Document:

PSM
      HOLDINGS, INC.

    

    2002
      STOCK OPTION/STOCK ISSUANCE PLAN

    (As
      amended August 16, 2005)

    

    
      	
              I.

            	
              GENERAL
                PROVISIONS

            

    

    

    
      	 	
              A.

            	
              PURPOSE
                OF THE PLAN

            

    

    

    This
      2002
      Stock Option/Stock Issuance Plan (the “Plan”) is intended to aid the Corporation
      (or any Parent or Subsidiary) in maintaining and developing a management team,
      attracting qualified officers and employees capable of assisting in the future
      success of the Corporation, and rewarding those individuals who have
      contributed, or may contribute in the future, to the success of the Corporation
      (or any Parent or Subsidiary). It is designed to aid the Corporation (and any
      Parent or Subsidiary) in retaining the services of executives and Employees
      and
      in attracting new personnel when needed for future operations and growth and
      to
      provide such personnel with an incentive to remain Employees of the Corporation,
      to use their best efforts to promote the success of the Corporation’s business,
      and to provide them with an opportunity to obtain or increase a proprietary
      interest in the Corporation. It is further designed to attract and retain the
      best available personnel for service as directors of the Corporation (or any
      Parent or Subsidiary), whether or not such individuals may otherwise be
      Employees. It is also designed to permit the Corporation to reward those
      consultants or other independent advisors who are not Employees but who are
      perceived by management as having contributed to the success of the Corporation
      (or any Parent or Subsidiary) or who are important to the continued business
      and
      operations of the Corporation (or any Parent or Subsidiary).

    

    Capitalized
      terms herein shall have the meanings assigned to such terms in the attached
      Appendix.

    

    
      	 	
              B.

            	
              STRUCTURE
                OF THE PLAN

            

    

    

    
      	 	
              1.

            	
              The
                Plan shall be divided into two (2) separate equity
                programs:

            

    

    

    
      	 	
              a.

            	
              the
                Option Grant Program under which eligible persons may, at the discretion
                of the Plan Administrator, be granted options to purchase shares
                of Common
                Stock, and

            

    

     

    
      	 	
              b.

            	
              the
                Stock Issuance Program under which eligible persons may, at the discretion
                of the Plan Administrator, be issued shares of Common Stock directly,
                either through the immediate purchase of such shares or as a bonus
                for
                services rendered to the Corporation (or any
                Parent

            

    

     

     

    
      
         

      

      
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          1
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    or
      Subsidiary) or as an incentive to perform services for the Corporation (or
      any
      Parent or Subsidiary).

    

    
      	 	
              2.

            	
              The
                provisions of Sections I and IV shall apply to both equity programs
                under
                the Plan and shall accordingly govern the interests of all persons
                under
                the Plan.

            

    

    

    
      	 	
              C.

            	
              ADMINISTRATION
                OF THE PLAN

            

    

    

    
      	 	
              1.

            	
              The
                Plan shall be administered by the Board. However, any or all
                administrative functions otherwise exercisable by the Board may be
                delegated to the Committee. Members of the Committee shall serve
                for such
                period of time as the Board may determine and shall be subject to
                removal
                by the Board at any time. The Board may also at any time terminate
                the
                functions of the Committee and reassume all powers and authority
                previously delegated to the
                Committee.

            

    

    

    
      	 	
              2.

            	
              The
                Plan Administrator shall have full power and authority (subject to
                the
                provisions of the Plan) to establish such rules and regulations as
                it may
                deem appropriate for proper administration of the Plan and to make
                such
                determinations under, and issue such interpretations of, the Plan
                and any
                outstanding options thereunder as it may deem necessary or advisable.
                Decisions of the Plan Administrator shall be final and binding on
                all
                parties who have an interest in the Plan or any option
                thereunder.

            

    

    

    
      	 	
              D.

            	
              ELIGIBILITY

            

    

    

    
      	 	
              1.

            	
              The
                Plan Administrator shall have full authority to determine, (i) with
                respect to the option grants under the Option Grant Program, which
                eligible persons are to receive option grants, the time or times
                when such
                option grants are to be made, the number of shares to be covered
                by each
                such grant, the status of the granted option as either an Incentive
                Option
                or a Non-Statutory Option, the time or times at which each option
                is to
                become exercisable, the vesting schedule (if any) applicable to the
                option
                shares and the maximum term for which the option is to remain outstanding,
                and (ii) with respect to stock issuances under the Stock Issuance
                Program,
                which eligible persons are to receive stock issuances, the time or
                times
                when such issuances are to be made, the number of shares to be issued
                to
                each Participant, the vesting schedule (if any) applicable to the
                issued
                shares and the consideration to be paid or given by the Participant
                for
                such shares.

            

    

     

    
      	 	
              2.

            	
              The
                Plan Administrator shall have the absolute discretion either to grant
                options in accordance with the Option Grant Program or to effect
                stock
                issuances in accordance with the Stock Issuance
                Program.

            

    

    

    
      	 	
              E.

            	
              STOCK
                SUBJECT TO THE PLAN

            

    

    

    
      	 	
              1.

            	
              The
                stock issuable under the Plan shall be shares of authorized but unissued
                or reacquired Common Stock. The maximum number of shares of Common
                Stock
                which may be issued over the term of the Plan shall not exceed 3,000,000
                shares.

            

    

    

    
      	 	
              2.

            	
              Shares
                of Common Stock subject to outstanding options shall be available
                for
                subsequent issuance under the Plan to the extent (i) the options
                expire or
                terminate for any reason prior to exercise in full or
                (ii) the options are canceled in accordance with the cancellation-re-grant
                provisions of Section II(E).

            

    

    

    
      	 	
              3.

            	
              Should
                any change be made to the Common Stock by reason of any stock split,
                stock
                dividend, recapitalization, combination of shares, exchange of shares
                or
                other change affecting the outstanding Common Stock as a class without
                the
                Corporation’s receipt of consideration, appropriate adjustments shall be
                made to the maximum number and/or class of securities issuable under
                the
                Plan. The adjustments determined by the Plan Administrator shall
                be final,
                binding and conclusive.

            

    

    

    
      	
              II.

            	
              OPTION
                GRANT PROGRAM

            

    

    

    
      	 	
              A.

            	
              TYPES
                OF OPTIONS

            

    

    

    The
      Option Grant Program shall be comprised of two types of options as
      follows:

    

    
      	 	
              1.

            	
              Incentive
                Options which are options intended to qualify under the Code, subject
                to
                limiting conditions, for favorable tax treatment in respect of the
                recognition of ordinary income, gain, or loss and withholding requirements
                applicable to the exercise of the options and disposition of the
                shares of
                Common Stock acquired upon exercise of Incentive
                Options.

            

    

     

    
      	 	
              2.

            	
              Non-Statutory
                Options which are those options that are not intended to qualify
                under the
                Code for favorable tax treatment in respect of the recognition of
                ordinary
                income, gain, or loss and withholding requirements applicable to
                the
                exercise of options and disposition of shares of Common Stock acquired
                pursuant to the exercise of the Non-Statutory options. The Option
                grant
                program intends that the treatment of such transactions
                in

            

    

    
      
         

      

      
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    respect
      of Non-Statutory Options will be governed by the taxation rules applicable
      to
      the transfer of property in connection with the performance of
      services.

    

    
      	 	
              B.

            	
              OPTION
                TERMS APPLICABLE TO BOTH INCENTIVE AND NON-STATUTORY
                OPTIONS

            

    

    

    
      	 	
              1.

            	
              Option
                Agreements.

            

    

    

    Each
      option shall be evidenced by one or more option agreements between the
      Corporation and the Optionee. Option agreements shall designate the number
      of
      shares and the exercise price of the Option to which it pertains, and shall
      set
      forth the vesting schedule of the Option or state that the Option is vested
      immediately. The option agreements shall be in writing, dated as of the date
      the
      option is granted, and shall be executed on behalf of the Corporation by such
      officers as the Board shall authorize. Option agreements shall be in such form
      and contain such additional provisions as the Plan Administrator shall
      prescribe, but in no event shall they contain provisions inconsistent with
      the
      provisions of this Plan.

    

    
      	 	
              2.

            	
               Exercise
                Price.

            

    

    

    
      	 	
              a.

            	
              The
                exercise price per share shall be fixed by the Plan Administrator
                for
                Incentive and Non-Statutory Options as set forth
                below.

            

    

     

    
      	 	
              b.

            	
              The
                exercise price shall become immediately due upon exercise of the
                option
                and shall, subject to the provisions of Section IV(A) and the documents
                evidencing the option, be payable in cash or check made payable to
                the
                Corporation. The Plan Administrator, in its discretion, may also
                permit
                the exercise price to be paid partly in cash and/or as
                follows:

            

    

    

    
      	 	
              (1)

            	
              in
                shares of Common Stock valued at Fair Market Value on the Exercise
                Date,
                or

            

    

     

    
      	 	
              (2)

            	
              to
                the extent the option is exercised for vested shares, through a special
                sale and remittance procedure pursuant to which the Optionee shall
                concurrently provide irrevocable written instructions (A) to a
                Corporation-designated brokerage firm to effect the immediate sale
                of the
                purchased shares and remit to the Corporation, out of the sale proceeds
                available on the settlement date, sufficient funds to cover the aggregate
                exercise price payable for the purchased shares plus
                all

            

    

    
      
         

      

      
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    applicable
      Federal, state and local income and employment taxes required to be withheld
      by
      the Corporation by reason of such exercise, and (B) to the Corporation to
      deliver the certificates for the purchased shares directly to such brokerage
      firm in order to complete the sale.

    

    
      	 	
              c.

            	
              Except
                to the extent such sale and remittance procedure is utilized, payment
                of
                the exercise price for the purchased shares must be made on the Exercise
                Date.

            

    

    

    
      	 	
              3.

            	
              Exercise
                and Term of Options. 

            

    

    

    Each
      option shall be exercisable at such time or times, during such period and for
      such number of shares as shall be determined by the Plan Administrator and
      set
      forth in the documents evidencing the option grant. However, no option shall
      have a term in excess of ten (10) years measured from the option grant date.
      The
      terms of Incentive and Non-Qualified Options shall be fixed by the Plan
      Administrator within the limits specified below.

    

    
      	 	
              4.

            	
              Effect
                of Termination of
                Service.

            

    

    

    
      	 	
              a.

            	
              The
                following provisions shall govern the exercise of any options held
                by the
                Optionee at the time of cessation of Service or
                death:

            

    

    

    
      	 	
              (1)

            	
              Should
                the Optionee cease to remain in Service for Misconduct, then the
                options
                shall terminate on the date of cessation of the
                Service.

            

    

    

    
      	 	
              (2)

            	
              Should
                the Optionee cease to remain in Service for any reason other than
                Misconduct, Disability or death, then the Optionee shall have a period
                of
                three (3) months following the date of such cessation of Service
                during
                which to exercise each outstanding option held by such
                Optionee.

            

    

    

    
      	 	
              (3)

            	
              Should
                Optionee’s Service terminate by reason of Disability, then the Optionee
                shall have a period of twelve (12) months following the date of such
                cessation of Service during which to exercise each outstanding option
                held
                by such Optionee.

            

    

     

    
      	 	
              (4)

            	
              If
                the Optionee dies while holding an outstanding option, then the personal
                representative of his or her estate or the person or persons to whom
                the
                option is transferred pursuant to the Optionee’s will or the laws of
                inheritance shall have a twelve

            

    

    
      
         

      

      
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          4
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    (12)
      month period following the date of the Optionee’s death to exercise such
      option.

    

    
      	 	
              (5)

            	
              Under
                no circumstances, however, shall any such option be exercisable after
                the
                specified expiration of the option
                term.

            

    

    

    
      	 	
              (6)

            	
              During
                the applicable post-Service exercise period, the option may not be
                exercised in the aggregate for more than the number of vested shares
                for
                which the option is exercisable on the date of the Optionee’s cessation of
                Service. Upon the expiration of the applicable exercise period or
                (if
                earlier) upon the expiration of the option term, the option shall
                terminate and cease to be outstanding for any vested shares for which
                the
                option has not been exercised. However, the option shall, immediately
                upon
                the Optionee’s cessation of Service, terminate and cease to be outstanding
                with respect to any and all option shares for which the option is
                not
                otherwise at the time exercisable or in which the Optionee is not
                otherwise at that time vested.

            

    

    

    
      	 	
              b.

            	
              The
                Plan Administrator shall have the discretion, exercisable either
                at the
                time an option is granted or at any time while the option remains
                outstanding, to:

            

    

    

    
      	 	
              (1)

            	
              extend
                the period of time for which the option is to remain exercisable
                following
                Optionee’s cessation of Service or death from the limited period otherwise
                in effect for that option to such greater period of time as the Plan
                Administrator shall deem appropriate, but in no event beyond the
                expiration of the option term;
                and/or

            

    

    

    
      	 	
              (2)

            	
              permit
                the option to be exercised, during the applicable post-Service exercise
                period, not only with respect to the number of vested shares of Common
                Stock for which such option is exercisable at the time of the Optionee’s
                cessation of Service but also with respect to one or more additional
                installments in which the Optionee would have vested under the option
                had
                the Optionee continued in Service.

            

    

     

    
      	 	
              5.

