Agreement and Plan of Merger

THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) dated as of August 8, 2011, is by, between, and among United Community Mortgage Corporation, a New Jersey corporation (“UCMC”), a wholly owned subsidiary of Prime Source Mortgage, Inc., a Texas corporation (“PSMI”), PSMI’s parent, PSM Holdings, Inc., a Nevada corporation (“PSMH”), Fidelity Mortgage Company, a Colorado corporation (“Fidelity”), and its shareholders, James Pulsipher, an individual residing in the State of Colorado, and Jared Peterson, an individual residing in the State of Colorado (collectively the “ Shareholders”). Certain capitalized terms used in this Agreement are defined in  ARTICLE XII of this Agreement.

WHEREAS, PSMH desires to acquire Fidelity, and Fidelity desires to be acquired by PSMH through the merger of Fidelity with and into UCMC, with UCMC being the surviving entity pursuant to the terms hereinafter set forth, and pursuant to which the Shareholders would receive shares of PSMH in exchange for all of the outstanding shares of Fidelity (the “Merger”);

WHEREAS, the respective Boards of Directors of PSMH, UCMC, and Fidelity, have approved and declared advisable the Merger upon the terms and subject to the conditions of this Agreement, and in accordance with the New Jersey Business Corporation Act (the “New Jersey Act”) in the case of UCMC, the Colorado Business Corporation Act (the “Colorado Act”) in the case of Fidelity, and the Nevada Revised Statutes (the “NRS”) in the case of PSMH;

WHEREAS, the respective Boards of Directors of PSMH, UCMC, and Fidelity have determined that the Merger is in furtherance of and consistent with their respective business strategies and is in the best interest of their respective shareholders and owners, as applicable;

ARTICLE I.

1.1           The Merger. Upon the terms and subject to the satisfaction or waiver of the conditions set forth in this Agreement, at the Effective Time (as defined in Section 1.2 herein), in accordance with the relevant provisions of the Colorado Act and the New Jersey Act, Fidelity shall be merged with and into UCMC, and UCMC shall be the surviving corporation of the Merger (the “Surviving Corporation”). Upon completion of the Merger, the existence of Fidelity shall cease at the Effective Time as a consequence of the Merger.

 

1.3           Surviving Corporation. Following the Merger, UCMC shall continue to exist under and be governed by the laws of the State of New Jersey and shall be the Surviving Corporation.

1.4           Effect of Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the Colorado Act and the New Jersey Act. Without limiting the generality of the foregoing, at the Effective Time, all the property, rights, privileges, powers, and franchises of Fidelity shall vest in the Surviving Corporation.

1.5           Articles of Incorporation of Surviving Corporation. The Articles of Incorporation of UCMC, as in effect at the Effective Time, shall continue in full force and effect, and shall be the Articles of Incorporation of the Surviving Corporation.

1.6           Bylaws of Surviving Corporation. The Bylaws of UCMC, as in effect at the Effective Time, shall continue in full force and effect, and shall be the Bylaws of the Surviving Corporation.

1.7           Directors and Officers of Surviving Corporation. The directors of UCMC immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation. The officers of UCMC immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation.

ARTICLE II.

2.1           Conversion of Fidelity Common Stock. At the Effective Time each share of Common Stock, no par value, of Fidelity (the “Fidelity Common Stock”), issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive 47.61904 shares of common stock, par value $0.001 per share, of PSMH (the “PSMH Common Stock”). The total shares of PSMH Common Stock to be issued in the Merger shall not exceed 1,785,714 shares of PSMH Common Stock, which shall be divided between the Shareholders as follows: 1,367,210 shares to Mr. Pulsipher and 418,504 shares to Mr. Peterson. All converted shares of Fidelity Common Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each certificate previously representing any such converted shares shall thereafter represent the right to receive a certificate (or electronic register) representing that number of shares of PSMH Common Stock into which such shares of Fidelity Common Stock were converted in the Merger pursuant to this Agreement (the “PSMH Shares”).

