Document:

New
      Mexico Commercial Lease Agreement

     

    This
      Commercial Lease Agreement ("Lease") is made and effective March 1, 2008, by
      and
      between Spectrum Development Co., LLC ("Landlord") and PrimeSource Mortgage,
      Inc. ("Tenant").

     

    Landlord
      is the owner of land and improvements commonly known and numbered as

     

    1112
      N.
      Main St., Roswell, NM.

     

    Landlord
      desires to lease a portion of the Leased Premises to Tenant, and Tenant desires
      to lease the agreed upon Leased Premises from Landlord for the term, at the
      rental and upon the covenants, conditions and provisions herein set
      forth.

     

     

    THEREFORE,
      in consideration of the mutual promises herein, contained and other good and
      valuable consideration, it is agreed:

     

    1.
      Term.

     

    A.
      Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby leases
      the same from Landlord, for an "Initial Term" beginning March
      1, 2008
      ending
February
      28, 2013.
      Landlord shall use its best efforts to give Tenant possession as nearly as
      possible at the beginning of the Lease term. If Landlord is unable to timely
      provide the Leased Premises, rent shall abate for the period of delay. Tenant
      shall make no other claim against Landlord for any such delay.

     

    B.
      Tenant
      may renew the Lease for an extended term with written approval from Landlord.
      Said renewal will be taken under consideration within 90 days of the end of
      the
      lease term. 

     

    2.
      Rental.

     

    A.
      Tenant
      shall pay to Landlord during the Initial Term rental of $36,000.00 per
      year,
      payable in installments of $3,000.00
      per
      month. Each installment payment shall be due in advance on the first day of
      each
      calendar month during the lease term to Landlord at 1112 N. Main St., Roswell,
      NM or at such other place designated by written notice from Landlord or Tenant.
      The rental payment amount for any partial calendar months included in the lease
      term shall be prorated on a daily basis. The agreed upon rental amount will
      escalate annually beginning March 1st
      of each
      year by 4%. 

     

    B.
      Tenant
      shall also pay to Landlord a "Security Deposit" in the amount of $0.00.

     

    3.
      Use

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      the forgoing, Tenant shall not use the Leased Premises for illegal activity
      or
      for the purposes of storing, manufacturing or selling any explosives, flammables
      or other inherently dangerous substance, chemical, thing or device.

     

    4.
      Sublease
      and Assignment.

     

    Tenant
      shall have the right without Landlord's consent, to assign this Lease to a
      corporation with which Tenant may merge or consolidate, to any subsidiary of
      Tenant, to any corporation under common control with Tenant, or to a purchaser
      of substantially all of Tenant's assets. Except as set forth above, Tenant
      shall
      not sublease all or any part of the Leased Premises, or assign this Lease in
      whole or in part without Landlord's consent, such consent not to be unreasonably
      withheld or delayed.

     

    5.
      Repairs.

     

    During
      the Lease term, Tenant shall make, at Tenant's expense, all necessary repairs
      to
      the Leased Premises. Repairs shall include such items as routine repairs of
      floors, walls, ceilings, and other parts of the Leased Premises damaged or
      worn
      through normal occupancy, except for major mechanical systems or the roof,
      subject to the obligations of the parties otherwise set forth in this
      Lease.

     

    6.
      Alterations
      and Improvements.

     

    Tenant,
      at Tenant's expense, shall have the right following Landlord's consent to
      remodel, redecorate, and make additions, improvements and replacements of and
      to
      all or any part of the Leased Premises from time to time as Tenant may deem
      desirable, provided the same are made in a workmanlike manner and utilizing
      good
      quality materials. Tenant shall have the right to place and install personal
      property, trade fixtures, equipment and other temporary installations in and
      upon the Leased Premises, and fasten the same to the premises. All personal
      property, equipment, machinery, trade fixtures and temporary installations,
      whether acquired by Tenant at the commencement of the Lease term or placed
      or
      installed on the Leased Premises by Tenant thereafter, shall remain Tenant's
      property free and clear of any claim by Landlord. Tenant shall have the right
      to
      remove the same at any time during the term of this Lease provided that all
      damage to the Leased Premises caused by such removal shall be repaired by Tenant
      at Tenant's expense.

