall be entitled to damages for the detriment caused thereby, but that it is extremely difficult and impractical to ascertain the extent of such damages, and (iii) the Default Rate and the late charge described in this Note are a reasonable estimate of such damages.
(b) Maker acknowledges and agrees that (i) prepayment prior to the maturity date may result in loss to Holder, (ii) the amount of the loss will depend on the interest rates at the time of prepayment, the amount of principal prepaid and the length of time remaining between the prepayment date and the scheduled maturity date, (iii) prepayment is most likely to occur when interest rates have dropped below the Note Rate, and (iv) because it is extremely difficult and impractical to ascertain now the


amount of loss Holder may suffer in the event of prepayment, (A) Holder shall be entitled to damages for the loss caused by prepayment and (B) the prepayment charge described in this Note is a reasonable measure of such damages. Maker agrees that the prepayment charge described in this Note shall be imposed, to the extent permitted by law, whether the prepayment is voluntary, involuntary or by operation of law, in connection with an Event of Default, or required by Holder in connection with a transfer or contract to transfer the Trust Property, provided that no prepayment charge shall be added to sums prepaid with casualty insurance proceeds or condemnation awards.
(c) Maker expressly (i) waives any right to prepay the Loan without payment of the prepayment charge described above in connection with a transfer or contract to transfer the Trust Property by Maker, or a successor in interest of the undersigned, and (ii) agrees to pay such prepayment charge as provided above in connection with such a transfer or contract to transfer.
(d) Maker represents that it is a knowledgeable real estate investor and fully understands the effect of the charges, waivers and agreements contained above. Maker acknowledges and agrees that the making of the loan by Holder at the interest rate and with the other terms described herein is sufficient consideration for such charges, waiver and agreement, and that Holder would not make this loan on these terms without such charges, waiver and agreement.


7. Expenses and Attorney Fees. If Holder refers this Note to an attorney for collection or seeks legal advice following a default alleged in good faith under this Note; if Holder is the prevailing party in any litigation instituted in connection with this Note; or if Holder or any other person initiates any judicial or nonjudicial action, suit or proceeding, including but not limited to a foreclosure sale, in connection with this Note or the security therefor, and an attorney is employed by Holder to (a) appear in any such action, suit or proceeding, (b) reclaim, seek relief from a judicial or statutory stay, sequester, protect, preserve or enforce Holder's interest in this Note, the Deed of Trust, or any other security for this Note (including but not limited to proceedings at appellate levels, under federal bankruptcy law, in eminent domain, under probate proceedings, or in connection with any stateor federal tax lien), or (c) assist Holder in any foreclosure sale, then, in any such event, Maker shall pay attorney's fees and costs and expenses incurred by Holder and/or its attorney in connection with the above-mentioned events and any appeals related to such events, including but not limited to costs incurred in searching records, the cost of title reports, the cost of appraisals, and the cost of surveyors' reports. If not paid within ten days after such fees, vests and expenses become due and written demand for payment is made upon Maker, such amount may, at Holder's option, be added to the principal of the Note and shall bear interest at the Default Rate.


8. No Usury. In no event shall any payment of interest or any other sum payable hereunder both (a) violate the usury laws of the state in which the Trust Property is located and (b) allow Maker to bring a claim for usury or


raise usury as a defense in any astion on this Note. If it is established that both (a) and (b) have occurred, and any payment exceeding lawful limits has been received, Holder shall refund such excess or, at its option, credit the excess amount to principal, but such payments shall not affect the obligation to make periodic payments required herein.


9. Security. The indebtedness evidenced by this Note is secured by the Deed of Trust of even date and may be secured by other security instruments.