 

2.2           Manner of Conversion of Shares of Fidelity Stock. The manner of converting shares of Fidelity Common Stock into shares of PSMH Common Stock in accordance with Section 2.1 above shall be as follows:

(a)           From and after the Effective Time, PSMH (either directly or through its transfer agent) shall act as exchange agent in effecting the conversion of shares of Fidelity Common Stock pursuant to Section 2.1 hereof. PSMH will issue, or cause to be issued by the transfer agent, certificates representing the PSMH Shares issued to the Shareholders in connection with the Merger. PSMH (either directly or through its transfer agent) shall cause certificates representing the PSMH Shares to be distributed to the Shareholders, all in accordance with the provisions of this ARTICLE II. The shares which prior to the Effective Time represented outstanding shares of Fidelity Common Stock shall forthwith be canceled.

(b)           Each of the Shareholders shall, for all purposes, be deemed to be a shareholder of PSMH, as of the Effective Time, irrespective of whether he or she has received his or her certificate representing shares of PSMH Common Stock.

2.3           Restricted Stock. The PSMH Common Stock to be issued pursuant to the Merger shall not have been registered and shall be characterized as “restricted securities” under the federal securities laws, and under such laws such shares may be resold without registration under the Securities Act only in certain limited circumstances. Each certificate evidencing PSMH Common Stock to be issued pursuant to the Merger shall bear an appropriate restrictive legend in accordance with Rule 144 under the Securities Act.

ARTICLE III.

3.1           Closing Date. The closing of the Merger and the consummation of the other transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of legal counsel for PSMH, at 1656 Reunion Avenue, Suite 250, South Jordan, Utah, at such time and date as each of the parties hereto may otherwise agree promptly following closing of the Repurchase Option as provided in Section 6.16 hereof, or as soon as practicable after the satisfaction or waiver of the conditions set forth in ARTICLE VII and ARTICLE VIII of this Agreement (the “Closing Date”). If a party hereto is not in attendance at the Closing, Closing may be held by conference call and delivery of the stock certificate representing the PSMH Shares and signed agreements shall be via Federal Express to the address set forth in this Agreement or such other address that the party has provided to counsel for PSMH.

3.2           Execution of Exchange Documents. On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing the Articles of Merger with the Colorado Corporations Division in the Office of the Secretary of the State and the filing of the Articles of Exchange with the Nevada Secretary of State, together with any required or related certificates in such form as required by, and executed in accordance with, the relevant provisions of the Colorado Act or the NRS. The Merger shall be effective as of the Effective Time.

ARTICLE IV.

Each of Fidelity and the Shareholders, jointly and severally, represents and warrants to PSMH and UCMC that all of the statements contained in this ARTICLE IV are true as of the date of this Agreement (or, if made as of a specified date, as of such date) except as otherwise provided in this Agreement.

 

4.1           Due Incorporation; Foreign Qualification. Fidelity is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado, with all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being owned, leased, operated and conducted. True, correct and complete copies of the Articles of Incorporation and Bylaws of Fidelity have been delivered to PSMH and UCMC. Fidelity does not have any wholly or partially owned subsidiaries and does not own any economic, voting or management interests in any other Person. The Shareholders are, and will be at Closing, the sole shareholders of Fidelity. Fidelity is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in or cause an Fidelity Material Adverse Effect.