     

    7.
      Property
      Taxes.

     

    Landlord
      shall pay, prior to delinquency, all general real estate taxes and installments
      of special assessments coming due during the Lease term on the Leased Premises,
      and all personal property taxes with respect to Landlord's personal property,
      if
      any, on the Leased Premises. Tenant shall be responsible for paying all personal
      property taxes with respect to Tenant's personal property at the Leased
      Premises.

     

    8.
      Insurance.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    A.
      If the
      Leased Premises or any other part of the Building is damaged by fire or other
      casualty resulting from any act or negligence of Tenant or any of Tenant's
      agents, employees or invitees, rent shall not be diminished or abated while
      such
      damages are under repair, and Tenant shall be responsible for the costs of
      repair not covered by insurance.

     

    B.
      Landlord shall maintain fire and extended coverage insurance on the Building
      and
      the Leased Premises in such amounts as Landlord shall deem appropriate. Tenant
      shall be responsible, at its expense, for fire and extended coverage insurance
      on all of its personal property, including removable trade fixtures, located
      in
      the Leased Premises.

     

    C.
      Tenant
      and Landlord shall, each at its own expense, maintain a policy or policies
      of
      comprehensive general liability insurance with respect to the respective
      activities of each in the Building with the premiums thereon fully paid on
      or
      before due date, issued by and binding upon some insurance company approved
      by
      Landlord, such insurance to afford minimum protection of not less than
      $1,000,000 combined single limit coverage of bodily injury, property damage
      or
      combination thereof. Landlord shall be listed as an additional insured on
      Tenant's policy or policies of comprehensive general liability insurance, and
      Tenant shall provide Landlord with current Certificates of Insurance evidencing
      Tenant's compliance with this Paragraph. Tenant shall obtain the agreement
      of
      Tenant's insurers to notify Landlord that a policy is due to expire at least
      (10) days prior to such expiration. Landlord shall not be required to maintain
      insurance against thefts within the Leased Premises or the
      Building.

     

    9.
      Utilities.

     

    Tenant
      shall pay all charges for water, sewer, gas, electricity, telephone and other
      services and utilities used by Tenant on the Leased Premises during the term
      of
      this Lease unless otherwise expressly agreed in writing by Landlord. In the
      event that any utility or service provided to the Leased Premises is not
      separately metered, Landlord shall pay the amount due and separately invoice
      Tenant for Tenant's pro rata share of the charges. Tenant shall pay such amounts
      within fifteen (15) days of invoice. Tenant acknowledges that the Leased
      Premises are designed to provide standard office use electrical facilities
      and
      standard office lighting. Tenant shall not use any equipment or devices that
      utilizes excessive electrical energy or which may, in Landlord's reasonable
      opinion, overload the wiring or interfere with electrical services to other
      tenants.

     

    10.
      Signs.

     

    Following
      Landlord's consent, Tenant shall have the right to place on the Leased Premises,
      at locations selected by Tenant, any signs which are permitted by applicable
      zoning ordinances and private restrictions. Landlord may refuse consent to
      any
      proposed signage that is in Landlord's opinion too large, deceptive,
      unattractive or otherwise inconsistent with or inappropriate to the Leased
      Premises or use of any other tenant. Landlord shall assist and cooperate with
      Tenant in obtaining any necessary permission from governmental authorities
      or
      adjoining owners and occupants for Tenant to place or construct the foregoing
      signs. Tenant shall repair all damage to the Leased Premises resulting from
      the
      removal of signs installed by Tenant.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    11.
      Entry.

     

    Landlord
      shall have the right to enter upon the Leased Premises at reasonable hours
      to
      inspect the same, provided Landlord shall not thereby unreasonably interfere
      with Tenant's business on the Leased Premises.

