Exhibit 10.7            Guaranty

 

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**GUARANTY**

 

LENDER:                       **Temporary Financial Services, Inc.**

                                        200 North Mullan Road, Suite213

                                        Spokane, Washington 99206

 

BORROWER:                **Genesis Financial, Inc.**

**                                       **200 North MullanRoad, Suite 217

                                        Spokane,Washington 99206

 

GUARANTOR:**             MichaelA. Kirk, a single man**

**                                       **6519 NorthSutherlin

                                        Spokane,Washington 99208

 

                                        **Douglas B. Durham and Colleen D. Durham, husband andwife**

                                        1926East 38th

                                        Spokane,Washington 99223

 

This Guaranty supports andbacks the Warehousing Line of Credit Promissory Note and the related SecurityAgreement between BORROWER and LENDER, both dated as of February 20, 2002(collectively the “Credit Facility”).

 

Executed at: Spokane,Washington, this 20th day of February, 2002.

 

For a valuable considerationthe undersigned and each of them, hereinafter collectively called “Guarantor”,jointly and severally and unconditionally guarantees and promises to payTemporary Financial Services, Inc., a Washington corporation, (herein called‘LENDER’), its successors or assigns, on demand in lawful money of the UnitedStates of America, any and all indebtedness of the above named “BORROWER”, toLENDER, as follows:

 

**1. Maximum liability.** The liability of Guarantor hereunder shall not exceed at any one timethe sum of: (a) The principal amount of the Credit Facility; (b) An amountequal to interest, and fees owed by BORROWER on the Credit Facility; and, (c)All costs, expenses and attorneys’ fees, including any on appeals, incurred byLENDER in connection with the collection of the indebtedness of BORROWER orwith the collection or sale of any collateral in accordance with the CreditFacility.

 

2.  **“Indebtedness” defined.** The word “indebtedness” is used hereinin its most comprehensive sense and includes, but is not limited to, any andall advances, debts, obligations, and liabilities of BORROWER to LENDER,including judgments against BORROWER by LENDER, whether currently existing orarising at a later date, whether voluntarily or involuntarily created, andhowever arising, and whether due or not due, absolute or contingent, liquidatedor unliquidated, determined or undetermined.

 

3.  **Nature of Guarantor’s undertaking.** The liability of Guarantorhereunder shall be open and continuous for as long as this guaranty shall be inforce. Guarantor intends to guarantee at all times the performance of allobligations of BORROWER to LENDER within the limits set forth above. Thus, nopayments made upon BORROWER’s indebtedness shall be held to discharge ordiminish the liability of Guarantor for any and all remaining and succeedingindebtedness of BORROWER to LENDER. The liability of Guarantor hereunder shallbe joint and several with all other Guarantors hereunder, shall also be bindingupon Guarantor’s marital community (if any), and shall be enforceable againstboth the separate and community property of Guarantor existing at the date ofexecution hereof or hereafter acquired.

 

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4.  **LENDER’s rights and obligations in dealing with BORROWER.**Guarantor authorizes LENDER to deal with BORROWER and BORROWER’s sureties,endorsers, and other guarantors, in any manner in which LENDER sees fit inconnection with any indebtedness of BORROWER to LENDER, now or hereaftercreated, without any further consent or authorization from Guarantor beingnecessary. Specifically, but without limiting the powers of LENDER, LENDER maymake various types of secured or unsecured financing arrangements for BORROWER;LENDER may extend the time for payment of any indebtedness of BORROWER, LENDERmay release any collateral given to LENDER by BORROWER, with or without thesubstitution of new collateral; LENDER may release or agree not to sueBORROWER’s sureties, endorsers, or other guarantors on any terms it chooses;LENDER may sue or fail to sue BORROWER upon any overdue indebtedness or mayrealize or neglect to realize upon any collateral held in connection therewith;all of the foregoing without the necessity of any notice to or consent fromGuarantor and all without affecting Guarantor’s liability hereunder.