4.2           Due Authorization. Each of Fidelity and the Shareholders has full power and authority to enter into this Agreement, the Articles of Merger, and the Articles of Exchange, as applicable, and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Fidelity of this Agreement have been duly and validly approved and authorized by the Board of Directors of Fidelity, and, other than the Shareholder Approval, no other actions or proceedings on the part of Fidelity are necessary to authorize this Agreement, the Articles of Merger, the Articles of Exchange and the transactions contemplated hereby and thereby. Fidelity and the Shareholders have duly and validly executed and delivered this Agreement. This Agreement constitutes the legal, valid and binding obligation of Fidelity and the Shareholders, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or other laws from time to time in effect which affect creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(a)           Except for the filing of the Articles of Merger with the Colorado and New Jersey Secretaries of State and the Articles of Exchange with the Nevada Secretary of State, filings required by applicable federal and state securities laws, and the requirement to obtain Shareholder Approval, no Permit, consent, authorization or approval of, or filing or registration with, any Governmental Authority or any other Person not a party to this Agreement, is necessary in connection with the execution, delivery and performance by Fidelity and the Shareholders of this Agreement or the Articles Merger or Articles of Exchange, or the consummation of the transactions contemplated hereby or thereby, or for the lawful continued operation by UCMC following the Effective Time of the business currently conducted by Fidelity.

(b)           Except as would not result in or cause an Fidelity Material Adverse Effect, the execution, delivery and performance by Fidelity of this Agreement, the Articles of Merger do not and will not (i) violate any Law; (ii) violate or conflict with, result in a breach or termination of, or constitute a default (or a circumstance which, with or without notice or lapse of time or both, would constitute a default) under any material Contract or Permit; (iii) give any third party any additional right (including a termination right) under, permit cancellation of, or result in the creation of any Lien (except for any Lien for taxes not yet due and payable) upon any of the assets or properties of Fidelity under any material Contract to which Fidelity is a party or by which Fidelity or any of its assets or properties are bound; (iv) permit the acceleration of the maturity of any indebtedness of Fidelity or indebtedness secured by Fidelity’s assets or properties; (v) violate or conflict with any provision of the Articles of Incorporation or Bylaws of Fidelity; or (vi) result in the activation of any anti-dilution rights or a reset or repricing of any debt or security instrument of any creditor or equity holder of Fidelity except as provided for in this Agreement.

 

4.4           Capitalization. The authorized capital stock of Fidelity consists of 50,000 shares of Fidelity Common Stock and no shares of any other class of common or preferred stock. There are issued and outstanding 37,500 shares of Fidelity Common Stock. The Shareholders are the sole owners of record and sole beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of all of the outstanding equity securities of Fidelity. All of the issued and outstanding shares of Fidelity Common Stock are validly issued, fully paid and non-assessable and the issuance thereof was not subject to preemptive rights or was issued in compliance therewith. No shares of Fidelity’s capital stock are subject to preemptive rights or any other similar rights or any Liens or encumbrances suffered or permitted by Fidelity; (ii) there are no outstanding debt securities; (iii) there are no outstanding shares of capital stock, options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of Fidelity, or contracts, commitments, understandings or arrangements by which Fidelity is or may become bound to issue additional shares of capital stock of Fidelity or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of Fidelity; (iv) there are no agreements or arrangements under which Fidelity is obligated to register the sale of any of its securities under the Securities Act; (v) there are no outstanding securities of Fidelity which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which Fidelity is or may become bound to redeem a security of Fidelity; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the shares as described in this Agreement; (vii) Fidelity does not have any stock appreciation rights plans or agreements or any similar plan or agreement; and (viii) there is no dispute as to the class of any shares of Fidelity’s capital stock.

4.5           Financial Statements. Copies of the unaudited balance sheet of Fidelity at June 30, 2011, and the profit and loss statement for the period from October 2009 through September 2010 and from August 2010 through June 30, 2011 (the “Fidelity Financial Statements”), have been provided to PSMH and UCMC. These unaudited financial statements fairly present in all material respects the financial position of Fidelity as of and for the dates thereof and the results of operations for the period then ended. Not later than seven days prior to Closing, Fidelity shall deliver audited financial statements for the two most recent fiscal years accompanied by an unqualified opinion of Fidelity’s auditor.