     

    12.
      Parking.

     

    During
      the term of this Lease, Tenant shall have the non-exclusive use in common with
      Landlord, other tenants of the Building, their guests and invitees, of the
      non-reserved common automobile parking areas, driveways, and footways, subject
      to rules and regulations for the use thereof as prescribed from time to time
      by
      Landlord. Landlord reserves the right to designate parking areas within the
      Building or in reasonable proximity thereto, for Tenant and Tenant's agents
      and
      employees. Tenant shall provide Landlord with a list of all license numbers
      for
      the cars owned by Tenant, its agents and employees. Separated structured
      parking, if any, located about the Building is reserved for tenants of the
      Building who rent such parking s paces. Tenant hereby leases from Landlord
      10
      spaces in such structural parking area, such spaces to be on a first come-first
      served basis. In consideration of the leasing to Tenant of such spaces, Tenant
      shall pay a monthly rental of $0.00 per space throughout the term of the Lease.
      Such rental shall be due and payable each month without demand at the time
      herein set for the payment of other monthly rentals, in addition to such other
      rentals.

     

    13.
      Building
      Rules.

     

    Tenant
      will comply with the rules of the Building adopted and altered by Landlord
      from
      time to time and will cause all of its agents, employees, invitees and visitors
      to do so; all changes to such rules will be sent by Landlord to Tenant in
      writing. The initial rules for the Building are attached hereto as Exhibit
      "A"
      and incorporated herein for all purposes.

     

    14.
      Damage
      and Destruction.

     

    Subject
      to Section 8 A. above, if the Leased Premises or any part thereof or any
      appurtenance thereto is so damaged by fire, casualty or structural defects
      that
      the same cannot be used for Tenant's purposes, then Tenant shall have the right
      within ninety (90) days following damage to elect by notice to Landlord to
      terminate this Lease as of the date of such damage. In the event of minor damage
      to any part of the Leased Premises, and if such damage does not render the
      Leased Premises unusable for Tenant's purposes, Landlord shall promptly repair
      such damage at the cost of the Landlord. In making the repairs called for in
      this paragraph, Landlord shall not be liable for any delays resulting from
      strikes, governmental restrictions , inability to obtain necessary materials
      or
      labor or other matters which are beyond the reasonable control of Landlord.
      Tenant shall be relieved from paying rent and other charges during any portion
      of the Lease term that the Leased Premises are inoperable or unfit for
      occupancy, or use, in whole or in part, for Tenant's purposes. Rentals and
      other
      charges paid in advance for any such periods shall be credited on the next
      ensuing payments, if any, but if no further payments are to be made, any such
      advance payments shall be refunded to Tenant. The provisions of this paragraph
      extend not only to the matters aforesaid, but also to any occurrence which
      is
      beyond Tenant's reasonable control and which renders the Leased Premises, or
      any
      appurtenance thereto, inoperable or unfit for occupancy or use, in whole or
      in
      part, for Tenant's purposes.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    15.
      Default.

     

    If
      default shall at any time be made by Tenant in the payment of rent when due
      to
      Landlord as herein provided, and if said default shall continue for fifteen
      (15)
      days after written notice thereof shall have been given to Tenant by Landlord,
      or if default shall be made in any of the other covenants or conditions to
      be
      kept, observed and performed by Tenant, and such default shall continue for
      thirty (30) days after notice thereof in writing to Tenant by Landlord without
      correction thereof then having been commenced and thereafter diligently
      prosecuted, Landlord may declare the term of this Lease ended and terminated
      by
      giving Tenant written notice of such intention, and if possession of the Leased
      Premises is not surrendered, Landlord may reenter said premises. Landlord shall
      have, in addition to the remedy above provided, any other right or remedy
      available to Landlord on account of any Tenant default, either in law or equity.
      Landlord shall use reasonable efforts to mitigate its damages.

     

    16.
      Quiet
      Possession.

     

    Landlord
      covenants and warrants that upon performance by Tenant of its obligations
      hereunder, Landlord will keep and maintain Tenant in exclusive, quiet, peaceable
      and undisturbed and uninterrupted possession of the Leased Premises during
      the
      term of this Lease.