            	
              Shareholder
                Rights.
                The holder of an option shall have no shareholder rights with respect
                to
                the shares subject to the option until such person shall have exercised
                the option, paid the exercise price, and become a holder of record
                of the
                purchased shares.

            

    

    
      
         

      

      
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          5
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              6.

            	
              [RESERVED]

            

    

    

    
      	 	
              7.

            	
              Limited
                Transferability of Options.
                During the lifetime of the Optionee, the option shall be exercisable
                only
                by the Optionee and shall not be assignable or transferable other
                than by
                will or by the laws of descent and distribution following the Optionee’s
                death.

            

    

    

    
      	 	
              8.

            	
              Withholding.
                The Corporation’s obligation to deliver shares of Common Stock upon the
                exercise of any options granted under the Plan shall be subject to
                the
                satisfaction of all applicable Federal, state and local income and
                employment tax withholding
                requirements.

            

    

    

    
      	 	
              C.

            	
              INCENTIVE
                OPTIONS

            

    

    

    The
      terms
      specified below shall be applicable to all Incentive Options. Except as modified
      by the provisions of this Section II(C), all the provisions of the Plan shall
      be
      applicable to Incentive Options. Options which are specifically designated
      as
      Non--Statutory Options shall not be subject to the terms of this Section II
      (C).

    

    
      	 	
              1.

            	
              Eligibility.
                Incentive Options may only be granted to
                Employees.

            

    

    

    
      	 	
              2.

            	
              Exercise
                Price.
                The exercise price per share shall not be less than one hundred percent
                (100%) of the Fair Market Value per share of Common Stock on the
                option
                grant date. For options granted to a 10% Shareholder, the exercise
                price
                per share shall not be less than one hundred ten percent (110%) of
                the
                Fair Market Value per share of Common Stock on the option grant
                date.

            

    

     

    
      	 	
              3.

            	
              Dollar
                Limitation.
                The aggregate Fair Market Value of the shares of Common Stock (determined
                as of the respective date or dates of grant) for which one or more
                options
                granted to any Employee under the Plan (or any other option plan
                of the
                Corporation or any Parent or Subsidiary) may for the first time become
                exercisable as Incentive Options during any one (1) calendar year
                shall
                not exceed the sum of One Hundred Thousand Dollars ($100,000). To
                the
                extent the Employee holds two (2) or more such options which become
                exercisable for the first time in the same calendar year, the foregoing
                limitation on the exercisability of such options as Incentive Options
                shall be applied on the basis of the order in which such options
                are
                granted.

            

    

    

    
      	 	
              4.

            	
              Option
                Term for 10% Shareholder.
                If
                any Employee to whom an Incentive Option is granted is a 10% Shareholder,
                then the option term shall not exceed five (5) years measured from
                the
                option grant date.

            

    

    
      
         

      

      
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              D.

            	
              NON-STATUTORY
                OPTIONS

            

    

    

    The
      terms
      specified below shall be applicable to all Non-Statutory Options. Except as
      modified by the provisions of this Section II(D), all the provisions of the
      Plan
      shall be applicable to Non-Statutory Options.

    

    
      	 	
              1.

            	
              Eligibility.
                Non-Statutory Options may be granted to the following
                persons:

            

    

    

    
      	 	
              a.

            	
              Employees,

            

    

    

    
      	 	
              b.

            	
              non-employee
                members of the Board or the non-employee members of the board of
                directors
                of any Parent or Subsidiary, and

            

    

    

    
      	 	
              c.

            	
              consultants
                and other independent advisors who provide services to the Corporation
                (or
                any Parent or Subsidiary), provided that such consultants or advisors
                are
                natural persons; that they provide bona fide services to the Corporation
                (or the Parent or Subsidiary); and that the services are not in connection
                with the offer or sale of securities in a capital-raising transaction,
                and
                do not directly or indirectly promote or maintain a market for the
                Corporation’s securities.

            

    

    

    
      	 	
              2.

            	
              Exercise
                Price.
                The exercise price per share covered by a Non-Statutory Option shall
                not
                be less than eighty-five percent (85%) of the Fair Market Value per
                share
                of Common Stock on the option grant
                date.

            

    

    

    
      	 	
              E.

            	
              CORPORATE
                TRANSACTION

            

    

     

    
      	 	
              1.

            	
              The
                Plan and each option outstanding under the Plan at the time of a
                Corporate
                Transaction shall terminate and cease to be outstanding, but only
                after
                each Optionee (or the successor in interest) has been given, for
                the
                period of ten (10) days ending five (5) days before the effective
                date of
                the Corporate Transaction (or such longer period as the Board may
                specify), the right to exercise any unexpired option in full or in
                part,
                as if such option was fully vested and exercisable notwithstanding
                anything to the contrary contained in any option agreement between
                the
                Corporation and any optionee. However, the outstanding options shall
                not
                terminate and cease to be outstanding on such an accelerated basis
                if and
                to the extent such options are assumed by the successor corporation
                (or
                parent thereof) in the Corporate
                Transaction.

            

    

    

    
      	 	
              2.

            	
              Each
                option which is assumed in connection with a Corporate Transaction
                shall
                be appropriately adjusted, immediately after such
                Corporate

            

    

    
      
         

      

      
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    Transaction,
      to apply to the number and class of securities which would have been issuable
      to
      the Optionee in consummation of such Corporate Transaction, had the option
      been
      exercised immediately prior to such Corporate Transaction. Appropriate
      adjustments shall also be made to (i) the number and class of securities
      available for issuance under the Plan following the consummation of such
      Corporate Transaction and (ii) the exercise price payable per share under each
      outstanding option, provided the aggregate exercise price payable for such
      securities shall remain the same.

    

    
      	 	
              3.

            	
              The
                Plan Administrator shall have the discretion, exercisable either
                at the
                time the option is granted or at any time while the option remains
                outstanding, to provide for the automatic acceleration (in whole
                or in
                part) of one or more outstanding options upon the occurrence of a
                Corporate Transaction, whether or not those options are to be assumed
                or
                replaced in the Corporate
                Transaction.

            

    

    

    
      	 	
              4.

            	
              The
                portion of any Incentive Option accelerated in connection with a
                Corporate
                Transaction shall remain exercisable as an Incentive Option only
                to the
                extent the applicable One Hundred Thousand Dollar ($100,000) limitation
                is
                not exceeded. To the extent such dollar limitation is exceeded, the
                accelerated portion of such option shall be exercisable as a Non-Statutory
                Option under the Federal tax laws.

            

    

    

    
      	 	
              5.

            	
              Subject
                to Section II(F) below, the grant of options under the Plan shall
                in no
                way affect the right of the Corporation to adjust, reclassify, reorganize
                or otherwise change its capital or business structure or to merge,
                consolidate, dissolve, liquidate or sell or transfer all or any part
                of
                its business or assets.

            

    

    

    
      	 	
              F.

            	
              ADJUSTMENTS

            

    

     

    
      	 	
              1.

            	
              If
                the Corporation shall at any time subdivide its outstanding shares
                of
                Common Stock by recapitalization, reclassification or split-up thereof,
                or
                if the Corporation shall declare a stock dividend or distribute shares
                of
                Common Stock to its stockholders, the number of shares of Common
                Stock
                purchasable upon exercise of the options immediately prior to such
                subdivision shall be proportionately increased in each instance,
                and if
                the Corporation shall at any time combine the outstanding shares
                of Common
                Stock by recapitalization, reclassification or combination thereof,
                the
                number of shares of Common Stock purchasable upon exercise of the
                options
                immediately prior to such combination shall be proportionately decreased
                in each instance. Any adjustment which is the result of a stock dividend
                or distribution shall be effective on the record date
                therefor.

            

    

    
      
         

      

      
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            	2.	
              Whenever
                the number of shares of Common Stock purchasable upon the exercise
                of any
                of the options is required to be adjusted as provided in Section
                II(F)(1)
                above, the exercise price per share shall be adjusted (to the nearest
                cent) in each instance by multiplying such exercise price per share
                immediately prior to such adjustment by a fraction (x) the numerator
                of
                which shall be the number of shares of Common Stock purchasable upon
                the
                exercise of the options immediately prior to such adjustment, and
                (y) the
                denominator of which shall be the number of shares of Common Stock
                so
                purchasable immediately thereafter.

            

    

    

    
      	 	
              3.

            	
              In
                case the Corporation shall, at any time prior to the expiration date
                of
                the options, and prior to the exercise thereof, offer to the holders
                of
                its Common Stock any right to subscribe for additional shares of
                any class
                of the Corporation, then the Corporation shall give written notice
                thereof
                to the registered holders of the options not less than thirty (30)
                days
                prior to the date on which the books of the Corporation are closed
                or a
                record date fixed for the determination of stockholders entitled
                to such
                subscription rights. Such notice shall specify the date as to which
                the
                books shall be closed or record date be fixed with respect to such
                offer
                or subscription, and the right of the holders to participate in such
                offer
                or subscription shall terminate if the options shall not be exercised
                on
                before the date of such closing of the books or such record
                date.

            

    

    

    
      	 	
              4.

            	
              If
                the Corporation shall take any action affecting the shares of its
                Common
                Stock, other than that action described in this Plan, which, in the
                opinion of the Plan Administrator, would materially affect the rights
                of
                the holders of the options or the exercise price per share, the number
                of
                shares of Common Stock purchasable on exercise of the options shall
                be
                adjusted in each instance and at such time as the Plan Administrator,
                in
                good faith, may determine to be equitable under the circumstances.
                The
                adjustments determined by the Plan Administrator shall be final,
                binding,
                and conclusive.

            

    

     

    
      	 	
              5.

            	
              Any
                changes or adjustments in the number of shares of Common Stock purchasable
                upon the exercise of the options or in the exercise price of options,
                as
                required or authorized by this Section II(F), shall be made with
                respect
                to all authorized options whether or not they have yet been issued
                or
                outstanding at the time of the occurrence of the circumstance leading
                to
                such change or adjustment.

            

    

    

    
      	 	
              G.

            	
              CANCELLATION
                AND RE-GRANT OF OPTIONS

            

    

    

    The
      Plan
      Administrator shall have the authority to effect, at any time and from time
      to
      time, with the consent of the affected option holders and subject to approval
      of
      the shareholders of the Corporation, the cancellation of any or all outstanding
      options under the Plan and to grant in substitution therefor new options
      covering the same or different number

    
      
         

      

      
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          9
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    of
      shares
      of Common Stock but with an exercise price per share based on the Fair Market
      Value per share of Common Stock on the new option grant date. The type and
      amount of consideration for the substituted options shall be subject to the
      approval of the Plan Administrator.

    

    
      	
              III.

            	
              STOCK
                ISSUANCE PROGRAM

            

    

    

    
      	 	
              A.

            	
              STOCK
                ISSUANCE TERMS

            

    

    

    Shares
      of
      Common Stock may be issued under the Stock Issuance Program through direct
      and
      immediate issuances without any intervening option grants. Each such stock
      issuance shall be evidenced by a Stock Issuance Agreement which complies with
      the terms specified below.

    

    
      	 	
              1.

            	
              Cost
                of Shares.
                Grants of shares of Common Stock under the Stock Issuance Program
                shall be
                made at such cost as the Plan Administrator shall determine and may
                be
                issued for no monetary consideration, subject to applicable state
                law.

            

    

    

    
      	 	
              2.

            	
              Vesting
                Provisions.

            

    

    

    
      	 	
              a.

            	
              Shares
                of Common Stock issued under the Stock Issuance Program may, in the
                discretion of the Plan Administrator, be fully and immediately vested
                upon
                issuance or may vest in one or more installments over the Participant’s
                period of Service or upon attainment of specified performance
                objectives.

            

    

     

    
      	 	
              b.

            	
              Any
                new, substituted or additional securities or other property (including
                money paid other than as a regular cash dividend) which the Participant
                may have the right to receive with respect to the Participant’s unvested
                shares of Common Stock by reason of any stock dividend, stock split,
                recapitalization, combination of shares, exchange of shares or other
                change affecting the outstanding Common Stock as a class without
                the
                Corporation’s receipt of consideration shall be issued subject to (i) the
                same vesting requirements applicable to the Participant’s unvested shares
                of Common Stock and (ii) such escrow arrangements as the Plan
                Administrator shall deem
                appropriate.

            

    

    

    
      	 	
              c.

            	
              Unless
                specified otherwise in the Stock Issuance Agreement, the Participant
                shall
                have full shareholder rights with respect to any shares of Common
                Stock
                issued to the Participant under the Stock Issuance Program, whether
                or not
                the Participant’s interest in
                those

            

    

    
      
         

      

      
        -
          10
          -

        
          

        

      

      
         

      

    

    shares
      is
      vested, and accordingly, the Participant shall have the right to vote such
      shares and to receive any regular cash dividends paid on such
      shares.

    

    
      	 	
              d.

            	
              Should
                the Participant cease to remain in Service while holding one or more
                unvested shares of Common Stock issued under the Stock Issuance Program
                or
                should the performance objectives not be attained with respect to
                one or
                more such unvested shares of Common Stock, then those shares shall
                be
                immediately surrendered to the Corporation for cancellation, and
                the
                Participant shall have no further shareholder rights with respect
                to those
                shares. To the extent the surrendered shares were previously issued
                to the
                Participant for consideration paid in cash or cash equivalent (including
                the Participant’s purchase-money indebtedness), the Corporation shall
                repay to the Participant the cash consideration paid for the surrendered
                shares and shall cancel the unpaid principal balance of any outstanding
                purchase-money note of the Participant attributable to such surrendered
                shares.