 

5.  **Duration of guaranty.** This guaranty shall take effect whenreceived by LENDER, without the necessity of any acceptance by LENDER, andshall continue in full force until such time as Guarantor shall notify LENDERin writing, at the office of LENDER to which this guaranty shall be deliveredin the first instance, of Guarantor’s election to terminate the same. Any suchelection to terminate shall be effective only as to indebtedness incurred byBORROWER to LENDER after receipt of such written notice; provided, that thisguaranty shall be effective even as to indebtedness incurred by BORROWER afterreceipt of such written notice if LENDER committed itself to BORROWER in regardto such indebtedness prior to receipt of such notice. This guaranty shall bindthe Guarantor for renewals and extensions granted after the termination hereofwhich pertain to debts guaranteed hereby whether or not the renewals orextensions are longer than the original period of the debts guaranteedhereunder. This guaranty shall bind the estate of Guarantor as to indebtednesscreated both before and after the death or incapacity of Guarantor; provided,that Guarantor’s executor or administrator or other legal representative mayterminate this guaranty in the same manner in which Guarantor might haveterminated it and with the same effect. Termination of this guaranty by one ofthe undersigned shall not affect the liability hereunder of the remaining ofthe undersigned.

 

6.  **LENDER’s rights against and obligations to Guarantor.**Guarantor hereby expressly waives presentment, protest, demand, or notice ofany kind, including notice of nonpayment of any of BORROWER’s indebtedness orof any collateral thereto and notice of any action or nonaction on the part ofBORROWER, LENDER, or any surety, endorser, or other guarantor. Upon any defaultof BORROWER on any obligation to LENDER, LENDER may, at its option, then andthere demand and be entitled to payment from Guarantor of the full amount orany part of the amount of BORROWER’s indebtedness to LENDER, within thelimitations set forth above, and if Guarantor shall not pay the sum demanded toLENDER, LENDER may proceed directly and at once against Guarantor to collectsuch sum without first proceeding against BORROWER, or any surety, endorser, orother guarantor and without foreclosing upon or selling or otherwise disposingof any collateral it may have as security for any of BORROWER’s indebtedness.Failure to make such demand at such time or so to proceed shall not relieve Guarantorof its obligations hereunder or in any sense constitute a waiver. LENDER shallhave the right to demand and collect from Guarantor all or any portion ofBORROWER’s indebtedness and failure of LENDER at any time to demand fromGuarantor or to proceed to collect from Guarantor the full amount of BORROWER’sindebtedness from Guarantor shall not preclude LENDER from later demanding orproceeding to collect from Guarantor any remaining indebtedness of BORROWER toLENDER covered by this guaranty. In any action or suit against Guarantor toenforce this guaranty, LENDER shall be entitled to recover from Guarantor, inaddition to costs and disbursements allowed by law, a reasonable amount forLENDER’s attorney’s fees in such action or suit or appeal therefrom. In anyaction or suit brought by LENDER against Guarantor, Guarantor will not assertas a defense any statute of limitations if at the time the action or suit iscommenced there is outstanding any indebtedness of

 

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BORROWER to LENDER which is not barred by thestatute of limitations of the State of Washington. If payment is made byBORROWER on a debt guaranteed hereby and thereafter LENDER is forced to remitthe amount of that payment to the BORROWER’s trustee in bankruptcy or similarperson under any federal or state bankruptcy law or law for the relief ofdebtors, the BORROWER’s debt shall be considered unpaid for the purpose ofenforcement of this Guaranty.