10. Due on Sale or Encumbrance.
(a) Generally. The Loan is personal to Maker and not assignable. In making it, Holder has relied on Maker's credit, Maker's interest in the Trust Property, and the financial market conditions at the time the Loan is made. Except as described in paragraph lO(f) below, in the event of a sale, conveyance, transfer or encumbrance of the title to or possession of all or part of the Trust Property, directly or indirectly, either voluntarily, involuntarily or by operation of law, Holder may declare the entire balance of this Loan immediately due and payable. In such event, and to the extent permitted by law, a prepayment charge calculated in accordance with the prepayment provisions of this Note shall be added to the sum due and payable.
(b) One Time Permitted Third-Partv Transfer. Holder will waive its right under the foregoing provisions of this paragraph one time during the term of this loan, if the Loan is not then in default and the following conditions are met:
(i) The purchaser of the Trust Property, the financial statements, financial strength, tax returns and credit history of the purchaser, the sale agreement and related documents, and all aspects of the sale are completely satisfactory to Holder.
(ii) The purchaser evidences a history of property management satisfactory to Holder or contracts for management of the Trust Property with a property management firm satisfactory to Holder.
(iii) If the amount then due on the Note exceeds seventy-five percent (75%) of the sale price of the Trust Property, the balance due on the Note, at the Holder's election, shall be reduced to an amount which does not exceed seventy-five percent (75%) of the sales price.
(iv) Maker furnishes to Holder, at Maker's expense, an endorsement to Holder's ALTA title insurance policy insuring the continued validity, enforceability, and priority of the Deed of Trust following the assumption. The form and content of the endorsement shall be satisfactory to Holder. If required by the Holder or the title insurer, the Maker shall furnish subordination agreements from tenants of the Trust Property and other necessary parties in form and substance acceptable to the Holder and the title insurer.
(v) In the event the Loan was made with a requirement imposed upon the Maker to complete any specified repairs of the Trust Property, the Maker shall not be entitled to a consent by Holder pursuant to the terms of this provision until such repairs have been completed to Holder's satisfaction.


(vi) The Holder may, at its option, require tax reserves as referred to in paragraph A.7 of the Deed of Trust, whether or not previously waived conditionally or otherwise as a condition to its consent.
(vii)Unless Holder, in its sole discretion, otherwise agrees in writing at that time, no such sale or assumption shall release Maker or any guarantor or other person from liability, or otherwise affect the liability of Maker or any such guarantor or other person, for payment of the indebtedness secured hereby.
(viii) Holder is paid an administrative fee equal to the greater of $1,OOO.OO or reimbursement of Holder's reasonable administrative and legal fees.
(ix) Holder is paid a lump sum compensation equal to one percent (1%) of the loan balance and, in Holder's sole discretion the Note Rate is increased to a rate not in excess of the then current market rates for comparable loans under comparable circumstances (the amount of the increase to be determined sole by Holder).
(x) The payment of a transfer fee to Holder's designated servicing agent in an amount equal to one percent ( 1 %) of the then outstanding loan balance.
(xi) The provisions in the Note, the Deed of Trust and any other instrument securing the Note regarding the maturity, amortization or prepayment of this Loan shall be modified, at Holder's sole option, to conform to provisions being offered by Holder in similar loans at the time Holder's waiver is sought, or in the event Holder is not offedng similar loans at such time, on such reasonable terms as Holder may determine. Without limiting the generality or effect of the foregoing, waiver by Holder of its right to accelerate the Loan upon any transfer or contract to transfer, or to require satisfaction of the conditions set forth in this subparagraph (b), shall not be deemed a waiver by Holder of its dght to accelerate the Loan upon any other transfer or contract to transfer or of its dght upon such transfer or contract to transfer to require satisfaction of the conditions set forth above in this subparagraph (b).
(c) Permitted Intra-family Transfer. Holder will also waive its right to the provisions of paragraph lO(a) if the Loan is not then in default and the following conditions are met: (i) Holder is paid a lump sum fee of $1,OOO.OO; (ii) the proposed transferees assume full personal liability for payment and performance of the Note, the Deed of Trust, and any other security instruments secuhng the Note; and (iii) the proposed transferee is (a) the spouse or issue of Maker, or the trustee(s) of a testamentary trust for the benefit of such spouse or issue, that succeeded to Maker's interest upon Maker's death, divorce or legal separation, or (b) the trustee(s) of an inter vivos trust established by Maker for estate planning purposes, provided that Maker is a trustee of such trust at the time of transfer.
(d) Changed Terms. Any changes in the provisions in this Note, the Deed of Trust, or any other instrument securing this Note resulting from the satisfaction of the conditions set forth in paragraph lO(b) above shall entitle Holder to increase the amount of the monthly installment to an amount determined by Holder to be sufficient to amortize this Loan within the remainder of the amortization period originally used by Holder to establish the original monthly payment amount for this Loan.


