Exhibit 10.4            Warehousing Line of CreditPromissory Note dated February 20, 2002

 

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**WAREHOUSING LINE OFCREDIT PROMISSORY NOTE**

 

INTRODUCTION.  This Warehousing Line of Credit PromissoryNote (the “NOTE”), governs your line of credit (the “CREDIT LINE”) withTemporary Financial Services, Inc.  Thewords “BORROWER,” “you,” and “your,” mean Genesis Financial, Inc., a Washingtoncorporation.  The words “LENDER,” “we,”“us,” and “our,” means Temporary Financial Services, Inc., the entity that ismaking the loans and advances described in this NOTE.  The CREDIT LINE will provide BORROWER with financing to acquireeligible real estate loans in accordance with the procedures described in thisNOTE and the attached exhibits.

 

MAXIMUMCREDIT.  The unpaid principal balanceunder the CREDIT LINE may not exceed $2,000,000 outstanding at any given timeduring the term of the NOTE. 

 

PROMISE TOPAY.  You promise to pay LENDER thetotal of all loan advances and finance charges, together with all costs andexpenses for which you are responsible under this NOTE.  You will pay the CREDIT LINE according tothe payment terms set forth below.  

 

DUE DATE.  You promise to pay the balance of this NOTEon February 15, 2003, or at the option of LENDER on demand.  So long as this NOTE is in good standing,you may obtain advances on the CREDIT LINE in accordance with the proceduresdescribed in this NOTE and the attached exhibits.

 

INTEREST.  Interest shall accrue on the daily netprincipal balance outstanding, and is payable on the 5th day of eachmonth during the term of this loan. Interest will be calculated at the rate equal to two percent above therate that Sterling Savings Bank, Spokane, Washington, refers to as its “primerate.”  Any change in the interest rateresulting from a change in the prime rate will be effective on the date of thechange.

 

COMMITMENTFEE.  BORROWER will pay LENDER OneQuarter of One Percent (1/4%) of the Maximum Credit amount as a Loan commitmentfee.  This amount, aggregating $5,000 ispayable on the date of this NOTE.

 

ADVANCES ANDREPAYMENTS.  BORROWER may requestadvances on the CREDIT LINE from time to time, and shall make payments againstthe outstanding principal balance from time to time in accordance with theprocedures set forth in EXHIBIT A (attached).

 

FINANCIALCOVENANTS.  So long as this CREDIT LINEis in effect, BORROWER will comply with the “Financial Covenants” and the“Reporting Obligations” described in EXHIBIT B (attached).  Each month, on or before the interestpayment due date, BORROWER will provide a “Compliance Certificate” in formsatisfactory to LENDER, either representing that BORROWER is in compliance withthe applicable financial covenants, or describing the non-compliance and thesteps being taken to bring BORROWER back into compliance.

 

SECURITY.  This NOTE is secured by a first lien on allof the assets of BORROWER.  The SecurityAgreement is attached as EXHIBIT C (attached).

 

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PERSONALGUARANTEES.  This NOTE is jointly andseverally personally guaranteed by Michael A. Kirk, an individual residing inSpokane, Washington, and Douglas B. Durham and Colleen D. Durham, husband andwife, residing in Spokane, Washington. The personal guarantee agreement is attached as EXHIBIT D (attached). 

 

DEFAULT.  If BORROWER defaults in timely payment ofany amount due under this NOTE, including non-payment upon LENDER’S demand, oris in default as a result of non-compliance with the Financial Covenantrequirements or the provisions of the Security Agreement, and such defaultcontinues without cure for ten days, LENDER may pursue any legal or equitableremedies for collection of the amounts due. BORROWER waives presentment, demand for payment, protest, and notice ofnonpayment.  BORROWER agrees to payLENDER all costs and expenses of collection of the amounts due or to become dueunder this NOTE, including reasonable attorneys’ fees.  Upon Lender’s declaration of a default, andBorrower’s failure to cure the default within ten days, the interest rate chargedon this NOTE shall be the lesser of 12% per annum, or the highest rate thenallowed by law.

 

ASSIGNMENT.  This NOTE, the Security Agreement and thePersonal Guarantees may be assigned by LENDER to an affiliated entity, andBORROWER consents to the assignment to such an affiliated entity.  Assignment to an unaffiliated entity mayonly be done after written consent of BORROWER.

 

SIGNATURES.  This NOTE is executed on February 20th,2002, in Spokane, Washington.

 

GENESIS FINANCIAL, INC.

 
| /s/Michael A. Kirk           |   |
|------------------------------|--------|
| Michael A.  Kirk, President  |   |
|                         |
| ATTEST:                      |
|                         |
| /s/Douglas B. Durham         |   |
| Douglas B.  Durham, Chairman |   |

 

 

Accepted this 20thday of February, 2002 in Spokane, Washington.

 

Temporary Financial Services,Inc.

 

 
| /s/John R. Coghlan          |   |
|-----------------------------|--------|
| John R.  Coghlan, President |   |

 
|                     |
|--------------------------|
|                     |
| Attest:                  |
|                     |
| /s/Brad E. Herr          |   |
| Brad E. Herr,  Secretary |   |

 

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