     

    17.
      Condemnation.

     

    If
      any
      legally, constituted authority condemns the Building or such part thereof which
      shall make the Leased Premises unsuitable for leasing, this Lease shall cease
      when the public authority takes possession, and Landlord and Tenant shall
      account for rental as of that date. Such termination shall be without prejudice
      to the rights of either party to recover compensation from the condemning
      authority for any loss or damage caused by the condemnation. Neither party
      shall
      have any rights in or to any award made to the other by the condemning
      authority.

     

    18.
      Subordination.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Tenant
      accepts this Lease subject and subordinate to any mortgage, deed of trust or
      other lien presently existing or hereafter arising upon the Leased Premises,
      or
      upon the Building and to any renewals, refinancing and extensions thereof,
      but
      Tenant agrees that any such mortgagee shall have the right at any time to
      subordinate such mortgage, deed of trust or other lien to this Lease on such
      terms and subject to such conditions as such mortgagee may deem appropriate
      in
      its discretion. Landlord is hereby irrevocably vested with full power and
      authority to subordinate this Lease to any mortgage, deed of trust or other
      lien
      now existing or hereafter placed upon the Leased Premises of the Building,
      and
      Tenant agrees upon demand to execute such further instruments subordinating
      this
      Lease or attorning to the holder of any such liens as Landlord may request.
      In
      the event that Tenant should fail to execute any instrument of subordination
      herein require d to be executed by Tenant promptly as requested, Tenant hereby
      irrevocably constitutes Landlord as its attorney-in-fact to execute such
      instrument in Tenant's name, place and stead, it being agreed that such power
      is
      one coupled with an interest. Tenant agrees that it will from time to time
      upon
      request by Landlord execute and deliver to such persons as Landlord shall
      request a statement in recordable form certifying that this Lease is unmodified
      and in full force and effect (or if there have been modifications, that the
      same
      is in full force and effect as so modified), stating the dates to which rent
      and
      other charges payable under this Lease have been paid, stating that Landlord
      is
      not in default hereunder (or if Tenant alleges a default stating the nature
      of
      such alleged default) and further stating such other matters as Landlord shall
      reasonably require.

     

    19.
      Security
      Deposit.

     

    The
      Security Deposit shall be held by Landlord without liability for interest and
      as
      security for the performance by Tenant of Tenant's covenants and obligations
      under this Lease, it being expressly understood that the Security Deposit shall
      not be considered an advance payment of rental or a measure of Landlord's
      damages in case of default by Tenant. Unless otherwise provided by mandatory
      non-waivable law or regulation, Landlord may commingle the Security Deposit
      with
      Landlord' s other funds. Landlord may, from time to time, without prejudice
      to
      any other remedy, use the Security Deposit to the extent necessary to make
      good
      any arrearages of rent or to satisfy any other covenant or obligation of Tenant
      hereunder. Following any such application of the Security Deposit, Tenant shall
      pay to Landlord on demand the amount so applied in order to restore the Security
      Deposit to its original amount. If Tenant is not in default at the termination
      of this Lease, the balance of the Security Deposit remaining after any such
      application shall be returned by Landlord to Tenant. If Landlord transfers
      its
      interest in the Premises during the term of this Lease, Landlord may assign
      the
      Security Deposit to the transferee and thereafter shall have no further
      liability for the return of such Security Deposit.

     

    20.
      Notice.

     

    Any
      notice required or permitted under this Lease shall be deemed sufficiently
      given
      or served if sent by United States certified mail, return receipt requested,
      addressed as follows:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    If
      to
      Landlord to:

     

    Spectrum
      Development Co., LLC

    1112
      N. Main St.

    Roswell,
      NM 88201

     

     

    If
      to
      Tenant to:

    

    PrimeSource
      Mortgage, Inc.

    1112
      N. Main St.

    Roswell,
      NM 88201

     

    Landlord
      and Tenant shall each have the right from time to time to change the place
      notice is to be given under this paragraph by written notice thereof to the
      other party.

