Exhibit 10.3            Option to Acquire Shares from aShareholder

 

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OPTION TO ACQUIRE SHARES FROM A SHAREHOLDER

 

THIS AGREEMENTis by and between TEMPORARY FINANCIAL SERVICES, INC. (“TFS”) which owns 800,000shares of the common stock of Genesis Financial, Inc., a Washington corporation(the “GENESIS”), and Michael A. Kirk and Douglas B. Durham (collectively the“Buyer”).

 

R E C I T A L S

 

This Agreementis entered into upon the basis of the following facts and intentions of theparties:

 

A.                                   TFSowns 800,000 shares of the common stock (collectively the “Shares”) of GENESIS.

 

B.                                     Buyerdesires to obtain an option to purchase the Shares from TFS and TFS is willingto grant such an option to Buyer.

 

NOW,THEREFORE, for good and valuable consideration, the receipt and adequacy ofwhich are hereby acknowledged, the parties hereby agree as follows:

 

1.                                       Option.As of the date hereof, TFS grants to Buyer an option (the “Option”) to purchaseup to 200,000 of the Shares from TFS upon the terms, covenants and conditionshereinafter set forth. The share certificates representing the Shares shallhereafter bear a legend referring to this Option Agreement.

 

2.                                       Considerationfor the Option. This Option is given in connection with the transaction (the“Transaction”) described in the Stock Investment Agreement executed on January25, 2002, and the agreement of TFS to sell the securities to Buyers is anintegral part of the transaction, supported by adequate consideration, receiptof which is hereby acknowledged by TFS.

 

3.                                       Termand Exercise. Buyer may exercise the Option at any time up to and untilDecember 31, 2005, by giving TFS written notice of the intention to exercisethe Option.

 

4.                                       PurchasePrice. The purchase price (“Purchase Price”) which Buyer agrees to pay uponexercise of the Option is the lesser of Five Dollars ($5.00) per share, or theInitial Public Offering Price if GENESIS conducts an Initial Public Offeringprior to the expiration date of the Option. The Purchase Price is payable in cash.

 

5.                                       Numberof Shares. The number and class of Shares specified in this Agreement and/orthe Purchase Price are subject to appropriate adjustment in the event of anymerger, reorganization, consolidation, recapitalization, liquidation, stockdividend, split-up, share combination or other change in the corporatestructure of the GENESIS affecting the Shares.

 

6.                                       Representationsand Warranties of TFS. TFS represents and warrants to the Buyer that:

 

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(a)                                  TFShas full power and authority to execute and deliver this Agreement, and thisAgreement is a valid and binding agreement enforceable against the TFS inaccordance with its terms;

 

(b)                                 Neitherthe execution of this Agreement nor the sale of the Shares will constitute aviolation of, or conflict with, or default under, any contract, commitment,agreement, understanding or arrangement to which the TFS is a party or by whichTFS is bound or of any law, decree, or judgment;

 

(c)                                  Nowand up to the time of exercise of the Option, TFS will have valid title to theShares, free and clear of all claims, liens, charges, encumbrances and securityinterests, and will transfer such Shares upon exercise of the Option to theBuyer free and clear of all claims, liens, charges, encumbrances and securityinterests;

 

(d)                                 ThePurchase Price may or may not reflect the actual value of the Shares, that TFShas investigated the value independently, that it has been represented byindependent counsel, and that it understands that the value of the Shares whenand if the Option is exercised may be significantly higher than the PurchasePrice; and

 

(e)                                  Priorto December 31, 2005, TFS shall not sell, assign, transfer, pledge,hypothecate, or otherwise encumber 200,000 of the Shares.

 

7.                                       Cooperation.Each party shall, upon request of the other party, promptly execute and deliverall additional documents reasonably deemed by the requesting party to benecessary, appropriate or desirable to complete and evidence the sale,assignment and transfer of the Shares pursuant to this Agreement.

 

8.                                       Representationsand Warranties of the Buyer. Buyer represents and warrants to the TFS that (a)this Agreement is a valid and binding agreement enforceable against Buyer inaccordance with its terms and (b) Buyer, if he exercises the option, will bepurchasing the Shares for his own account and not with a view to or for sale inconnection with any distribution of such Shares in violation of applicablesecurities laws.

 

9.                                       Purchaseand Sale. If Buyer exercises the Option, at a closing (the “Closing”), TFSshall sell, transfer and deliver the Shares, represented by certificates dulyendorsed in blank or accompanied by stock powers duly executed, to the Buyer,and the Buyer shall purchase the Shares in exchange for the Purchase Price.

 

10.                                 Dividendsand Voting Rights. Until the Option is exercised, if at all, all dividends andvoting rights attendant to the Shares shall remain with TFS.

 

11.                                 BuyerMay Exercise Option for Less Than All Shares. Notwithstanding any otherprovision herein to the contrary, the Buyer may exercise the Option with respectto less than all of the Shares.  MichaelA. Kirk (Kirk) and Douglas B. Durham (Durham) shall each be entitled topurchase 100,000 shares in accordance with this Option.  If either Kirk 

 

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or Durham doesnot purchase the full number of shares available to him under this Option priorto the expiration date, the other shall have the right for ten days followingexpiration of this Option, to purchase the remaining shares, and for thispurpose only, the expiration date of the Option shall be considered extended. 

 

12.                                 Survival.All representations, warranties and agreements made by the TFS and by the Buyerin this Agreement shall survive the execution of this Agreement and any Closingand any investigation at any time made by or on behalf of any party hereto.

 

13.                                 Modification;Assignment. This Agreement may not be modified, amended, altered orsupplemented except upon the execution and delivery of a written agreementexecuted by the parties hereto. Buyer may assign his rights under thisAgreement with the consent of TFS.

 

14.                                 Successors.This Agreement will be binding upon, inure to the benefit of and be enforceableby and against the parties hereto and their respective heirs, beneficiaries,executors, representatives and permitted assigns.

 

15.                                 GoverningLaw. This Agreement shall be governed by and construed in accordance with thelaws of the State of Washington.

 

16.                                 EntireAgreement. This Agreement constitutes the entire agreement among the partieswith respect to its subject matter and supersedes all agreements,understanding, representations, or warranties, whether oral or written, by oramong the parties, previously or contemporaneously made or given.

 

IN WITNESS WHEREOF, thisAgreement has been duly executed and delivered by the Buyer and TFS as of theday and year first written below:

 
| BUYER:              |       |   | TFS:                        |       |
|---------------------|------------|--------|-----------------------------|------------|
|                |       |   |                        |
| /s/Michael  A. Kirk | 01/25/2002 |   | /s/John R. Coghlan          | 01/25/2002 |
| Michael A.  Kirk    | Date       |   | John R.  Coghlan, President |       |
|                     |            |        |                             |            |  |  |

 
| /s/Douglas  B. Durham | 01/25/2002 |   |   |
|-----------------------|------------|--------|--------|
| Douglas B.  Durham    | Date       |   |   |

 

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