4.6           Liabilities. Except as set forth in Schedule 4.6, there are no material liabilities of Fidelity, whether accrued, absolute, contingent or otherwise, which arose or relate to any transaction of Fidelity, its agents or servants occurring prior to the period covered by the Fidelity Financial Statements which are not disclosed by or reflected in the Fidelity Financial Statements. To the Knowledge of Fidelity and the Shareholders, there are no circumstances, conditions, happenings, events or arrangements, contractual or otherwise, which may hereafter give rise to liabilities, except in the normal course of business of Fidelity.

4.7           Material Changes; Undisclosed Events, Liabilities or Developments. Since the period covered by the Fidelity Financial Statements, except as specifically disclosed in Schedule 4.7, (i) there has been no event, occurrence or development that has had or that could reasonably be expected, individually or in the aggregate, to result in or cause an Fidelity Material Adverse Effect, (ii) Fidelity has not incurred any liabilities (contingent or otherwise) other than trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice, (iii) Fidelity has not altered its method of accounting, (iv) Fidelity has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) Fidelity has not issued any equity securities to any officer, director or Affiliate. Except for the transactions contemplated by this Agreement or as set forth on Schedule 4.7, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to Fidelity or its business, prospects, properties, operations, assets or financial condition that would result in or cause an Fidelity Material Adverse Effect. Fidelity has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy or similar law nor does Fidelity or the Shareholders have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy or similar proceedings.

 

4.8           Taxes. All federal, state, foreign, county, and local income, withholding, profits, franchise, occupation, property, sales, use, gross receipts and other taxes (including any interest or penalties relating thereto) and assessments which are due and payable have been duly reported, fully paid and discharged as reported by Fidelity, and there are no unpaid taxes which are, or could become a Lien on the properties and assets of Fidelity, except as provided for in the Fidelity Financial Statements, or have been incurred in the normal course of business of Fidelity since that date. All tax returns of any kind required to be filed have been filed and the taxes paid. Except as set forth in Schedule 4.8, there are no disputes as to taxes of any nature payable by Fidelity.

4.9           Environmental Laws. Fidelity (i) is in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”); (ii) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its business; and (iii) is in compliance with all terms and conditions of any such permit, license or approval where, in each of the three foregoing cases, the failure to so comply would have or cause, individually or in the aggregate, an Fidelity Material Adverse Effect.

4.10           Compliance. Neither Fidelity nor the Shareholders: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by Fidelity or the Shareholders under), nor has Fidelity or the Shareholders received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it or he is a party or by which it or he or any of their properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the mortgage industry, except in each case as could not have or reasonably be expected to result in or cause an Fidelity Material Adverse Effect.

4.11           Regulatory Permits. Fidelity possess all certificates, authorizations and Permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its business as  described in the Fidelity Financial Statements, except where the failure to possess such Permits could not reasonably be expected to result in or cause an Fidelity Material Adverse Effect (“Fidelity Material Permits”), and neither Fidelity nor the Shareholders has received any notice of proceedings relating to the revocation or modification of any Fidelity Material Permit. Schedule 4.11 sets forth a complete list of each Fidelity Material Permit.

4.12           Title to Assets. Fidelity has good and marketable title in fee simple to all real property owned by it and good and marketable title in all personal property owned by it that is material to the business of Fidelity, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by Fidelity and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by Fidelity are held by it under valid, subsisting and enforceable leases with which Fidelity is in compliance. Set forth in Schedule 4.12 is a list of all material real and personal properties owned or leased by Fidelity.

 

4.13           Patents and Trademarks. Except as set forth in Schedule 4.13, Fidelity has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with its business and which the failure to so have could have or cause an Fidelity Material Adverse Effect (collectively, the “Fidelity Intellectual Property Rights”). Fidelity has not received a notice (written or otherwise) that any of the Fidelity Intellectual Property Rights used by Fidelity violates or infringes upon the rights of any Person. To the knowledge of Fidelity and the Shareholders, all such Fidelity Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Fidelity Intellectual Property Rights. Fidelity has taken reasonable security measures to protect the secrecy, confidentiality and value of all of its intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have or cause an Fidelity Material Adverse Effect.