     

    21.
      Waiver.

     

    No
      waiver
      of any default of Landlord or Tenant hereunder shall be implied from any
      omission to take any action on account of such default if such default persists
      or is repeated, and no express waiver shall affect any default other than the
      default specified in the express waiver and that only for the time and to the
      extent therein stated. One or more waivers by Landlord or Tenant shall not
      be
      construed as a waiver of a subsequent breach of the same covenant, term or
      condition.

     

    23.
      Memorandum
      of Lease.

     

    The
      parties hereto contemplate that this Lease should not and shall not be filed
      for
      record, but in lieu thereof, at the request of either party, Landlord and Tenant
      shall execute a Memorandum of Lease to be recorded for the purpose of giving
      record notice of the appropriate provisions of this Lease.

     

    24.
      Headings.

     

    The
      headings used in this Lease are for convenience of the parties only and shall
      not be considered in interpreting the meaning of any provision of this
      Lease.

     

    25.
      Successors.

     

    The
      provisions of this Lease shall extend to and be binding upon Landlord and Tenant
      and their respective legal representatives, successors and assigns.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    26.
      Consent.

     

    Landlord
      shall not unreasonably withhold or delay its consent with respect to any matter
      for which Landlord's consent is required or desirable under this
      Lease.

     

    27.
      Performance.

     

    If
      there
      is a default with respect to any of Landlord's covenants, warranties or
      representations under this Lease, and if the default continues more than fifteen
      (15) days after notice in writing from Tenant to Landlord specifying the
      default, Tenant may, at its option and without affecting any other remedy
      hereunder, cure such default and deduct the cost thereof from the next accruing
      installment or installments of rent payable hereunder until Tenant shall have
      been fully reimbursed for such expenditures, together with interest thereon
      at a
      rate equal to the lessor of twelve percent (12%) per annum or the then highest
      lawful rate. If this Lease terminates prior to Tenant's receiving full
      reimbursement, Landlord shall pay the unreimbursed balance plus accrued interest
      to Tenant on demand.

     

    28.
      Compliance
      with Law.

     

    Tenant
      shall comply with all laws, orders, ordinances and other public requirements
      now
      or hereafter pertaining to Tenant's use of the Leased Premises. Landlord shall
      comply with all laws, orders, ordinances and other public requirements now
      or
      hereafter affecting the Leased Premises.

     

    29.
      Final
      Agreement.

     

    This
      Agreement terminates and supersedes all prior understandings or agreements
      on
      the subject matter hereof. This Agreement may be modified only by a further
      writing that is duly executed by both parties.

     

    30.
      Governing
      Law.

     

    This
      Agreement shall be governed, construed and interpreted by, through and under
      the
      Laws of the State of New Mexico.

     

    IN
      WITNESS WHEREOF, the parties have executed this Lease as of the day and year
      first above written.

     

    
      /s/
        Jeffrey R.
        Smith                                                              

      Spectrum
        Development Co., LLC, Managing Member 

    

     

     

    
      /s/
        James E.
        Kunko                                                              

      PrimeSource
        Mortgage, Inc.NWBO CORPORATION & BOB DUANE & CARY
                HISE,

              INDIVIDUALLY

              601 W NW HWY., SUITE 100

              GRAPEVINE, TX 76051 

            	
              PSM
                HOLDINGS, INC. 

              1112
                N. MAIN STREET

              ROSWELL,
                NM 88201

            
	 	 
	BORROWER’S NAME AND
              ADDRESS	LENDER’S NAME AND
              ADDRESS

    

     

     

    For
      value
      received, I promise to pay to you, or your order, at your address listed above
      the PRINCIPAL sum of NINETY
      EIGHT THOUSAND NINE HUNDRED FIFTY FOUR DOLLARS AND 18/100 Dollars
      $98,954.18.

    

    □
      Single Advance:
      I
      received all of this principle sum on 05-15-2007. No additional advances are
      contemplated under this note.