            

    

    

    
      	 	
              e.

            	
              The
                Plan Administrator may in its discretion waive the surrender and
                cancellation of one or more unvested shares of Common Stock (or other
                assets attributable thereto) which would otherwise occur upon the
                non-completion of the vesting schedule applicable to such shares.
                Such
                waiver shall result in the immediate vesting of the Participant’s interest
                in the shares of Common Stock as to which the waiver applies. Such
                waiver
                may be effected at any time, whether before or after the Participant’s
                cessation of Service or the attainment or non-attainment of the applicable
                performance objectives.

            

    

     

    
      	 	
              3.

            	
              Non-transferability.
                Shares of Common Stock granted under the Stock Issuance program shall
                not
                be transferable until the shares are
                vested.

            

    

    

    
      	 	
              B.

            	
              CORPORATE
                TRANSACTION

            

    

    

    
      	 	
              1.

            	
              Upon
                the occurrence of a Corporate Transaction all unvested shares not
                assumed
                by the successor corporation (or parent thereof) shall be immediately
                surrendered to the Corporation for cancellation, and the Participant
                shall
                have no further shareholder rights with respect to those shares.
                To the
                extent the surrendered shares were previously issued to the Participant
                for consideration paid in cash or cash equivalent (including the
                Participant’s purchase-money indebtedness), the Corporation shall repay to
                the Participant the cash consideration paid for the surrendered shares
                and
                shall cancel the unpaid

            

    

    
      
         

      

      
        -
          11
          -

        
          

        

      

      
         

      

    

    principal
      balance of any outstanding purchase-money note of the Participant attributable
      to such surrendered shares.

    

    
      	 	
              2.

            	
              The
                Plan Administrator shall have the discretionary authority, exercisable
                either at the time the unvested shares are issued or any time while
                the
                Corporation’s repurchase rights with respect to those shares remaining
                outstanding, to provide that those rights shall automatically terminate
                on
                an accelerated basis, and the shares of Common Stock subject to those
                terminated rights shall immediately vest, in the event of a Corporate
                Transaction or in the event that the Participant’s Service should
                subsequently terminate by reason of an Involuntary Termination within
                a
                period designated by the Plan Administrator following the effective
                date
                of any Corporate Transaction in which those repurchase rights are
                assumed
                by the successor corporation (or parent
                thereof).

            

    

    

    
      	 	
              C.

            	
              SHARE
                ESCROW/LEGENDS

            

    

    

    Unvested
      shares may, in the Plan Administrator’s discretion, be held in escrow by the
      Corporation until the Participant’s interest in such shares vests or may be
      issued directly to the Participant with restrictive legends on the certificates
      evidencing those unvested shares.

    

    
      	
              IV.

            	
              MISCELLANEOUS

            

    

    

    
      	 	
              A.

            	
              FINANCING

            

    

     

    The
      Plan
      Administrator may permit any Optionee or Participant to pay the option exercise
      price or the purchase price for shares issued to such person under the by
      delivering a full-recourse, interest-bearing promissory note payable in one
      or
      more installments and secured by the purchased shares. In no event shall the
      maximum credit available to the Optionee or Participant exceed the sum of (i)
      the aggregate option exercise price or purchase price payable for the purchased
      shares plus (ii) any Federal, state and local income and employment tax
      liability incurred by the Optionee or the Participant in connection with the
      option exercise or share purchase.

    

    
      	 	
              B.

            	
              EFFECTIVE
                DATE AND TERM OF PLAN

            

    

    

    
      	 	
              1.

            	
              The
                Plan shall become effective when adopted by the Board, but no option
                granted under the Plan may be exercised, and no shares shall be issued
                under the Plan, until the Plan is approved by the Corporation’s
                shareholders. If such shareholder approval is not obtained within
                twelve
                (12) months after the date of the Board’s adoption of the Plan, then all
                options previously granted under the Plan shall terminate and cease
                to be
                outstanding, and no further options shall be granted and no shares
                shall
                be issued under the Plan. Subject

            

    

     

     

    
      
         

      

      
        -
          12
          -

        
          

        

      

      
         

      

    

    to
      such
      limitation, the Plan Administrator may grant options and issue shares under
      the
      Plan at any time after the effective date of the Plan and before the date fixed
      herein for termination of the Plan.

    

    
      	 	
              2.

            	
              The
                Plan shall terminate upon the earliest of (i) January 31, 2010, (ii)
                the
                date on which all shares available for issuance under the Plan shall
                have
                been issued, or (iii) the termination of all outstanding options
                in
                connection with a Corporate Transaction. All options and unvested
                stock
                issuances outstanding at that time under the Plan shall continue
                to have
                full force and effect in accordance with the provisions of the documents
                evidencing such options or
                issuances.

            

    

    

    
      	 	
              C.

            	
              AMENDMENT
                OF THE PLAN

            

    

    

    
      	 	
              1.

            	
              The
                Board shall have complete and exclusive power and authority to amend
                or
                modify the Plan in any or all respects, except as set forth herein.
                However, no such amendment or modification shall adversely affect
                the
                rights and obligations with respect to options or unvested stock
                issuances
                at the time outstanding under the Plan unless the Optionee or the
                Participant consents to such amendment or modification. In addition,
                the
                Board shall not amend the Plan, without approval of the shareholders
                of
                the Corporation, in a manner which
                would:

            

    

    

    
      	 	
              a.

            	
              Cause
                Options which are intended to qualify as Incentive Options to fail
                to
                qualify;

            

    

    
      	 	
              b.

            	
              increase
                the number of shares of Common Stock issuable over the term of the
                Plan;

            

    

    
      	 	
              c.

            	
              cause
                the Plan to fail to meet the requirements of Rule 16b-3; or
                

            

    

    
      	 	
              d.

            	
              violate
                applicable law.

            

    

     

    
      	 	
              2.

            	
              Options
                may be granted under the Option Grant Program and shares may be issued
                under the Stock Issuance Program which are in each instance in excess
                of
                the number of shares of Common Stock then available for issuance
                under the
                Plan, provided any excess shares actually issued under those programs
                shall be held in escrow until there is obtained shareholder approval
                of an
                amendment sufficiently increasing the number of shares of Common
                Stock
                available for issuance under the Plan. If such shareholder approval
                is not
                obtained within twelve (12) months after the date the first such
                excess
                issuances are made, then (i) any unexercised options granted on the
                basis
                of such excess shares shall terminate and cease to be outstanding
                and (ii)
                the Corporation shall promptly refund to the Optionees and the
                Participants the exercise or purchase price paid for any excess shares
                issued under the Plan and held in escrow, together with interest
                (at the
                applicable Short Term

            

    

    
      
         

      

      
        -
          13
          -

        
          

        

      

      
         

      

    

    Federal
      Rate) for the period the shares were held in escrow, and such shares shall
      thereupon be automatically canceled and cease to be outstanding.

    

    
      	 	
              D.

            	
              USE
                OF PROCEEDS

            

    

    

    Any
      cash
      proceeds received by the Corporation from the sale of shares of Common Stock
      under the Plan shall be used for general corporate purposes.

    

    
      	 	
              E.

            	
              WITHHOLDING

            

    

    

    The
      Corporation’s obligation to deliver shares of Common Stock upon the exercise of
      any options or upon the vesting of any shares issued under the Plan shall be
      subject to the satisfaction of all applicable Federal, state and local income
      and employment tax withholding requirements.

    

    
      	 	
              F.

            	
              REGULATORY
                APPROVALS

            

    

    

    The
      implementation of the Plan, the granting of any options under the Plan and
      the
      issuance of any shares of Common Stock (i) upon the exercise of any option
      or
      (ii) under the Stock Issuance Program shall be subject to the Corporation’s
      procurement of all approvals and permits required by regulatory authorities
      having jurisdiction over the Plan, the options granted under it and the shares
      of Common Stock issued pursuant to it.

    

    
      	 	
              G.

            	
              NO
                EMPLOYMENT OR SERVICE RIGHTS

            

    

    

    Nothing
      in the Plan shall confer upon the Optionee or the Participant any right to
      continue in Service for any period of specific duration or interfere with or
      otherwise restrict in any way the rights of the Corporation (or any Parent
      or
      Subsidiary employing or retaining such person) or of the Optionee or the
      Participant, which rights are hereby expressly reserved by each, to terminate
      such person’s Service at any time for any reason, with or without
      cause.

     

    
      	 	
              H.

            	
              INDEMNIFICATION

            

    

    

    In
      addition to such other rights as they may have as directors or as members of
      the
      Committee, the members of the Plan Administrator shall be indemnified by the
      Corporation against the reasonable expenses, including attorneys’ fees, actually
      and necessarily incurred in connection with the defense of any action, suit,
      or
      proceeding, and in connection with any appeal therein, to which they or any
      of
      them may be a party by reason of any action or failure to act under or in
      connection with this Plan or any option or stock award granted hereunder, and
      against all amounts paid by them in settlement thereof (provided such settlement
      is approved by independent legal counsel selected by the Corporation) or paid
      by
      them in satisfaction of a judgment in any such action, suit, or proceeding,
      except in relation to matters as to which it shall be finally adjudged in such
      action, suit, or proceeding that such

    
      
         

      

      
        -
          14
          -

        
          

        

      

      
         

      

    

    member
      of
      the Plan Administrator is liable for gross negligence or willful misconduct
      in
      the performance of his duties; provided that within 60 days after institution
      of
      any such action, suit, or proceeding (or within 30 days after service upon
      such
      member of legal process in such case, if later) a member of the Plan
      Administrator shall in writing offer the Corporation the opportunity, at its
      own
      expense, to handle and defend the same.

    

    
      	 	
              I.

            	
              RULE
                16b-3

            

    

    

    With
      respect to Participates subject to Rule 16b-3, transactions under the Plan
      are
      intended to comply with all applicable provisions of Rule 16b-3. To the extent
      any provision of the Plan or action by the Plan Administrator fails to so
      comply, it shall be deemed null and void, to the extent permitted by law and
      deemed advisable by the Plan Administrator.

    

    
      	 	
              J.

            	
              RELATIONSHIP
                TO OTHER PLANS

            

    

    

    Nothing
      in this Plan shall prevent the Corporation (or any Parent or Subsidiary) from
      adopting or continuing other or additional compensation arrangements, including
      without limitation plans providing for the granting of restricted stock awards,
      options, cash, or Common Stock performance bonuses. Grants under the Plan may
      form a part of or otherwise be related to such other or additional compensation
      arrangements.

     

     

    
      
         

      

      
        -
          15
          -

        
          

        

      

      
         

      

    

     

    APPENDIX

    

    The
      following definitions shall be in effect under the Plan:

    

    Board
      shall
      mean the Corporation’s Board of Directors.

    

    Code
      shall
      mean the Internal Revenue Code of 1986, as amended.

    

    Committee
      shall
      mean a committee of two (2) or more non-employee Board members appointed by
      the
      Board to exercise one or more administrative functions under the
      Plan.

    

    Common
      Stock
      shall
      mean the Corporation’s common stock.

    

    Corporate
      Transaction
      shall
      mean either of the following shareholder approved transactions to which the
      Corporation is a party:

    

    (a) a
      merger
      or consolidation in which securities possessing more than fifty percent
      (50%) of the total combined voting power of the Corporation’s outstanding
      securities are transferred to a person or persons different from the persons
      holding those securities immediately prior to such transaction, or

    

    (b) the
      sale,
      transfer or other disposition of all or substantially all of the Corporation’s
      assets in complete liquidation or dissolution of the Corporation.

    

    Corporation
      shall
      mean PSM Holdings, Inc., a Nevada corporation.

    

    Disability
      shall
      mean the inability of the Optionee or the Participant to engage in any
      substantial gainful activity by reason of any medically determinable physical
      or
      mental impairment and shall be determined by the Plan Administrator on the
      basis
      of such medical evidence as the Plan Administrator deems warranted under the
      circumstances.

    

    Employee
      shall
      mean an individual who is in the employ of the Corporation (or any Parent or
      Subsidiary), subject to the control and direction of the employer entity as
      to
      both the work to be performed and the manner and method of
      performance.

    

    Exercise
      Date
      shall
      mean the date on which the Corporation shall have received written notice of
      the
      option exercise.

    

    Fair
      Market Value
      per
      share of Common Stock on any relevant date shall be determined in accordance
      with the following provisions:

     

    (a)
      If
      the Common Stock is at the time traded on the NASDAQ National Market, then
      the
      Fair Market Value shall be the closing selling price per share of Common Stock
      on the date

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

    in
      question, as such price is reported by the National Association of Securities
      Dealers on the NASDAQ National Market or any successor system. If there is
      no
      closing selling price for the Common Stock on the date in question, then the
      Fair Market Value shall be the closing selling price on the last preceding
      date
      for which such quotation exists.

    

    (b) If
      the
      Common Stock is at the time listed on any Stock Exchange, then the Fair Market
      Value shall be the closing selling price per share of Common Stock on the date
      in question on the Stock Exchange determined by the Plan Administrator to be
      the
      primary market for the Common Stock, as such price is officially quoted in
      the
      composite tape of transactions on such exchange. If there is no closing selling
      price for the Common Stock on the date in question, then the Fair Market Value
      shall be the closing selling price on the last preceding date for which such
      quotation exists.