4.14           Insurance. Fidelity is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which Fidelity is engaged. Fidelity has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

4.15           Litigation. There are no actions, suits, arbitrations, regulatory proceedings or other litigation, proceedings or governmental investigations pending or, to the Knowledge of Fidelity and the Shareholders, threatened against Fidelity or any of its officers or directors in their capacity as such, or any of its properties or businesses, and neither Fidelity nor the Shareholders has any Knowledge of any facts or circumstances which may reasonably be likely to give rise to any of the foregoing. Neither Fidelity nor any of the Shareholders is subject to any order, judgment, decree, injunction, stipulation or consent order of or with any court or other Governmental Authority. Neither Fidelity nor any of the Shareholders has entered into any agreement to settle or compromise any proceeding pending or threatened in writing against it which has involved any obligation for which Fidelity or its properties or business has any continuing obligation. There are no claims, actions, suits, proceedings, or investigations pending or, to the Knowledge of Fidelity or the Shareholders, threatened by or against Fidelity or the Shareholders with respect to this Agreement, the Articles of Merger, or in connection with the transactions contemplated hereby or thereby, and Fidelity and the Shareholders have no reason to believe there is a valid basis for any such claim, action, suit, proceeding or investigation.

4.16           Labor Relations. No material labor dispute exists or, to the Knowledge of Fidelity, is imminent with respect to any of the employees of Fidelity, which could reasonably be expected to result in or cause an Fidelity Material Adverse Effect. None of Fidelity’s employees is a member of a union that relates to such employee’s relationship with Fidelity, and Fidelity is not a party to a collective bargaining agreement, and Fidelity reasonably believes that its relationship with its employees is good. No executive officer, to the Knowledge of Fidelity, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject Fidelity to any liability with respect to any of the foregoing matters. Fidelity is in material compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have or cause an Fidelity Material Adverse Effect.

4.17           Brokers. Neither Fidelity or the Shareholders nor any of their agents or representatives has retained any finder, broker, agent, financial advisor or other intermediary in connection with the transactions contemplated by this Agreement.

 

4.18         Reorganization Treatment.

(a)           Assets . At the Effective Time, Fidelity will hold at least 90 percent of the fair market value of its net assets and at least 70 percent of the fair market value of its gross assets held immediately prior to the Effective Time. For purposes of this representation, amounts used by Fidelity or the Surviving Corporation to pay Merger expenses, in each case, will be treated as constituting assets of Fidelity immediately prior to the Effective Time.

(b)           Business. Fidelity currently conducts a business. Such business is Fidelity’s “historic business” within the meaning of Treasury Regulations Section 1.368-1(d), and no assets of Fidelity have been sold, transferred, or otherwise disposed of that would prevent PSMH and UCMC from continuing the “historic business” of Fidelity or from using a “significant portion” of Fidelity’s “historic business assets” in a business following the Merger, as such terms are used in Treasury Regulations Section 1.368-1(d).

(c)           Investment Company. Fidelity is not an “investment company” as defined in Sections 368(a)(2)(F)(iii) and (iv) of the Code.

(d)           Redemptions and Distributions. Neither Fidelity nor any person related to Fidelity within the meaning of Treasury Regulations Sections 1.368-1(e)(3), (e)(4) and (e)(5) has purchased, redeemed or otherwise acquired, or made any distributions with respect to, any of Fidelity’s stock prior to or in contemplation of the Merger, or otherwise as part of a plan of which the Merger is a part.

(e)           Dividends. At the Effective Time, there will be no accrued but unpaid dividends on Fidelity Common Stock.

(f)           Control. In the Merger, stock of Fidelity representing “control” of Fidelity (within the meaning of Section 368(c) of the Code) will be exchanged solely for “voting stock” of PSMH (within the meaning of Sections 368(a)(1)(B) and (2)(E) of the Code).