    

    INTEREST:
      I agree
      to pay interest on the outstanding principal balance from 05-30-2008 at the
      rate
      of 9.250% per year until

    08-30-2009.

    

    ACCRUAL
      METHOD:
      Interest
      will be calculated on a ACTUAL/360 basis.

    

    POST
      MATURITY RATE:
      I agree
      to pay interest on the unpaid balance of this note owing after maturity, and
      until paid in full, as stated below:

     

    □
      on
      the
      same fixed or variable rate basis in effect before maturity (as indicated
      above).

    

    □
      LATE CHARGE: If
      a
      payment is made more than 15 days after it is due, I agree to pay a late charge
      of $50.00.

    

    PAYMENTS:
      I agree
      to pay this note as follows:

    

    14
      MONTHLY PAYMENTS OF $1,000.00 EACH BEGINNING 06-30-2008 AND 1 PAYMENT OF
      96,381.53 ON 08-30-2009.

     

    
      
        	
                □
                  SECURITY: 
                  This note is separately secured by (described

                 balance
                  separate document by type and date):

              	
                PURPOSE:
                  The purpose of this loan is renew
                  

              
	 	 
	
                
                  SECURITY
                    AGREEMENT DATED FEBRUARY 16, 2007 &

                  NOVEMBER
                    16, 2006

                  NOTE

                

              	SIGNATURES:
                I
                AGREE TO THE TERMS OF THIS 
	 	 
	
                Signature
                  for Lender

              	 
	 	 
	PSM HOLDINGS,
                INC. 	NWBO CORPORATION
&
                BOB DUANE & CARY HISE, INDIVIDUALLY
	 	 
	
                /s/
                  Jeffrey R.
                  Smith                                          
                  

                JEFFREY
                  R. SMITH, PRESIDENT/CEO

              	
                /s/
                  Bob
                  Duane                                                                    
                  

                BOB
                  DUANE, PRESIDENT & INDIVIDUALLY

              
	 	 
	 	
                /s/
                  Cary
                  Hise                                                                      
                  

                CARY
                  HISE, INDIVIDUALLY

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	
              DEBTOR
                NAME AND ADDRESS

            	SECURED PARTY NAME AND
              ADDRESS
	 	 
	
              NWBO CORPORATION & BOB DUANE & CARY HISE,
                INDIVIDUALLY

              3230 CAMP BOWIE SUITE A

              FORT WORTH, TX 76107

            	
              PSM HOLDINGS, INC.

              1112 N. MAIN 

              ROSWELL,
                NM 88201

            

    

    
 

    Type:
      □
      corporation 

    

    COMMERCIAL
      SECURITY AGREEMENT

    

    The
      date
      of this Commercial Security Agreement (Agreement) is 11-16-2006.

     

    
      
        	SECURED
                DEBTS.
                	
                This
                  Agreement will secure all sums advanced by Secured Party under
                  the terms
                  of this Agreement and the

                payment
                  and performance of the following described Secured Debts that Debtor
                  owes
                  to Secured Party:

              

      

    

     

    
      	□ All
              Debts.
              	
              All
                present and future debts, even if this Agreement is not referenced,
                the
                debts are also secured by other collateral,
                or the future debt is unrelated to or of a different type than the
                current
                debt. Nothing in this Agreement is a commitment to make future loans
                or
                advances.

            

    

     

    
      	SECURITY
              INTEREST. 	
              To
                secure the payment and performance of the Secured Debts, Debtor gives
                Secured Party a security interest in all of the Property described
                in this
                Agreement that Debtor owns or has sufficient rights in which to transfer
                an interest, now or in the future, wherever the Property is or will
                be
                located, and all proceeds and products of the Property. “Property”
                includes all parts, accessories, repairs, replacements, improvements,
                and
                accessions to the Property; any original evidence of title or ownership;
                and all obligations that support the payment or performance of the
                Property. “Proceeds” includes anything acquired upon the sale, lease,
                license, exchange, or other disposition of the Property; any rights
                and
                claims arising from the Property; and any collections and distributions
                on
                account of the Property. This Agreement remains in effect until terminated
                in writing, even if the Secured Debts are paid and Secured Party
                is no
                longer obligated to advance funds to Debtor or
                Borrower.