    

    (c) If
      the
      Common Stock is at the time neither listed on any Stock Exchange nor traded
      on
      the NASDAQ National Market, then the Fair Market Value shall be determined
      by
      the Plan Administrator after taking into account such factors as the Plan
      Administrator shall deem appropriate.

    

    Incentive
      Option
      shall
      mean an option which satisfies the requirements of Code Section
      422.

    

    Involuntary
      Termination
      shall
      mean the termination of the Service of any individual which occurs by reason
      of
      :

    

    (a) such
      individual’s involuntary dismissal or discharge by the Corporation for reasons
      other than Misconduct, or

    

    (b) such
      individual’s voluntary resignation following (A) a change in his or her position
      with the Corporation which materially reduces his or her level of
      responsibility, (B) a reduction in his or her level of compensation (including
      base salary, fringe benefits and target bonuses under any corporate -performance
      based bonus or incentive programs) by more than fifteen percent (15%), or (c)
      a
      relocation of such individual’s place of employment by more than fifty (50)
      miles, provided and only if such change, reduction or relocation is effected
      without the individual’s consent.

    

    The
      Plan
      Administrator shall be entitled to revise the definition of Involuntary
      Termination and Misconduct with respect to individual Optionees or Participants
      under the Plan.

     

    Misconduct
      shall
      mean the commission of any act of fraud, embezzlement or dishonesty by the
      Optionee or Participant, any unauthorized use or disclosure by such person
      of
      confidential information or trade secrets of the Corporation (or any Parent
      or
      Subsidiary), or any other intentional misconduct by such person adversely
      affecting the business or affairs of the Corporation (or any Parent or
      Subsidiary) in a material manner. The foregoing definition shall not be deemed
      to be

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

    inclusive
      of all the acts or omissions which the Corporation (or any Parent or Subsidiary)
      may consider as grounds for the dismissal or discharge of any Optionee,
      Participant or other person in the Service of the Corporation (or any Parent
      or
      Subsidiary).

    

    1934
      Act
      shall
      mean the Securities Exchange Act of 1934, as amended.

    

    Non-Statutory
      Option
      shall
      mean an option not intended to satisfy the requirements of Code Section
      422.

    

    Option
      Grant Program
      shall
      mean the option grant program in effect under the Plan.

    

    Optionee
      shall
      mean any person to whom an option is granted under the Plan.

    

    Parent
      shall
      mean any corporation (other than the Corporation) in an unbroken chain of
      corporations ending with the Corporation, provided each corporation in the
      unbroken chain (other than the Corporation) owns, at the time of the
      determination, stock possessing fifty percent (50%) or more of the total
      combined voting power of all classes of stock in one of the other corporations
      in such chain.

    

    Participant
      shall
      mean any person who is issued shares of Common Stock under the Stock Issuance
      Program.

    

    Plan
      shall
      mean the Corporation’s 2002 Stock Option/Stock Issuance Plan, as amended August
      16, 2005, as set forth in this document.

    

    Plan
      Administrator
      shall
      mean either the Board or the Committee acting in its capacity as administrator
      of the Plan.

    

    Rule
      16b-3
      shall
      mean Rule 16b-3 promulgated under the 1934 Act by the U.S. Securities and
      Exchange Commission, as amended, or any successor rule in effect from time
      to
      time.

    

    Service
      shall
      mean the provision of services to the Corporation (or any Parent or Subsidiary)
      by a person in the capacity of an Employee, a non-employee member of the board
      of directors or a consultant or independent advisor, except to the extent
      otherwise specifically provided in the documents evidencing the option
      grant.

    

    Stock
      Exchange
      shall
      mean either the American Stock Exchange or the New York Stock
      Exchange.

    

    Stock
      Issuance Agreement
      shall
      mean the agreement entered into by the Corporation and the Participant at the
      time of issuance of shares of Common Stock under the Stock Issuance
      Program.

    

    Stock
      Issuance Program
      shall
      mean the stock issuance program in effect under the Plan.

     

     

    
      
         

      

      
        A-3

        
          

        

      

      
         

      

    

     

    Subsidiary
      shall
      mean any corporation (other than the Corporation) in an unbroken chain of
      corporations beginning with the Corporation, provided each corporation (other
      than the last corporation) in the unbroken chain owns, at the time of the
      determination, stock possessing fifty percent (50%) or more of the total
      combined voting power of all classes of stock in one of the other corporations
      in such chain.

    

    10%
      Shareholder shall
      mean the owner of stock (as determined under Code Section 424(d)) possessing
      more than ten percent (10%) of the total combined voting power of all classes
      of
      stock of the Corporation (or any Parent or Subsidiary).

     

     

    
      
         

      

      
        A-4

        
          

        

      

      
         

      

    

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
      EXCHANGE COMMISSION BECAUSE THEY ARE BELIEVED TO BE EXEMPT FROM
      REGISTRATION
      AS
      PROVIDED IN RULE 701 PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION
      (THE
“SEC”) UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”).

    

    THESE
      SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
      COMMISSION. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER
      AUTHORITY HAS PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY
      OR ADEQUACY OF THE INFORMATION PROVIDED TO THE INVESTORS. ANY REPRESENTATION
      TO
      THE CONTRARY IS A CRIMINAL OFFENSE. INVESTORS MUST RELY ON THEIR OWN EXAMINATION
      OF THE COMPANY, AND THE RISKS, MERITS AND TERMS OF THIS OFFERING IN MAKING
      AN
      INVESTMENT DECISION.

     

    PSM
      Holdings, Inc.

    

    GRANT
      OF STOCK OPTION

    

    

    This
      Grant of Stock Option is hereby offered to Optionee with respect to the
      following option grant (the “Option”) to purchase shares of the Common Stock of
      PSM Holdings, Inc. (the “Corporation”):

    

    Optionee: 
      ________________________________________________________________________________________________

    

    Grant
      Date:
      _______________________________________________________________________________________________

    

    Vesting
      Commencement:
      _____________________________________________________________________________________

    

    Exercise
      Price: $_____ per share

    

    Number
      of
      Option Shares: _________________ shares

    

    Expiration
      Date:
      ____________________________________________________________________________________________

    

    Type
      of
      Option:   _______   Non-Statutory

                                   
      _______  Incentive
      Stock Option

    

    Date
      Exercisable:
      ___________________________________________________________________________________________

    

    Vesting
      Schedule:
      __________________________________________________________________________________________

    

    Optionee
      understands and agrees that the Option is granted subject to and in accordance
      with the terms of the PSM Holdings, Inc. 2002 Stock Option/Stock Issuance Plan,
      as amended

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    (the
      “Plan”). Optionee further agrees to be bound by the terms of the Plan and the
      terms of the Option as set forth in the Stock Option Agreement, a copy of which
      is attached hereto as Exhibit A.

    

    Optionee
      understands that any Option Shares purchased under the Option will be subject
      to
      the terms set forth in the Stock Purchase Agreement attached hereto as Exhibit
      B. Optionee hereby acknowledges receipt of a copy of the Plan in the form
      attached hereto as Exhibit C.

    

    All
      capitalized terms in this Grant form shall have the meaning assigned to them
      in
      this form or in the attached Plan.

    

    Assuming
      that you are in agreement with the terms of this Grant of Stock Option, please
      sign your name in the space indicated below.

    

    PSM
      Holdings, Inc.

    

    

    

    By:
      _____________________________________

    

    Title:
      ____________________________________

    

    AGREED:

    

    

    ______________________________

    Optionee’s
      Signature

    

    Address:
      ___________________________

    __________________________________

     

    Exhibit
      A Stock
      Option Agreement

    Exhibit
      B Stock
      Purchase Agreement

    Exhibit
      C 2002
      Stock Option/Stock Issuance Plan, as amended

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    EXHIBIT
      A

    

    PSM
      HOLDINGS, INC.

    STOCK
      OPTION AGREEMENT

    

    RECITALS

    

    A.    The
      Board
      has adopted the Plan for the purpose of retaining the services of selected
      Employees, non-employee members of the Board or the Board of Directors of any
      Parent or Subsidiary and consultants and other independent advisors in the
      service of the Corporation (or any Parent or Subsidiary).

    

    B.    Optionee
      is to render valuable services to the Corporation (or a Parent or Subsidiary),
      and this Agreement is executed pursuant to, and is intended to carry out the
      purposes of, the Plan in connection with the Corporation’s grant of an option to
      Optionee.

    

    C.    All
      capitalized terms in this Agreement shall have the meaning assigned to them
      in
      the attached Appendix.

    

    NOW,
      THEREFORE, it is hereby agreed as follows:

    

    1.    Grant
      of Option.
      The
      Corporation hereby grants to Optionee, as of the Grant Date, an option to
      purchase up to the number of Option Shares specified in the Grant Form. The
      Option Shares shall be purchasable from time to time during the option term
      specified in Paragraph 2 at the Exercise Price.

    

    2.    Option
      Term.
      This
      option shall have a term commencing on the Grant Date and shall accordingly
      expire at the close of business on the Expiration Date, unless sooner terminated
      in accordance with Paragraph 5 or 6.

    

    3.    Limited
      Transferability.
      During
      Optionee’s lifetime, this option shall be exercisable only by Optionee and shall
      not be assignable or transferable other than by will or by the laws of descent
      and distribution following Optionee’s death.

    

    4.    Dates
      of Exercise.
      This
      option shall become exercisable for the Option Shares in one or more
      installments as specified in the Grant Form. As the option becomes exercisable
      for such installments, those installments shall accumulate and the option shall
      remain exercisable for the accumulated installments until the Expiration Date
      or
      sooner termination of the option term under Paragraph 5 or 6.

     

    5.    Cessation
      of Service.
      Except
      as provided in the Grant Form or the Plan, the option term specified in
      Paragraph 2 shall terminate (and this option shall cease to be outstanding)
      prior to the Expiration Date should the Optionee cease to remain in Service
      as
      provided in the Plan, provided, however, that notwithstanding the foregoing
      and
      notwithstanding the provisions of paragraph II(B)(4)(a) of the Plan, the option
      may be exercised up until the Expiration Date of the option. Except as provided
      in the Grant Form or the Plan, during the

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    limited
      period of post-Service exercisability, this option may not be exercised in
      the
      aggregate for more than the number of Option Shares in which Optionee is, at
      the
      time of Optionee’s cessation of Service, vested pursuant to the Vesting Schedule
      specified in the Grant Form. Upon the expiration of such limited exercise period
      or (if earlier) upon the Expiration Date, this option shall terminate and cease
      to be outstanding for any vested Option Shares for which the option has not
      been
      exercised. To the extent Optionee is not vested in the Option Shares at the
      time
      of Optionee’s cessation of Service, this option shall immediately terminate and
      cease to be outstanding with respect to those shares. In the event of a
      Corporate Transaction, the provisions of Paragraph 6 shall govern the period
      for
      which this option is to remain exercisable following Optionee’s cessation of
      Service and shall supersede any provisions to the contrary in this
      paragraph.

    

    6.    Corporate
      Transaction

    

    (a)    The
      vesting provisions set forth in the Grant Form shall apply in the event of
      a
      Corporate Transaction (as defined in the appendix to this
      Agreement).

    

    (b)    Any
      unvested option shall immediately vest in its entirety effective upon the time
      immediately prior to the consummation of a Corporate Transaction.

    

    (c)    If
      this
      option is assumed in connection with a Corporate Transaction, then this option
      shall be appropriately adjusted, immediately after such Corporate Transaction,
      to apply to the number and class of securities which would have been issuable
      to
      Optionee in consummation of such Corporate Transaction had the option been
      exercised immediately prior to such Corporate Transaction, and appropriate
      adjustments shall also be made to (i) the number and class of securities
      available for issuance under the Plan following the consummation of such
      Corporate Transaction and (ii) the Exercise Price, provided, the aggregate
      Exercise Price shall remain the same.

    

    (d)    This
      Agreement shall not in any way affect the right of the Corporation to adjust,
      reclassify, reorganize or otherwise change its capital or business structure
      or
      to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
      of its business or assets.

    

    7.    Adjustment
      in Option Shares.
      Should
      any change be made to the Common Stock by reason of any stock split, stock
      dividend, recapitalization, combination of shares, exchange of shares or other
      change affecting the outstanding Common Stock as a class without the
      Corporation’s receipt of consideration, appropriate adjustments shall be made to
      (i) the total number and/or class of securities subject to this option and
      (ii)
      the Exercise Price in order to reflect such change and thereby preclude a
      dilution or enlargement of benefits hereunder.

    

    8.    Shareholder
      Rights.
      The
      holder of this option shall not have any shareholder rights with respect to
      the
      Option Shares until such person shall have exercised the option, paid the
      Exercise Price and become a holder of record of the purchased
      shares.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    9.    Manner
      of Exercising Option.

    

    (a)    In
      order
      to exercise this option with respect to all or any part of the Option Shares
      for
      which this option is at the time exercisable, Optionee (or any other person
      or
      persons exercising the option) must take the following actions:

    

    (i)    Execute
      and deliver to the Corporation a Purchase Agreement for the Option Shares for
      which the option is exercised.