4.19           Board Approval. The Board of Directors of Fidelity, by unanimous written consent, duly adopted resolutions: (a) approving and declaring advisable this Agreement, the Merger and the transactions contemplated hereby; (b) determining that the terms of the Merger are fair to and in the best interests of Fidelity and its shareholders; (c) recommending that the shareholders of Fidelity approve and adopt this Agreement and the Merger; and (d) adopting this Agreement, which resolutions have not been modified, supplemented or rescinded and remain in full force and effect.

4.20           Disclosure. All of the disclosure furnished by or on behalf of Fidelity or the Shareholders to either PSMH or UCMC regarding Fidelity, its business and the transactions contemplated hereby, including the disclosure schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

PSMH and UCMC, severally and not jointly, represent and warrant to Fidelity and the Shareholders that all of the statements contained in this ARTICLE V are true as of the date of this Agreement (or, if made as of a specified date, as of such date) except as otherwise provided in this Agreement.

 

5.1           Due Incorporation; Foreign Qualification. PSMH is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, with all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being owned, leased, operated and conducted. UCMC is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, with all requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being owned, leased, operated and conducted. True, correct and complete copies of the Articles of Incorporation and Bylaws of PSMH and UCMC have been delivered to Fidelity and the Shareholders. PSMH has only one subsidiary, namely PSMI, which has only one subsidiary, namely UCMC and except for ownership of PSMI by PSMH, neither PSMH nor UCMC owns any economic, voting or management interests in any other Person. Each of PSMH and UCMC is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in or cause a PSMH Material Adverse Effect.

5.2           Due Authorization. Each of PSMH and UCMC has full power and authority to enter into this Agreement, the Articles of Merger, and the Articles of Exchange, as applicable, and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by PSMH and UCMC of this Agreement have been duly and validly approved and authorized by the Board of Directors of each entity, and, other than the Shareholder Approval, no other actions or proceedings on the part of PSMH or UCMC are necessary to authorize this Agreement, the Articles of Merger, the Articles of Exchange and the transactions contemplated hereby and thereby. PSMH and UCMC have duly and validly executed and delivered this Agreement. This Agreement constitutes the legal, valid and binding obligation of PSMH and UCMC, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or other laws from time to time in effect which affect creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(a)           Except for the filing of the Articles of Merger with the Colorado Corporations Division in the Office of the Secretary of the State and the Articles of Exchange with the Nevada Secretary of State, filings required by applicable federal and state securities laws, and the requirement to obtain Shareholder Approval, no Permit, consent, authorization or approval of, or filing or registration with, any Governmental Authority or any other Person not a party to this Agreement, is necessary in connection with the execution, delivery and performance by PSMH and UCMC of this Agreement or the Articles Merger or Articles of Exchange, or the consummation of the transactions contemplated hereby or thereby.

(b)           Except as would not result in or cause a PSMH Material Adverse Effect, the execution, delivery and performance by PSMH and UCMC of this Agreement, the Articles of Merger and the Articles of Exchange do not and will not (i) violate any Law; (ii) violate or conflict with, result in a breach or termination of, or constitute a default (or a circumstance which, with or without notice or lapse of time or both, would constitute a default) under any material Contract or Permit; (iii) give any third party any additional right (including a termination right) under, permit cancellation of, or result in the creation of any Lien (except for any Lien for taxes not yet due and payable) upon any of the assets or properties of PSMH or UCMC under any material Contract to which PSMH or UCMC is a party or by which PSMH, UCMC, or any of their assets or properties are bound; (iv) permit the acceleration of the maturity of any indebtedness of PSMH or UCMC or indebtedness secured by such entity’s assets or properties; (v) violate or conflict with any provision of the Articles of Incorporation or Bylaws of PSMH or UCMC; or (vi) result in the activation of any anti -dilution rights or a reset or repricing of any debt or security instrument of any creditor or equity holder of PSMH or UCMC, except as provided for in this Agreement.