            

    

     

    
      	PROPERTY DESCRIPTION:	
              The
                Property is described as follows:

            

    

     

     

    
      	 	
              □
                Specific
                Property Description: The Property includes, but is not limited by,
                the
                following (if required, provide 

              real
                estate description):

            

    

     

    50,000
      SHARES OF PSMH STOCK

     

    
      
        	USE OF PROPERTY.
                	The Property will be used for □
                business purposes.

      

    

     

    SIGNATURES:

     

    
      	
              DEBTOR 

            	
              SECURED
                PARTY

            
	 	 
	NWBO CORPORATION	
              PSM
                HOLDINGS, INC. 

            
	 	 
	/s/ BOB DUANE, PRESIDENT &
              INDIVIDUALLY	
              /s/
                JEFFREY R. SMITH

            
	 	 
	/s/ CARY HISE, INDIVIDUALLY	 

    

              

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	
              DEBTOR
                NAME AND ADDRESS

            	
              SECURED
                PARTY NAME AND ADDRESS

            
	 	 
	
              NWBO CORPORATION & BOB DUANE & CARY HISE,
                INDIVIDUALLY

              3230 CAMP BOWIE SUITE A

              FORT WORTH, TX 76107

            	
              PSM
                HOLDINGS, INC.

              1112
                N. MAIN

              ROSWELL,
                NM 88201

            
	 	 
	Type: □
              corporation 	 
	 	 
	 	 

    

    
 

    COMMERCIAL
      SECURITY AGREEMENT

    

    The
      date
      of this Commercial Security Agreement (Agreement) is 02-16-2007.

     

     

    
      
        	SECURED
                DEBTS.
                	
                This
                  Agreement will secure all sums advanced by Secured Party under
                  the terms
                  of this Agreement and the payment
                  and performance of the following described Secured Debts that Debtor
                  owes
                  to Secured Party:

              

      

    

     

    
      	□ All
              Debts.	
              All
                present and future debts, even if this Agreement is not referenced,
                the
                debts are also secured by other collateral,
                or the future debt is unrelated to or of a different type than the
                current
                debt. Nothing in this Agreement is a commitment to make future loans
                or
                advances.

            

    

     

     

    
      	SECURITY
              INTEREST.	
              To
                secure the payment and performance of the Secured Debts, Debtor gives
                Secured Party a security interest in all of the Property described
                in this
                Agreement that Debtor owns or has sufficient rights in which to transfer
                an interest, now or in the future, wherever the Property is or will
                be
                located, and all proceeds and products of the Property. “Property”
                includes all parts, accessories, repairs, replacements, improvements,
                and
                accessions to the Property; any original evidence of title or ownership;
                and all obligations that support the payment or performance of the
                Property. “Proceeds” includes anything acquired upon the sale, lease,
                license, exchange, or other disposition of the Property; any rights
                and
                claims arising from the Property; and any collections and distributions
                on
                account of the Property. This Agreement remains in effect until terminated
                in writing, even if the Secured Debts are paid and Secured Party
                is no
                longer obligated to advance funds to Debtor or
                Borrower.

            

    

     

     

    
      	PROPERTY DESCRIPTION:	 The Property is described as
              follows:

    

     

    □
      Specific
      Property Description: The Property includes, but is not limited by, the
      following (if required, provide 

    real
      estate description):

    

    100,000
      SHARES OF PSMH STOCK

    

    USE
      OF PROPERTY.
      The
      Property will be used for □
      business
      purposes.

     

    SIGNATURES:

     

    
      	
              DEBTOR

            	
              SECURED
                PARTY

            
	 	 
	NWBO CORPORATION 	PSM
              HOLDINGS, INC. 
	 	 
	/s/ BOB DUANE, PRESIDENT &
              INDIVIDUALLY    	/s/ KURT GASS
	 	 
	
              /s/
                CARY HISE, INDIVIDUALLY

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