    

    (ii)    Pay
      the
      aggregate Exercise Price for the purchased shares in one or more of the
      following forms:

    

    (A)    cash
      or
      check made payable to the Corporation; or

    

    (B)    a
      promissory note payable to the Corporation, but only to the extent authorized
      by
      the Plan Administrator in accordance with Paragraph 13.

    

    (C)    in
      shares
      of Common Stock held by Optionee (or any other person or persons exercising
      the
      option) for the requisite period necessary to avoid a charge to the
      Corporation’s earnings for financial reporting purposes and valued at Fair
      Market Value on the Exercise Date; or

    

    (D)    to
      the
      extent the option is exercised for vested Option Shares, through a special
      sale
      and remittance procedure pursuant to which Optionee (or any other person or
      persons exercising the option) shall concurrently provide irrevocable
      instructions (a) to a Corporation-designated brokerage firm to effect the
      immediate sale of the purchased shares and remit to the Corporation, out of
      the
      sale proceeds available on the settlement date, sufficient funds to cover the
      aggregate Exercise Price payable for the purchased shares plus all applicable
      Federal, state and local income and employment taxes required to be withheld
      by
      the Corporation by reason of such exercise and (b) to the Corporation to deliver
      the certificates for the purchased shares directly to such brokerage firm in
      order to complete the sale.

    

    Except
      to
      the extent the sale and remittance procedure is utilized in connection with
      the
      option exercise, payment of the Exercise Price must accompany the Purchase
      Agreement delivered to the Corporation in connection with the option
      exercise.

    

    (iii)    Furnish
      to the Corporation appropriate documentation that the person or persons
      exercising the option (if other than Optionee) have the right to exercise this
      option.

    

    (iv)    Execute
      and deliver to the Corporation such written representations as may be requested
      by the Corporation in order for it to comply with the applicable requirements
      of
      Federal and state securities laws.

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (v)    Make
      appropriate arrangements with the Corporation (or Parent or Subsidiary employing
      or retaining Optionee) for the satisfaction of all federal, state and local
      income and employment tax withholding requirements applicable to the option
      exercise.

    

    (b)    As
      soon
      as practical after the Exercise Date, the Corporation shall issue to or on
      behalf of Optionee (or any other person or persons exercising this option)
      a
      certificate for the purchased Option Shares, with the appropriate legends
      affixed thereto.

    

    (c)    In
      no
      event may this option be exercised for any fractional shares.

    

    10.    Compliance
      with Laws and Regulations.

    

    (a)    The
      exercise of this option and the issuance of the Option Shares upon such exercise
      shall be subject to compliance by the Corporation and Optionee with all
      applicable requirements of law relating thereto and with all applicable
      regulations of any stock exchange (or the NASDAQ National Market, if applicable)
      on which the Common Stock may be listed for trading at the time of such exercise
      and issuance.

    

    (b)    The
      inability of the Corporation to obtain approval from any regulatory body having
      authority deemed by the Corporation to be necessary to the lawful issuance
      and
      sale of any Common Stock pursuant to this option shall relieve the Corporation
      of any liability with respect to the non-issuance or sale of the Common Stock
      as
      to which such approval shall not have been obtained. The Corporation, however,
      shall use its best efforts to obtain all such approvals.

    

    11.    Successors
      and Assigns.
      Except
      to the extent otherwise provided in Paragraphs 3 and 6, the provisions of this
      Agreement shall inure to the benefit of, and be binding upon, the Corporation
      and its successors and assigns and Optionee, Optionee’s assigns and the legal
      representatives, heirs and legatees of Optionee’s estate.

    

    12.    Notices.
      Any
      notice required to be given or delivered to the Corporation under the terms
      of
      this Agreement shall be in writing and addressed to the Corporation at its
      principal corporate offices. Any notice required to be given or delivered to
      Optionee shall be in writing and addressed to Optionee at the address indicated
      below Optionee’s signature line on the Grant Form. All notices shall be deemed
      effective upon personal delivery or upon deposit in the U.S. mail, postage
      prepaid and properly addressed to the party to be notified.

    

    13.    Financing.
      The
      Plan Administrator may, in its absolute discretion and without any obligation
      to
      do so, permit Optionee to pay the Exercise Price for the purchased Option Shares
      by delivering a full-recourse, interest-bearing promissory note secured by
      those
      Option Shares. The payment schedule in effect for any such promissory note
      shall
      be established by the Plan Administrator in its sole discretion.

     

    14.    Construction.
      This
      Agreement and the option evidenced hereby are made and granted pursuant to
      the
      Plan and are in all respects limited by and subject to the terms of the Plan.
      All decisions of the Plan Administrator with respect to any question or issue
      arising under the

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    Plan
      or
      this Agreement shall be conclusive and binding on all persons having an interest
      in this option.

    

    15.    Shareholder
      Approval.
      If the
      Option Shares covered by this Agreement exceed, as of the Grant Date, the number
      of shares of Common Stock which may be issued under the Plan as last approved
      by
      the shareholders, then this option shall be void with respect to such excess
      shares, unless shareholder approval of an amendment sufficiently increasing
      the
      number of shares of Common Stock issuable under the Plan is obtained in
      accordance with the provisions of the Plan.

    

    16.    Additional
      Terms Applicable to an Incentive Option.
      To the
      extent any option designated in the Grant Form as an Incentive Option would
      not
      qualify in whole or in part for favorable tax treatment as an Incentive Option
      at the time of exercise, such option may nevertheless be exercised by the
      Optionee as a Non-Statutory Option.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    APPENDIX

    

    The
      following definitions shall be in effect under the Agreement:

    

    
      	1.	
              Agreement
                shall mean this Stock Option
                Agreement.

            

    

    

    
      	2.	
              Board
                shall mean the Corporation’s Board of
                Directors.

            

    

    

    
      	3.	
              Code
                shall mean the Internal Revenue Code of 1986, as
                amended.

            

    

    

    
      	4.	
              Committee
                shall mean a committee of two (2) or more non-employee Board members
                appointed by the Board to exercise one or more administrative functions
                under the Plan.

            

    

    

    
      	5.	
              Common
                Stock
                shall mean the Corporation’s common
                stock.

            

    

    

    
      	
              6.

            	
              Corporate
                Transaction
                shall mean either of the following shareholder approved transactions
                to
                which the Corporation is a party:

            

    

    

    (a) a
      merger
      or consolidation in which securities possessing more than fifty percent
      (50%) of the total combined voting power of the Corporation’s outstanding
      securities are transferred to a person or persons different from the persons
      holding those securities immediately prior to such transaction, or

    

    (b) the
      sale,
      transfer or other disposition of all or substantially all of the Corporation’s
      assets in complete liquidation or dissolution of the Corporation.

    

    
      	
              7.

            	
              Corporation
                shall mean PSM Holdings, Inc. (formerly Durban Holdings, Inc.), a
                Nevada
                corporation, and any successor corporation to all or substantially
                all of
                the assets or voting stock of Durban Holdings, Inc. which shall by
                appropriate action adopt the Plan.

            

    

    

    
      	
              8.

            	
              Disability
                shall mean the inability of the Optionee or the Participant to engage
                in
                any substantial gainful activity by reason of any medically determinable
                physical or mental impairment and shall be determined by the Plan
                Administrator on the basis of such medical evidence as the Plan
                Administrator deems warranted under the
                circumstances.

            

    

    

    
      	
              9.

            	
              Employee
                shall mean an individual who is in the employ of the Corporation
                (or any
                Parent or Subsidiary), subject to the control and direction of the
                employer entity as to both the work to be performed and the manner
                and
                method of performance.

            

    

    

    
      	
              10.

            	
              Exercise
                Date
                shall mean the date on which the option shall have been exercised
                in
                accordance with Paragraph 9 of the
                Agreement.

            

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      	
              11.

            	
              Exercise
                Price
                shall mean the exercise price payable per Option Share as specified
                in the
                Grant Form.

            

    

    

    
      	
              12.

            	
              Expiration
                Date
                shall mean the date on which the option expires as specified in the
                Grant
                Form.

            

    

    

    
      	
              13.

            	
              Fair
                Market Value
                per share of Common Stock on any relevant date shall be determined
                in
                accordance with the following
                provisions:

            

    

    

    (a)    If
      the Common
      Stock is at the time traded on the NASDAQ National Market, then the Fair Market
      Value shall be the closing selling price per share of Common Stock on the date
      in question, as such price is reported by the National Association of Securities
      Dealers on the NASDAQ National Market or any successor system. If there is
      no
      closing selling price for the Common Stock on the date in question, then the
      Fair Market Value shall be the closing selling price on the last preceding
      date
      for which such quotation exists.

    

    (b)    If
      the
      Common Stock is at the time listed on any Stock Exchange, then the Fair Market
      Value shall be the closing selling price per share of Common Stock on the date
      in question on the Stock Exchange determined by the Plan Administrator to be
      the
      primary market for the Common Stock, as such price is officially quoted in
      the
      composite tape of transactions on such exchange. If there is no closing selling
      price for the Common Stock on the date in question, then the Fair Market Value
      shall be the closing selling price on the last preceding date for which such
      quotation exists.

    

    (c)    If
      the
      Common Stock is at the time neither listed on any Stock Exchange nor traded
      on
      the NASDAQ National Market, then the Fair Market Value shall be determined
      by
      the Plan Administrator after taking into account such factors as the Plan
      Administrator shall deem appropriate.

    

    
      	14.	
              Grant
                Date
                shall mean the date of grant of the option as specified in the Grant
                Form.

            

    

    

    
      	
              15.

            	
              Grant
                Form
                shall mean the Grant of Stock Option accompanying the Agreement,
                pursuant
                to which Optionee has been informed of the basic terms of the option
                evidenced hereby.

            

    

    

    
      	
              16.

            	
              Incentive
                Option
                shall mean an option which satisfies the requirements of Code
                Section 422.

            

    

    

    
      	
              17.

            	
              Involuntary
                Termination
                shall mean the termination of the Service of any individual which
                occurs
                by reason of :

            

    

    

    (a)    such
      individual’s involuntary dismissal or discharge by the Corporation for reasons
      other than Misconduct, or

     

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    (b)    such
      individual’s voluntary resignation following (A) a change in his or her position
      with the Corporation which materially reduces his or her level of
      responsibility, (B) a reduction in his or her level of compensation (including
      base salary, fringe benefits and target bonuses under any corporate -performance
      based bonus or incentive programs) by more than fifteen percent (15%), or (c)
      a
      relocation of such individual’s place of employment by more than fifty (50)
      miles, provided and only if such change, reduction or relocation is effected
      without the individual’s consent.

    

    The
      Plan
      Administrator shall be entitled to revise the definition of Involuntary
      Termination and Misconduct with respect to individual Optionees or Participants
      under the Plan.

    

    
      	
              18.

            	
              Misconduct
                shall mean the commission of any act of fraud, embezzlement or dishonesty
                by the Optionee or Participant, any unauthorized use or disclosure
                by such
                person of confidential information or trade secrets of the Corporation
                (or
                any Parent or Subsidiary), or any other intentional misconduct by
                such
                person adversely affecting the business or affairs of the Corporation
                (or
                any Parent or Subsidiary) in a material manner. The foregoing definition
                shall not be deemed to be inclusive of all the acts or omissions
                which the
                Corporation (or any Parent or Subsidiary) may consider as grounds
                for the
                dismissal or discharge of any Optionee, Participant or other person
                in the
                Service of the Corporation (or any Parent or
                Subsidiary).

            

    

    

    
      	19.	
              1934
                Act
                shall mean the Securities Exchange Act of 1934, as
                amended.

            

    

    

    
      	
              20.

            	
              Non-Statutory
                Option
                shall mean an option not intended to satisfy the requirements of
                Code
                Section 422.

            

    

    

    
      	
              21.

            	
              Option
                Shares
                shall mean the number of shares of Common Stock subject to the
                option.

            

    

    

    
      	
              22.

            	
              Optionee
                shall mean the person to whom the option is granted as specified
                in the
                Grant Form.

            

    

    

    
      	
              23.

            	
              Parent
                shall mean any corporation (other than the Corporation) in an unbroken
                chain of corporations ending with the Corporation, provided each
                corporation in the unbroken chain (other than the Corporation) owns,
                at
                the time of the determination, stock possessing fifty percent (50%)
                or
                more of the total combined voting power of all classes of stock in
                one of
                the other corporations in such
                chain.

            

    

    

    
      	24.	
              Plan
                shall mean the Corporation’s 2002 Stock Option/Stock Issuance
                Plan.

            

    

    

    
      	
              25.

            	
              Plan
                Administrator
                shall mean either the Board or the Committee of the Board acting
                in its
                capacity as administrator of the
                Plan.

            

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      	
              26.

            	
              Purchase
                Agreement
                shall mean the stock purchase agreement in substantially the form
                of
                Exhibit B to the Grant Form.

            

    

    

    
      	
              27.

            	
              Service
                shall mean the provision of services to the Corporation (or any Parent
                or
                Subsidiary) by a person in the capacity of an Employee, a non-employee
                member of the board of directors or a consultant or independent advisor,
                except to the extent otherwise specifically provided in the documents
                evidencing the option grant.

            

    

    

    
      	
              28.

            	
              Stock
                Exchange
                shall mean the American Stock Exchange or the New York Stock
                Exchange.

            

    

    

    
      	
              29.