(e) Transfer Examples. For the purpose of, and without limiting the generality of the foregoing, the occurrence at any time of any of the following events, without Holder's prior written consent, shall be deemed to be a transfer of title to the Trust Property:
(i) Any sale, conveyance, assignment or other transfer of, or the grant of a security interest in, all or any part of the legal and/or equitable title to the Trust Property;
(ii) Any sale, conveyance, assignment or other transfer of, or the grant of a security interest in, any share of stock of Maker;
(iii) Any sale, conveyance, assignment or other transfer of, or the grant of a security interest in, any general partnership interest in Maker; or
(iv) Any sale, conveyance, assignment or other transfer of, or the grant of a security interest in, any member's interest in Maker if Maker is a limited liability company.
(f) Holder hereby consents to the following transfers, provided that the Loan is not then in default and Maker promptly provides Holder with written notice of such transfer:
(i) The sale of all or part of the shares of 4Health, Inc.
(g) No Release. Notwithstanding anything contained in this paragraph 10 to the contrary, assumption shall NOT release Maker or successor in interest from personal liability for payment and performance of the terms and conditions of this Note, the Deed of Trust, and other instruments securing this Note.


11. Notice and opportunity to Cure. Notwithstanding any other provision of this Note, Holder shall not accelerate the sums evidenced hereby because of a nonmonetary default (defined below) by Maker unless Maker fails to cure the default within fifteen (15) days of the earlier of the date on which Holder mails or delivers written notice of the default to Maker. For purposes of this Note, the term "nonmonetary default" means a failure by Maker or any other person or entity to perform any obligation contained in the Note or any other Loan document, other than the obligation to make payments provided for in the Note or any other Loan document. If a nonmonetary default is capable of being cured and the cure cannot reasonably be completed within the fifteen (15) day cure period, the cure period shall be extended up to sixty (6O) days so long as Maker has commenced action to cure within the fifteen (15) day cure period, and in Holder's opinion, Maker is proceeding to cure the default with due diligence. No notice of default and no opportunity to cure shall be required if during any 12-month period Holder has already sent a notice to Maker concerning default in the performance of the same obligation. None of the foregoing shall be construed to obligate Holder to forebear in any other manner from exercising its remedies and Holder may pursue any other rights or remedies which Holder may have because of a default.


12. Commercial Purpose. The obligation evidenced by this Note is exclusively for commercial or business purposes.


13. Governing Law. The law of the state where the Trust Property is located shall govern the validity, interpretation, construction and performance of this Note.


14. Successors and Assigns. Whenever used herein, the words "undersigned", "Maker" and "Holder" shall be deemed to include their respective heirs, executors, administrators, personal representatives, successors and assigns.


NOTICE TO THE BOROWER


DO NOT SIGN THIS NOTE BEFORE YOU READ 1T. THIS NOTE PROVIDES FOR THE PAYMENT OF A CHARGE IF THE NOTE IS REPAID PRIOR TO THE DATE PROVIDED FOR REPAYMENT IN THE NOTE AND OTHER CHARGES IF PAYMENTS ARE LATE. IF YOU HAVE ANY QUESTIONS ABOUT THIS NOTE, YOU SHOULD CONSULT YOUR ATTORNEY.


4Health, Inc., a Utah corporation By: /s/ R. Lindsey Duncan R. Lindsey Duncan Its: President By: (Print Name) Its: Controller


WHEN RECORDED RETURN TO: STANDARD INSURANCE COMPANY POST OFFICE BOX 7 L 1 PORTLAND, OR 972O7


ATTN: Jeff Gray, P7E


SIC LOAN No. 96122702


DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE EILING


THIS DEED OF TRUST made this 10th day of February, 1997, is among 4Health, Inc., a Utah corporation, ("Trustor"), and The Public Trustee of the County of Boulder, State of Colorado ("Trustee"), and STANDARD INSURANCE COMPANY, an Oregon corporation, ("Beneficiary").


Notice to Recorder:


THIS DOCUMENT CONSTITUTES A FIXTURE FLING IN ACCORDANCE WITH THE UNIFORM COMMERCIAL CODE.