 

7.  **Subordination of Guarantor’s rights against BORROWER.**Guarantor agrees that the indebtedness of BORROWER to LENDER, whether nowexisting or hereafter created, shall be and the same hereby is declared to beprior to any claim that Guarantor may now have or hereafter acquire againstBORROWER, whether or not BORROWER becomes insolvent, and Guarantor shall anddoes expressly subordinate such claim Guarantor may have against BORROWER, uponany account whatsoever, to any claim that LENDER may now or hereafter haveagainst BORROWER. In the event of insolvency and consequent liquidation of theassets of BORROWER, through Bankruptcy, by an assignment for the benefit ofcreditors, by voluntary liquidation, or otherwise, the assets of BORROWERapplicable to the payment of the claims of both LENDER and Guarantor shall bepaid to LENDER and shall be first applied by LENDER to the indebtedness ofBORROWER to LENDER. Guarantor does hereby assign to LENDER all claims which itmay have or acquire against BORROWER or any assignee or trustee in bankruptcyof BORROWER; provided, that such assignment shall be effective only for thepurpose of assuring to LENDER full payment of all indebtedness of BORROWER toLENDER.

 

8.  **Assignment of Guaranty.** Assignment by LENDER of all or part ofthe indebtedness shall transfer to the assignee all benefits of this Guarantyas to the portion of the indebtedness assigned. This Guaranty shall remain ineffect in favor of LENDER as to the portion of the indebtedness not assigned.

 

9.  **Releases and Waivers**. Guarantor hereby expressly and irrevocablyreleases and waives any and all “claims” (as now or hereafter defined in theUnited States Bankruptcy Code, 11 USC 101 et.seq.) of any nature whatsoever,whether known or unknown and whether now existing or hereafter acquired,against any debtor or the estate in any existing or future bankruptcy case inwhich the debtors include BORROWER or any person or entity with respect to whomGuarantor is an “insider” (as now or hereafter defined in such BankruptcyCode), to the extent such claims in any manner relate to or arise out of thisGuaranty or any indebtedness guaranteed hereby (including but not limited tofixed or contingent claims based on subrogation, indemnity, reimbursement,contribution or contract). Guarantor authorizes and empowers LENDER to at anytime exercise, in its sole discretion, any right or remedy or any combinationthereof which may then be available to LENDER; Guarantor agrees that nothingcontained herein shall prevent LENDER from suing on any indebtedness instrumentor from exercising any right or remedy available to LENDER thereunder, andGuarantor further agrees that the exercise of any such rights or remedies shallnot constitute a legal or equitable discharge of Guarantor. It is Guarantor’sintent and purpose that the obligation hereunder shall be absolute,independent, and unconditional under any and all circumstances.

 

Notwithstanding anyforeclosure of any lien on real or personal property securing any indebtednessguaranteed hereby, whether by the exercise of a power of sale, by an action forjudicial foreclosure or by acceptance of a deed in lieu of foreclosure,Guarantor shall remain bound under this Guaranty.

 

Guarantor acknowledges thatLENDER’s financing for BORROWER is of substantial and material benefit toGuarantor, that Guarantor has been informed and believes that LENDER would notprovide financing for BORROWER but for this Guaranty and the representations,acknowledgments, releases, waivers and agreements contained herein, and thatLENDER will rely on all such representations, acknowledgments, releases,waivers and agreements in providing financing for BORROWER.

 

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10. **Indebtedness continued.** Theterm “indebtedness” as defined in paragraph 2 above includes, but is notlimited to, all existing and future obligations and liabilities of BORROWERunder the Credit Facility between BORROWER and LENDER referenced above, a copyof which is attached to this Guaranty.

 

11. **Disputes.** This Guaranty shallbe governed by and construed and enforced in accordance with Washington Law.Notwithstanding any arbitration under the Credit Facility, any legal actiontaken in connection with this Guaranty shall be commenced in Spokane,Washington, and the parties agree that they will be subject to the jurisdictionof the Courts of Spokane County, Washington.

 

 
| **/s/Michael  A. Kirk**             |   |
|-------------------------------------|--------|
| **Michael  A. Kirk****, Guarantor** |   |
|                                |
|                                |
| **/s/Douglas  B. Durham**           |   |
| **Douglas B. Durham, Guarantor**    |   |
|                                |
|                                |
| **/s/Colleen  D. Durham**           |   |
| **Colleen D. Durham, Guarantor**    |   |
|                                     |        |  |

 

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