            	
              Subsidiary
                shall mean any corporation (other than the Corporation) in an unbroken
                chain of corporations beginning with the Corporation, provided each
                corporation (other than the last corporation) in the unbroken chain
                owns,
                at the time of the determination, stock possessing fifty percent
                (50%) or
                more of the total combined voting power of all classes of stock in
                one of
                the other corporations in such
                chain.

            

    

    

    
      	
              30.

            	
              Vesting
                Schedule
                shall mean the vesting schedule specified in the Grant Form pursuant
                to
                which the Optionee is to vest in the Option Shares in a series of
                installments over his or her period of
                Service.

            

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

       

    

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
      EXCHANGE COMMISSION BECAUSE THEY ARE BELIEVED TO BE EXEMPT FROM
      REGISTRATION
      AS
      PROVIDED IN RULE 701 PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION
      (THE
“SEC”) UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”).

    

    THESE
      SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
      COMMISSION. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER
      AUTHORITY HAS PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING OR THE ACCURACY
      OR ADEQUACY OF THE INFORMATION PROVIDED TO THE INVESTORS. ANY REPRESENTATION
      TO
      THE CONTRARY IS A CRIMINAL OFFENSE. INVESTORS MUST RELY ON THEIR OWN EXAMINATION
      OF THE COMPANY, AND THE RISKS, MERITS AND TERMS OF THIS OFFERING IN MAKING
      AN
      INVESTMENT DECISION.

    

    PSM
      Holdings, Inc.

    

    STOCK
      ISSUANCE FORM

    

    This
      Stock Issuance Form is furnished to the designated participant in the stock
      issuance program of the 2002 Stock Option/Stock Issuance Plan of PSM Holdings,
      a
      Nevada corporation (the “Company”):

    

    Participant:
      _______________________________________________________________________________________________

    

    Issuance
      Date:
      _____________________________________________________________________________________________

    

    Number
      of
      Shares:
      __________________________________________________________________________________________

    

    Consideration
      for Shares:
      _____________________________________________________________________________________

    

    Vesting
      of Shares:
      __________________________________________________________________________________________

    

    The
      Participant understands and agrees that the stock is issued subject to and
      in
      accordance with the terms of the PSM Holdings, Inc. 2002 Stock Option/Stock
      Issuance Plan, as amended (the “Plan”). The participant further agrees to be
      bound by the terms of the Plan, a copy of which is attached hereto as
      Exhibit A.

    

    Assuming
      that you are in agreement with the terms of this Stock Issuance Form, please
      sign your name in the space indicated below.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    PSM
      Holdings, Inc.

     

     

     

      
        

      

    

    Jeffery
      Smith, President

    

     

    

    AGREED:

     

     

    
      
        

      

    

    Participant

    

    

    Exhibit
      A 2002
      Stock Option/Stock Issuance Plan, as amended[Material
      marked with an asterisk has been omitted from this document pursuant to a
      request for confidential treatment and has been filed separately with the
      Securities and Exchange Commission.]

    

    LICENSE
      AGREEMENT

    

    This
      License Agreement (“Agreement”)
      is made
      this 14th day of April, 2006 (“Effective Date”) at Dallas, Texas, between
      PrimeSource Mortgage, Inc., a Texas corporation, whose principal place of
      business is located at 1112 N. Main St. Roswell, New Mexico and PSM Holdings,
      Inc. (collectively “PrimeSource”)
      and
      Nationwide By Owner, Inc., a Texas corporation (“NWBO”),
      whose
      principal place of business is located at 3230 Camp Bowie, Suite A, Fort Worth,
      Texas 76107 (collectively the “Parties”).

    

    WHEREAS,
      PrimeSource
      is engaged in the business of loan origination and brokering real estate
      mortgage loans to Lenders;

    

    WHEREAS,
      NWBO
      is
      engaged in the business of marketing real property for sale by owners;

    

    WHEREAS,
      NWBO,
      in
      the course of its business, generates a proprietary system that produces a
      Sales
      Leads Database (as defined below) that contains a homebuyer/home seller
      proprietary database of persons seeking financing on the purchase or refinance
      of real property; 

    

    WHEREAS,
      PrimeSource desires to have exclusive use of and access to the Sales Lead
      Database and is willing to compensate NWBO for its exclusive use of such Sales
      Leads Database in the origination of mortgage applications for submission to
      PrimeSource and/or Lenders according to the terms of this
      Agreement;

    

    WHEREAS,
      PrimeSource
      plans to establish a national processing center for the collection, organization
      and tracking of the Sales Leads Database for the origination of loans resulting
      from such Sales Leads Database;

    

    WHEREAS,
      NWBO desires
      to grant PrimeSource an exclusive license in and to the Sales Lead Database,
      according to the terms of this Agreement;

    

    WHEREAS,
      the
      Parties wish to define the parameters of their relationship regarding the
      exclusive license of such Sales Leads Database through this Agreement;

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual promises contained in this Agreement, and other
      good
      and valuable consideration, the receipt of which is hereby acknowledged, the
      Parties agree as follows:

    

    ARTICLE
      I—TERM 

    

    
      	
              1.01

            	
              Term.
                This Agreement shall be in force beginning on the Effective Date
                and shall
                continue thereafter for a term of five (5) years from the Effective
                Date
                (“Initial Term”). This Agreement shall automatically renew for three (3)
                successive three (3) year terms (hereinafter referred to as the
                “1st”,
                “2nd”
                or “3rd”
                “Automatic Renewal Term”, respectively), and thereafter, shall
                automatically renew for successive one (1) year terms (each, a “Subsequent
                Renewal Term”), unless either party gives the other party written notice
                of its intent not to renew this Agreement at least ninety (90) days
                prior
                to the expiration of the 3rd
                Automatic Renewal Term or any Subsequent Renewal
                Term.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              1.02

            	
              Termination
                Rights.

            

    

    

    1.02.1 Termination
      Upon Breach. In
      the
      event that either party to this Agreement shall fail, or refuse to fulfill
      or
      perform, any material condition, covenant or obligation of this Agreement,
      such
      party shall be deemed to have breached this Agreement, and said breach shall
      entitle the other party to terminate this Agreement by giving written notice
      thereof to the party in breach. If the party in breach does not rectify the
      default within one hundred twenty (120) days, the party providing such
      notification of breach may, at such party’s sole discretion, terminate this
      Agreement upon the expiration of said one hundred twenty (120) day period by
      providing written notice to the other party within five (5) days after
      termination of the one hundred twenty (120) day period.

    

    1.02.2 Termination
      Upon Change of Control. If
      a
      party to this Agreement experiences a Change of Control (the “Change of Control
      Party”), the other party shall have the right to terminate this Agreement by
      giving written notice to the Change of Control Party upon the occurrence of
      such
      Change of Control. For purposes of this Agreement, a Change of Control shall
      be
      deemed to have occurred if (i) a majority of the voting capital stock in the
      Change of Control Party is acquired by a third party or third parties other
      than
      the persons holding shares of the Change of Control Party’s voting capital stock
      on the date hereof, (ii) the Change of Control Party enters into a merger,
      consolidation or other business combination with another person in which the
      Change of Control Party is not the surviving person, or (iii) more than fifty
      percent (50%) of the assets of the Change of Control Party are sold or
      transferred. 

    

    
      	
              1.03

            	
              Return
                of Sales Lead Database.
                In the event of the termination of this Agreement, unless otherwise
                agreed
                by NWBO and PrimeSource, upon NWBO’s written request, PrimeSource shall
                promptly return to NWBO at PrimeSource’s expense the Sales Lead Database
                and its contents, together with any and all copies of all media,
                documents, software, source code, materials and other Intellectual
                Property Rights (as defined below) of NWBO associated with the Sales
                Lead
                Database. It is acknowledged by NWBO that the obligation to return
                such
                Sales Leads Database under this Section 1.03 is limited to the database
                as
                it exists when this Agreement is terminated and does not require
                PrimeSource to generate a list of all leads generated more than a
                year
                prior to the date of termination. 

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
      II—DEFINITIONS

    

    
      	
              2.01

            	
              Definitions.
                In
                this Agreement, the following definitions
                apply:

            

    

    

    2.01.1 “Sales
      Leads Database”
      shall
      mean the proprietary database, list or collection of potential homebuyers
      compiled, accumulated, collected, assembled or gathered by NWBO through its
      marketing of real property for sale by owners including, without limitation,
      leads generated via NWBO’s website, NWBO’s call capture system (which generates
      an email to the seller, NWBO and, upon execution of this Agreement, PrimeSource
      every time a prospective buyer calls in to get information on the advertised
      property) and NWBO’s brilliant yellow signs. Sales Leads Database, as defined in
      this Section 2.01.1, does not include loan originations or leads generated
      by
      NWBO associates, through personal referrals, who are located in markets where
      NWBO serves customers. Further, Sales Leads Database does not include any leads
      generated by PrimeSource, any affiliate or network branch office of PrimeSource,
      or any other source not attributable to NWBO, all such leads being the sole
      property of PrimeSource.

    

    2.01.2 “Annual
      Net Profit”
shall
      mean gross profit attributable to and arising from the Sales Leads Database
      tracked through the National Processing Center less all expenses directly
      related to the National Processing Center., all such records being maintained
      in
      accordance with generally accepted accounting principles consistently
      applied.

    

    2.01.3 “National
      Share Price”
shall
      mean the greater of the (i) price per share of PSM Holdings, Inc. (“PSMH”) stock
      (symbol PSMH.PK or its successor) on the last day of the fiscal year for the
      year in question, or (ii) average price per share of PSMH stock over the entire
      twelve month period for the fiscal year in question, in each case as determined
      by the over-the-counter trading billboards or national exchanges in which the
      PSMH stock is listed or quoted. 

    

    2.01.4  “Base
      Value of Shares” shall
      mean the
      respective percentage of the Annual Net Profit for a given fiscal year,
      according to the table below:

    

    
      	
              Term

            	 	
              Applicable Percentage Rate

            	 
	
              Initial
                Term

            	 	 	
              15

            	
              %

            
	
              1st
                Automatic Renewal Term

            	 	 	
              20

            	
              %

            
	
              2nd
                Automatic Renewal Term

            	 	 	
              25

            	
              %

            
	
              3rd
                Automatic Renewal Term

            	 	 	
              30

            	
              %

            
	
              All
                Subsequent Renewal Terms

            	 	 	
              30

            	
              %

            

    

     

    2.01.5 “Price
      Per Share”
or
      “PPS”
shall
      mean seventy-five percent (75%) of the National Share Price.

    

    2.01.6 Total
      Bonus Cash”
shall
      have the meaning given in Section 3.06.3.2(b). 

    

    2.01.7 “Total
      Bonus Shares” for
      purposes of this Agreement shall be defined as the total number of shares to
      be
      issued pursuant to Section 3.06.3 for a given fiscal year, which will be
      distributed according to the distribution schedule in Section 3.06.3.2.

    

    2.01.8 “Intellectual
      Property Rights” shall
      mean, collectively, any and all copyrights, whether registered or unregistered,
      mask works, and other copyrightable works; any computer software applications,
      software systems, tools, interfaces, in any form, including object code and
      source code, in any media, and related documentation; and any proprietary
      inventions, discoveries, improvements, know-how, show-how, works-in-progress,
      processes, designs, concepts, technologies, ideas, customer information,
      customer lists, marketing strategies, market research, industrial designs and
      any other trade secrets, and any and all modifications, enhancements, changes
      or
      improvements to the foregoing.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    ARTICLE
      III—OBLIGATIONS

    

    
      
        
          	3.01	
                  Exclusive
                    License to Access and Use Sales Leads Database. NWBO
                    grants, according to the terms of this Agreement and subject
                    to all of
                    NWBO’s Intellectual Property Rights in and to the Sales Lead Database,
                    an
                    exclusive license to PrimeSource in and to the Sales Leads Database
                    for
                    the purpose of developing the National Processing Center to originate
                    and
                    broker real estate mortgage loans. NWBO further agrees to supply,
                    provide
                    access to, make available and deliver to PrimeSource on a continuing
                    basis
                    during any and all terms of this Agreement, the Sales Lead Database.
                    Except as otherwise expressly set forth herein, the license by
                    NWBO to
                    PrimeSource of the Sales Leads Database pursuant to this Agreement
                    is
                    exclusive to PrimeSource, but only to the extent PrimeSource
                    utilizes the
                    Sales Lead Database for the purpose of developing the National
                    Processing
                    Center to originate and broker real estate mortgage loans. NWBO
                    agrees
                    that it shall NOT
                    have the right to assign, sublicense, sell or provide the Sales
                    Leads
                    Database to any other third party or third parties that is in
                    the business
                    of loan origination and/or brokering real estate mortgage loans,
                    except to
                    the extent that such assignment, sublicense, sale or provision
                    of the
                    Sales Leads Database to another third party would benefit NWBO
                    and
                    PrimeSource and would otherwise enhance the development of the
                    National
                    Processing Center, in which case NWBO shall obtain PrimeSource’s prior
                    written consent to so assign, sublicense, license, sell or provide
                    the
                    Sales Lead Database to any such third party, such consent not
                    to be
                    unreasonably withheld.

                

        

      

    

    

    
      
        
          	3.02	
                  Representations
                    of NWBO.
                    NWBO represents and warrants that no other person or entity has
                    any
                    rights, title or interest in and to the Sales Leads
                    Database.