Trustor grants, bargains, sells and conveys to Trustee, with power of sale, that property in the County of Boulder, State of Colorado (herein referred to as the "Property") and more particularly described as follows:


LOT 4, ARAPAHOE PARK EAST, FIRST ADDITION, EXCEPT THAT PORTION OF SUBJECT PROPERTY CONVEYED TO THE CTRY OF BOULDER IN THE DEED RECORDED JULY 27, 184 ON FILM 1314 AS RECEPTIO NO. 636442, COUNTY OF BOULDER, STATE OF COLORADO.


Together with (a) all rents, income, contract rights, issues and profits now due or which may become due under or by virtue of any lease, rental agreement or other contract, whether written or oral, for the use or occupancy of the Property, or any part thereof, together with all tenant security deposits, subject, however, to the right, power and authority hereinafter given to and conferred upon Trustor to collect and apply such rents, issues, income, contract rights, security deposits and profits prior to any default hereunder; (b) all buildings and improvements now or hereafter thereon, and all appurtenances, easements, rights in party walls, water and water rights, pumps and pumping plants and all shares of stock evidencing the same; (c) all fixtures and property now or hereafter attached to or used in the operation of the Property, including but not limited to machinery, equipment, appliances and fixtures for generating or distributing air, water, heat, electricity, light, fuel or refrigeration, or for ventilating or sanitary purposes, or for the exclusion of vermin or insects, or for the removal of dust, refuse or garbage, all wallbeds, wallsafes, built-in furniture and installations, shelving, lockers, partitions, door stops, vaults, elevators, dumbwaiters, awnings, window shades, venetian blinds, light fixtures, fire hoses and brackets and boxes for same, fire sprinklers, alarm systems, drapery rods and brackets,


screens, linoleum, carpets, plumbing, laundry tubs and trays, ice boxes, refrigerators, heating units, stoves, water heaters, incinerators, communication systems and all installations for which any such building is specifically designed; (d) all awards, compensation and settlements in lieu thereof made as a result of the taking by power of eminent domain of the whole or any part of the Property; (e) all trade names by which all or any part of the Property is known, any books and records relating to the use and operation of all or any portion of the Property, all present and future plans and specifications and contracts relevant to the design, construction, management or inspection of any construction of any improvements on the Property and all present and future licenses, permits, approvals and agreements with or from any municipal corporation, county, state or other governmental or quasigovernmental entity relevant to the development, improvement or use of all or any portion of the Property; (f) all rights of Trustor in and to any escrow or withhold agreements, surety bonds, warranties, management contracts, leasing or sales agreements with any real estate agents or brokers, and service contracts with any entity, which are in any way relevant to the development, improvement, leasing, sale or use of the Property or any personal property located thereon and; (g) all present and future policies of insurance in force or effect insuring any part of the improvements, fixtures or other personal property located upon the Property, the rents derived from and/or the leases on any portion of the Property; and all of said items whether now or hereafter installed being hereby declared to be, for all purposes of this Deed of Trust, a part of the realty; and all the estate, interest or other claim or demand, including insurance, in law as well as in equity, which Trustor now has or may hereafter acquire, in and to the aforesaid property; the specific enumerations herein not excluding the general. The Property and all of the foregoing shall constitute the "Trust Property".


This Deed of Trust is made for the purpose of securing, in such order of priority as Beneficiary may elect: (a) payment of the indebtedness in the sum of $1,350,000.00 evidenced by that certain Deed of Trust Note of even date herewith made by Trustor, delivered to Beneficiary and payable to its order, with final payment due on the first day of March, 2002, which is the maturity date of this Deed of Trust, and any and all modifications, extensions or renewals thereof, whether hereafter evidenced by the Note or otherwise (the "Note"); (b) payment of interest on said indebtedness according to the terms of the Note; (c) payment of all other sums, with interest as herein provided, becoming due and payable under the provisions hereof to Trustee or Beneficiary; (d) performance of each and every condition, obligation, covenant, promise and agreement of Trustor contained herein, or in the Note, or in any loan agreement relative to any indebtedness evidenced by the Note, or in any security agr ...