                

        

      

    

    

    
      
        
          	3.03	
                  Ownership
                    of Sales Leads Database.
                    PrimeSource acknowledges and agrees that NWBO owns and will continue
                    to
                    own the Sales Leads Database and any and all Intellectual Property
                    Rights
                    with respect thereto during the term of this Agreement and
                    thereafter.

                

        

      

    

    

    
      
        
          	3.04	
                  Limitations.
                    The license and the other rights granted to PrimeSource hereunder
                    shall
                    not be assigned, individually or together as a whole, by PrimeSource
                    without the prior written consent of NWBO, which may be withheld
                    by NWBO
                    in its sole discretion. Accordingly, under no circumstances shall
                    PrimeSource sell, license, sublicense, assign, publish, display,
                    distribute, or otherwise transfer or provide access to a third
                    party the
                    Sales Leads Database, or any copy or source code thereof, in
                    whole or in
                    part, without NWBO’s prior written consent, which may not be unreasonably
                    withheld by NWBO. PrimeSource may sell, license, sublicense,
                    assign,
                    publish, display, distribute, or otherwise transfer or provide
                    access to a
                    wholly-owned subsidiary of PrimeSource, any affiliate or network
                    branch
                    office of PrimeSource the Sales Leads Database, in whole or in
                    part, with
                    NWBO’s prior written consent, which consent may not be unreasonably
                    withheld by NWBO.

                

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      
        
          	3.05	
                  National
                    Processing Center.
                    PrimeSource shall create and implement a National Processing
                    Center or
                    other system for the collection, organization, and tracking of
                    the Sales
                    Leads Database generated by NWBO under this Agreement (“National
                    Processing Center”), for the sole purpose of originating home loans. NWBO
                    shall cause the Sales Leads Database to be delivered and/or transmitted
                    to
                    PrimeSource via the National Processing Center. NWBO acknowledges
                    and
                    agrees that PrimeSource owns and will continue to own the National
                    Processing Center and any and all Intellectual Property Rights
                    with
                    respect thereto during any term of this Agreement and thereafter;
                    provided, that to the extent that the National Processing Center
                    is
                    comprised (in whole or in part) of the Sales Lead Database, the
                    portion of
                    the National Processing Center that is comprised of the Sales
                    Lead
                    Database will be owned by and the property of
                    NWBO.

                

        

      

    

    

    
      
        
          	3.06	
                  Consideration
                    for Exclusive License of Sales Leads Database.
                    As
                    consideration for the exclusive license of the Sales Lead Database
                    and
                    obligations set forth in Section 3.01 and otherwise in this Agreement,
                    PrimeSource will compensate NWBO as
                    follows:

                

        

      

    

    

    
      
        3.06.1
          Stock.
          Following the execution of this Agreement, PrimeSource shall cause PSMH
          to issue
          150,000 shares of PSMH stock , valued at $1.00 per share, according to
          the
          following breakdown:

      

    

    

    50,000
      shares to Bob Duane 

    50,000
      shares to Cary Hise 

    50,000
      shares to NWBO.

    

    The
      Stock
      issued pursuant to Sections 3.06.1 and 3.06.3 are "restricted securities,” as
      defined by the Securities Act of 1933, as amended (the “Securities Act”). With a
      view to making available to the holders of the Stock (each, a “Holder”) the
      benefits of certain SEC rules and regulations, including Rule 144 under the
      Securities Act that may permit the sale of the Stock to the public without
      registration, PrimeSource agrees to cause the issuer of the Stock (the “Issuer”)
      to:

    

    (a) make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144 or any similar or analogous rule promulgated under the Securities
      Act,
      at all times;

     

    (b) file
      with
      the SEC in a timely manner all reports and other documents required of the
      Company under the Securities Act and the Exchange Act of 1934, as amended (the
      “Exchange Act”); and

    

    (c) so
      long
      as a Holder owns any Stock, furnish to the Holder promptly upon written request,
      or otherwise make available to a Holder (i) a written statement by Issuer as
      to
      the Issuer’s compliance with the reporting requirements of Rule 144 and of the
      Securities Act and the Exchange Act; (ii) a copy of the Issuer’s most recent
      annual or quarterly report; and (iii) such other reports and documents as a
      Holder may reasonably request in availing itself of any SEC rule or regulation
      allowing such Holder to sell any
      of
      the
      Stock without registration.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    [Material
      marked with an asterisk has been omitted from this document pursuant to a
      request for confidential treatment and has been filed separately with the
      Securities and Exchange Commission.]

    

    
      
        3.06.2
          Loan
          Processing Payment. PrimeSource
          shall pay NWBO a Loan Processing Payment of $* for each loan closed and
          processed through the National Processing Center. The Loan Processing Payment
          shall be paid by PrimeSource on or before the 10th
          of each
          month for all loans (as described above) closed by PrimeSource during the
          preceding month. The
          Loan Processing
          Payment shall be accompanied by a monthly report certified by an officer
          of
          PrimeSource setting forth the number of loans processed and closed for
          the
          preceding month. PrimeSource shall also make available at the National
          Processing Center to NWBO, at NWBO’s sole cost and expense, the HUD-1 settlement
          statements and other non-confidential, non-proprietary evidence and support
          to
          verify the number of loans processed and closed for the preceding
          month.

      

    

    

    
      
        3.06.3
          Year-End
          Bonus.
          

      

    

    

    3.06.3.1 Generally.
      In
      addition to the stock issued pursuant to Section 3.06.1 above, PrimeSource
      shall
      provide year-end bonuses, issued in stock or paid in cash, based on the Annual
      Net Profit attributable to the National Processing Center for a given fiscal
      year. NWBO shall elect whether to take the year-end bonus in stock (Total Bonus
      Shares) or cash (Total Bonus Cash) or any combination of the two not exceeding
      the Base Value of Shares. 

    

    3.06.3.2 Calculation
      and Distribution of Year-End Bonus.
      As a
      year-end bonus, PrimeSource shall issue the Total Bonus Shares or the Total
      Bonus Cash according to the distribution schedule below. 

    

    (a) PrimeSource
      will calculate the Total Bonus Shares to be issued as follows: Calculate the
      Base
      Value of Shares
      by
      multiplying the Annual Net Profit by the respective percentage rate according
      to
      the table in Section 2.01.4; Determine the National
      Share Price;
      calculate the Price Per Share (PPS) by multiplying the National Share Price
      for
      the fiscal year in question by * (*%); calculate the Total
      Bonus Shares
      to be
      issued by dividing the Base Value of Shares by the Price Per Share (PPS); The
      Total Bonus Shares will be distributed according to the following distribution
      schedule:

    

    *%
      to Bob
      Duane

    *%
      to
      Cary Hise

    *%
      to
      NWBO

    *%
      to
      NWBO’s employee pool (to be issued by NWBO in its sole discretion)

    

    For
      example,
      should
      the Annual Net Profit for a given year during the Initial Term be $* and the
      National Share Price for the fiscal year in question $*/share, the issuance
      of
      stock would be calculated as follows:

     

    $*
      Base
      Value of Shares
      (*% of
      Annual Net Profit)

    $*
      Price
      Per Share (*% of * National Share Price)

    
       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      [Material
        marked with an asterisk has been omitted from this document pursuant to a
        request for confidential treatment and has been filed separately with the
        Securities and Exchange Commission.]

       

    

    *
      Total
      Bonus Shares
      issued
      pursuant to Section 3.06.3, according to the  following
      distribution schedule:

    

    *
      shares
      to Bob Duane

    *
      shares
      to Cary Hise

    *
      shares
      to NWBO

    *
      shares
      to NWBO’s employee pool (to be issued by NWBO in its sole
      discretion)

     

    (b) PrimeSource
      will calculate the Total Bonus Cash (as herein so called) to be paid as follows:
      Multiply the Annual Net Profit by the respective percentage rate according
      to
      the table in Section 2.01.4. Based on the previous example, the Total Bonus
      Cash
      payment would be equal to $*. 

    

    3.06.3.3
      Time
      of Issuance or Payment. The
      stock
      issued or cash paid under this Section 3.06 shall be issued and paid promptly
      after the determination of Annual Net Profit following the close of the fiscal
      year in question, but in any event within ninety (90) days after the close
      of
      the fiscal year in question.

    

    
      
        
          	3.07	
                  Other
                    Obligations of PrimeSource. PrimeSource
                    shall (i) promptly but in any event no later than twelve (12)
                    months after
                    the date of this Agreement, obtain the appropriate licenses in
                    thirty-five
                    (35) states in the United States necessary to originate mortgage
                    loans in
                    all such states and shall endeavor in good faith and use its
                    best efforts
                    to obtain licensure in all fifty (50) states during such period;
                    provided,
                    that, to the extent that PrimeSource is not licensed in all states
                    as of
                    the end of such twelve (12) month period but provides evidence
                    satisfactory to NWBO in its discretion that PrimeSource is diligently
                    and
                    in good faith seeking licensure in such state(s), NWBO shall
                    grant a
                    one-time six (6) month extension to PrimeSource to obtain licensure
                    in
                    such states, and (ii) close that number of loans per year commensurate
                    with industry standards for mortgage companies that are similarly
                    situated
                    to PrimeSource.

                

        

      

    

    

    ARTICLE
      IV—RIGHT OF FIRST REFUSAL

    

    
      	
              4.01

            	
              Right
                of First Refusal. NWBO
                agrees that if NWBO receives a bona fide written offer for the purchase
                or
                acquisition of NWBO from a third party, either through the sale of
                a
                controlling or majority interest in NWBO shares of stock, an asset
                purchase agreement or otherwise, NWBO shall give PrimeSource written
                notice of such offer, including the general terms of such offer (the
                “Offer Notice”). PrimeSource shall give NWBO in writing its competing
                offer (the “Competing Offer”) within thirty (30) days after receiving the
                Offer Notice. If PrimeSource fails to deliver the Competing Offer
                to NWBO
                within such thirty (30) day period, NWBO shall have the right to
                enter
                into the transaction with the third party. If PrimeSource delivers
                a
                Competing Offer to NWBO, within the period described above, that
                is
                substantially similar in terms of structure (i.e., same type of
                consideration) and represents a substantial premium over the value
                of the
                offer contained in the Offer Notice, NWBO and PrimeSource shall enter
                into
                the transaction based on the terms set forth in the Competing Offer;
                provided, that if the transaction is not closed within sixty (60)
                days of
                NWBO’s receipt of the Competing Offer, then NWBO shall have the right
                to
                enter into the transaction with the third
                party.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
      V—DISPUTE RESOLUTION

    

    
      	
              5.01
                

            	
              Dispute
                Resolution.
                Both PrimeSource and NWBO agree that any controversy or claim arising
                out
                of or relating to this contract, or the breach thereof, is subject
                to
                arbitration under the Federal Arbitration Act and shall be settled
                by
                binding arbitration to be conducted in Dallas, Texas and administered
                by
                the American Arbitration Association in accordance with its Commercial
                Arbitration Rules and judgment on the award rendered by the arbitrator(s)
                may be entered in any court having jurisdiction thereof. The costs
                of any
                arbitration shall be borne equally by the Parties. A willful violation
                of
                this provision or any breach of this Agreement by either Party shall
                entitle the non-breaching Party to specific performance of this Agreement,
                to recover actual damages, to recover liquidated damages as stated
                herein
                and to receive reimbursement for expenses and attorneys’ fees incurred in
                securing enforcement herein. 

            

    

    

    ARTICLE
      VI. MISCELLANEOUS

    

    
      	
              6.01

            	
              Assignment
                and Transfer. Neither
                this Agreement nor any duties or obligations under it shall be assignable
                or transferable by either Party without the prior written consent
                of the
                other Party; provided, that if NWBO otherwise complies with Section
                4.01
                with respect to a proposed sale transaction, and PrimeSource or one
                of its
                affiliates is not the purchaser in such transaction, then NWBO shall
                have
                the right without obtaining PrimeSource’s consent to assign or transfer
                this Agreement in connection with such transaction. In the event
                of an
                assignment or transfer that complies with this Section 6.01, the
                assignee,
                transferee or assignee’s or transferee’s legal representative shall agree
                in writing to personally assume, perform and be bound by all the
                covenants, obligations and agreements contained in this
                Agreement.

            

    

    

    
      	
              6.02

            	
              Successors
                and Assigns.
                Subject to the provisions regarding assignment and transfer, this
                Agreement shall be binding upon and inure to the benefit of the Parties
                hereto and their respective heirs, executors, administrators, legal
                representatives, successors and
                assigns.

            

    

    

    
      	
              6.03

            	
              Attorney’s
                Fees.
                If
                any action at law or in equity is brought to enforce or interpret
                the
                provisions of this Agreement, the prevailing Party shall be entitled
                to
                reasonable attorney’s fees in addition to any other relief to which it may
                be entitled.

            

    

    

    
      	
              6.04

            	
              Governing
                Law.
                THE LAWS OF THE STATE OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION
                AND
                INTERPRETATION OF THE AGREEMENT OR ANY OF ITS TERMS OR PROVISIONS,
                AS WELL
                AS THE RIGHTS AND DUTIES OF THE
                PARTIES.

            

    

    

    
      	
              6.05

            	
              Amendment.
                This Agreement may be amended only by the mutual agreement of the
                Parties,
                in a writing to be attached to and incorporated in this
                Agreement.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              6.06

            	
              Invalidity.
                In
                the event that any one or more of the provisions contained in this
                Agreement shall for any reason be held to be invalid, illegal or
                unenforceable in any respect, such invalidity, illegality or
                unenforceability shall not affect any other provisions, and the Agreement
                shall be construed as if such invalid, illegal or unenforceable provision
                had never been contained herein.

            

    

    

    
      	
              6.07

            	
              Entire
                Agreement.
                The terms of this Agreement are intended by the Parties as a final
                expression of their agreement with respect to the subject matter
                of this
                Agreement and may not be modified by evidence of any prior or
                contemporaneous negotiations, representations, agreements or
                understandings. This Agreement supersedes all agreements previously
                entered into between the Parties. No other representations, agreements,
                or
                understandings between the Parties will be binding, unless in writing
                and
                signed by authorized representatives of the Parties to this Agreement.
                

            

    

    

    
      	
              6.08

            	
              Nature
                of Agreement.
                This Agreement does not in any way create the relationship between
                PrimeSource and NWBO of agency, partnership, joint venture or employment
                or any other relationship, other than as licensor and licensee, and
                the
                mutual desire to build the National Processing Center for the benefit
                of
                both Parties.

            

    

    

    
      	
              6.09

            	
              Headings.
                The article and paragraph headings of this Agreement are for convenience
                only and in no way limit or enlarge the scope or meaning of the language
                hereof.

            

    

    

    
      	
              6.10

            	
              No
                Third-Party Beneficiary.
                This Agreement is not intended to give or confer any benefits, rights,
                privileges, claims, actions or remedies to any person or entity as
                a
                third-party beneficiary or otherwise, other than Bob Duane and Cary
                Hise
                (but only as to Section 3.06).

            

    

    

    
      	
              6.11

            	
              Time.
                Time is of the essence of performance of each and every term, condition
                and covenant contained in this
                Agreement.

            

    

    

    
      	
              6.12

            	
              Use
                of Captions.
                Any captions contained in this Agreement are for convenience only
                and are
                not to be given any substantive meaning in construing this Agreement.
                

            

    

    

    
      	
              6.13

            	
              Notices.
                All notices required or permitted hereunder shall be in writing and
                shall
                be served on the Parties at the following
                address:

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              If
                to PrimeSource:

            	
              PrimeSource
                Mortgage, Inc.

            
	 	
              1112
                North Main

            
	 	
              Roswell,
                NM 88201

            
	 	
              Telephone:
                505.622.5113

            
	 	
              Facsimile:
                505.622.5233

            
	 	 
	
              With
                Copy to :

            	
              McCreary
                & Stockford LP

            
	 	
              18333
                Preston Rd., Ste 150

            
	 	
              Dallas,
                Texas, 75252

            
	 	 
	
              If
                to NWBO :

            	
              Nationwide
                By Owner, Inc.

            
	 	
              3230
                Camp Bowie, Suite A

            
	 	
              Fort
                Worth, Texas 76107

            
	 	 
	 	
              Telephone:
                _________________________

            
	 	
              Facsimile: _________________________
                

            

    

    

    Any
      such
      notices shall be either (a) sent by certified mail, return receipt requested,
      in
      which case notice shall be deemed delivered three (3) business days after
      deposit, postage prepaid in the U.S. Mail, (b) sent by overnight delivery using
      a nationally recognized overnight courier, in which case it shall be deemed
      delivered one (1) business day after deposit with such courier, (c) sent by
      facsimile, in which case notice shall be deemed delivered upon transmission
      of
      such notice, or (d) sent by personal delivery. The above address may be changed
      by written notice to the other provided; provided, however, that no notice
      of
      such a change of address shall be effective until actual receipt of such
      notice.

    

    
      	
              6.14

            	
              Waiver.
                Any failure by either Party to enforce and require the strict keeping
                and
                performance of any of the terms and conditions of this Agreement
                shall not
                constitute a waiver of any such terms and conditions at any future
                time
                and shall not prevent such Party from insisting on the strict keeping
                and
                performance of such terms and conditions at any later time.
                

            

    

    

    
      	
              6.15

            	
              Venue.
                Venue for any suit relating to this Agreement will lie exclusively
                in the
                courts of Dallas County, Texas. The Parties agree that Dallas County,
                Texas is the most convenient venue for any suit relating to this
                Agreement. 

            

    

    

    
      	
              6.16

            	
              Construction.
                The Parties agree that this Agreement will be construed fairly and
                without
                regard to which Party authored the Agreement.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              6.17

            	
              Indemnification.
                Each Party shall indemnify and hold the other harmless from and against
                any and all actions, suits, claims, liabilities, damages, costs,
                and
                reasonable attorney's fee or expenses arising from any breach of
                any of
                the representations, warranties or agreements contained in this Agreement
                by such Party, or such Party's officers, directors, agents or employees,
                in connection with the transactions contemplated by this Agreement.
                Notwithstanding anything to the contrary herein, neither Party shall
                be
                entitled to special, consequential, punitive or other speculative
                damages
                as a result of the breach or termination of this
                Agreement.

            

    

    

    
      	
              6.18

            	
              Effectiveness
                of Agreement.
                Notwithstanding anything contained in this Agreement to the contrary,
                this
                Agreement shall not be deemed effective until NWBO has received the
                approval of the Agreement from its Executive Committee and Board
                of
                Directors.

            

    

    

    EXECUTED
      on the day, month and year first set forth above.

    

    PRIMESOURCE
      MORTGAGE, INC.

     

    
      
        
          	
                  By: 

                	 	
                  /s/
                    Jeffrey R. Smith

                
	
                  JEFFREY
                    R. SMITH,

                
	 	
                  PRESIDENT

                
	 	 
	
                  PSM
                    HOLDINGS, INC.

                
	 	 
	
                  By:
                    

                	 	
                  /s/
                    Jeffrey R. Smith

                
	
                  JEFFREY
                    R. SMITH,

                
	 	
                  PRESIDENT

                

        

      

    

     

    
      	
              NWBO

            
	 
	
              By:  

            	
               
                /s/ Robert Duane

            
	
              Its:

            	
               
                President

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ADDENDUM
      TO LICENSE AGREEMENT 

    

    THIS
      ADDENDUM TO LICENSE AGREEMENT, dated as of April 14th 2006 (this “Addendum”),
      is by
      and among PrimeSource Mortgage, Inc., a Texas corporation, PSM Holdings, Inc.
      (collectively “PrimeSource”),
      and
      Nationwide By Owner, Inc., a Texas corporation (“NWBO”
      and
      together with PrimeSource, the “Parties”).

    

    WITNESSETH:

    

    WHEREAS, the
      Parties previously entered into that certain License Agreement, effective as
      of
      April 14, 2006 (the “Agreement”),
      in
      connection with the license by NWBO to PrimeSource of the Sales Leads Database;
      and

    

    WHEREAS,
      the Parties desire to enter into this Addendum to the Agreement in order to
      clarify (i) certain rights of PrimeSource with respect to the Sales Leads
      Database system, which includes the ability to sell signs to customers at the
      market price for such signs and listings and to have complete access to the
      loan
      origination leads from the NWBO system, and (ii) the consideration that
      PrimeSource will pay to NWBO for such license; and

    

    WHEREAS,
      capitalized terms not otherwise defined in this Addendum shall have the meaning
      given such terms in the Agreement.

    

    NOW,
      THEREFORE, in consideration of the foregoing recitals and of the mutual
      covenants set forth below, the Parties agree as follows:

    

    1. License;
      Consideration.
      The
      Parties acknowledge and agree that (i) as part of the license of the Sales
      Lead
      Database, PrimeSource shall have the right to sell NWBO signs to customers
      at
      the market price for such signs and listings and to have complete access to
      the
      loan origination leads from the NWBO system, and (ii) as additional
      consideration for the license of the Sales Lead Database pursuant to the terms
      of the Agreement as further clarified by this Addendum, PrimeSource shall pay
      NWBO $150,000, $75,000 of which shall be due immediately upon signing of this
      Addendum, and the remaining $75,000 shall be paid upon the first to occur of
      the
      following: (a) PrimeSource’s completion of its anticipated financing, whether
      through a private or public offering of equity, debt, or otherwise, the proceeds
      of which are to be used for the development of the National Processing Center,
      or (ii) ninety (90) days following the Effective Date. The consideration to
      be
      paid by PrimeSource to NWBO as set forth in this Section 1 of this Addendum
      is
      in addition to (and shall not limit) the consideration to be paid by PrimeSource
      to NWBO pursuant to the terms of the Agreement.

    

    2. Survival
      of Agreement.
      Except
      as expressly set forth in this Addendum, the terms and provisions of the
      Agreement shall continue in full force and effect and shall survive in all
      respects the execution of this Addendum.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    3. Complete
      Agreement; Counterparts.
      The
      Agreement as amended by this Addendum shall constitute the entire agreement
      among the Parties with respect to the subject matter hereof and thereof and
      shall supersede any previous negotiations, commitments and writings with respect
      to such subject matter. This Addendum may be executed in any number of
      counterparts, each of which shall be deemed an original, but all of which
      together shall constitute one and the same instrument. Facsimiles shall be
      deemed originals for purposes of this Addendum.

    

    4. Governing
      Law.
      This
      Addendum shall be governed by, and construed in accordance with, the laws of
      the
      State of Texas.

    

    5. Severability. 
      Should
      any provision of this Agreement be declared or be determined by any court to
      be
      illegal or invalid, the validity of the remaining parts, terms or provisions
      shall not be affected thereby and the illegal or invalid part, term or
      provisions shall be deemed not to be a part of this Addendum.

    

    [Remainder
      of page intentionally left blank]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF, the undersigned have executed this Addendum as of the
      14th
      day of
      April, 2006.

     

    
      
        	
                PRIMESOURCE
                  MORTGAGE,
INC.

              
	 	 
	
                By:

              	 	
                /s/
                  Jeffrey R. Smith

              
	 	
                JEFFREY
                  R. SMITH,

              
	 	
                PRESIDENT

              
	 	 
	
                PSM
                  HOLDINGS, INC.

              
	 	 
	
                By:

              	 	
                /s/
                  Jeffrey R. Smith

              
	 	
                JEFFREY
                  R. SMITH,

              
	 	
                PRESIDENT

              
	 	 
	
                NWBO

              
	 	 
	
                By:

              	 	
                /s/
                  Robert Duane

              
	
                Its:

              	 	
                President

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ADDENDUM
      TO LICENSE AGREEMENT 

     

    This
      is
      an addendum to the License agreement (“Agreement”) made April 14, 2006 at
      Dallas, Texas between PrimeSource Mortgage, Inc. whose principal place of
      business is 1112 North Main, Roswell, NM 88201 and PSM Holdings, Inc.
      (collectively “PrimeSource”) and Nationwide By Owner, Inc. whose principal place
      of business is located at 3230 Camp Bowie, Suite A, Fort Worth, Texas
      76107.

    

    WHEREAS,
      Section 3.07 of the original agreement date April 14, 2006 states:

    

    Other
      obligations of PrimeSource. PrimeSource
      shall (i) promptly but in any event no later than twelve (12) months after
      the
      date of this Agreement, obtain the appropriate licenses in thirty-five (35)
      states in the United States necessary to originate mortgage loans in all such
      states and shall endeavor in good faith and use its best efforts to obtain
      licensure in all fifty (50) states during such period, provided, that, to the
      extent that PrimeSource is not licensed in all states as of the end of such
      twelve (12) month period but provides evidence satisfactory to NWBO in its
      discretion that PrimeSource is diligently and in good faith seeking licensure
      in
      such state(s), NWBO shall grant a one-time (6) month extension to PrimeSource
      to
      obtain licensure in such states, and (ii) clo9se that number of loans per year
      commensurate with industry standards for mortgage companies that are similarly
      situated to PrimeSource;

    

    WHEREAS,
      NWBO does recognize that PrimeSource has in good faith and diligently been
      pursuing to become licensed in all fifty states per the original
      agreement;

    

    WHEREAS,
      PrimeSource has committed to NWBO that they will continue in good faith to
      diligently strive to become licensed in all states;

    

    THEREFORE
      BE IT RESOLVED that the specific dates be removed from this section of the
      agreement. It is understood by both parties that PrimeSource shall move forward
      with diligence to continue to become licensed in all fifty (50) states or in
      those that NWBO requests they become licensed in. 

    

    Signed
      effective this 1st
      day of
      March, 2007. 

    

      
        	
                PRIMESOURCE
                  MORTGAGE, INC.

              	 	
                NWBO,
                  INC

              
	 	 	 	 	 
	
                By:  

              	 	
                   
                  /s/ Jeffrey R. Smith

              	 	
                By:  

              	 	
                   
                  /s/ Robert Duane

              
	 	
                   
                  Jeffrey R. Smith

              	 	 	
                   
                  Robert Duane

              
	 	
                   
                  President

              	 	 	
                   
                  President

              
	 	 	 	 	 
	
                PSM
                  HOLDINGS, INC.

              	 	 	 
	 	 	 	 	 
	
                By: 

              	 	
                   
                  /s/ Jeffrey R. Smith

              	 	 	 
	 	
                   
                  Jeffrey R. Smith

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