 

 

5.4           Capitalization. The authorized capital stock of PSMH consists of 100,000,000 shares of PSMH Common Stock and 10,000,000 shares of preferred stock. As of the date of this Agreement, there are issued and outstanding 17,434,192 shares of PSMH Common Stock. PSMH is the sole owner of record and sole beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of all of the outstanding equity securities of PSMI. PSMI is the sole owner of record and sole beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of all of the outstanding equity securities of UCMC. All of the issued and outstanding shares of PSMH Common Stock are validly issued, fully paid and non-assessable and the issuance thereof was not subject to preemptive rights or was issued in compliance therewith. Except as set forth in the SEC Reports, (i) no shares of PSMH’s capital stock are subject to preemptive rights or any other similar rights or any Liens or encumbrances suffered or permitted by PSMH; (ii) there are no outstanding debt securities; (iii) there are no outstanding shares of capital stock, options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of PSMH, or contracts, commitments, understandings or arrangements by which PSMH is or may become bound to issue additional shares of capital stock of PSMH or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of PSMH; (iv) there are no agreements or arrangements under which PSMH is obligated to register the sale of any of its securities under the Securities Act; (v) there are no outstanding securities of PSMH which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which PSMH is or may become bound to redeem a security of PSMH; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the shares as described in this Agreement; (vii) PSMH does not have any stock appreciation rights plans or agreements or any similar plan or agreement; and (viii) there is no dispute as to the class of any shares of PSMH’s capital stock. Notwithstanding the foregoing, PSMH is in discussions with additional target companies, which may result in the obligation to issue additional shares of its common stock for such prospective acquisitions.

5.5           SEC Reports; Financial Statements. PSMH has filed all reports, schedules, forms, statements and other documents required to be filed by PSMH under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as PSMH was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. Notwithstanding the forgoing, PSMH has not filed the financial statements and pro forma financial information of UCMC required pursuant to Item 9.01 of Form 8-K, which items are not yet due pursuant to the extension granted by Paragraphs (a)(4) and (b)(2) of Item 9.01 of Form 8-K. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The consolidated financial statements of PSMH included in the SEC Reports (the “PSMH Financial Statements”) comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”) (except (i) as may be otherwise indicated in the Fidelity Financial Statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the PSMH on a consolidated basis as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

 

5.6           Liabilities. Except as set forth in Schedule 5.6, there are no material liabilities of PSMH, whether accrued, absolute, contingent or otherwise, which arose or relate to any transaction of PSMH, its agents or servants occurring prior to the period covered by the PSMH Financial Statements which are not disclosed by or reflected in the PSMH Financial Statements. To the Knowledge of PSMH, there are no circumstances, conditions, happenings, events or arrangements, contractual or otherwise, which may hereafter give rise to liabilities, except in the normal course of business of PSMH.

5.7           Material Changes; Undisclosed Events, Liabilities or Developments. Since the period covered by the PSMH Financial Statements, except as specifically disclosed in the SEC Reports or Schedule 5.7, (i) there has been no event, occurrence or development that has had or that could reasonably be expected, individually or in the aggregate, to result in or cause a PSMH Material Adverse Effect, (ii) PSMH has not incurred any liabilities (contingent or otherwise) other than trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice, (iii) PSMH has not altered its method of accounting, (iv) PSMH has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) PSMH has not issued any equity securities to any officer, director or Affiliate. Except for the transactions contemplated by this Agreement or as set forth on Schedule 5.7, no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to PSMH or its business, prospects, properties, operations, assets or financial condition that would result in or cause a PSMH Material Adverse Effect. PSMH has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy or similar law nor does PSMH have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy or similar proceedings.

5.8           Taxes. All federal, state, foreign, county, and local income, withholding, profits, franchise, occupation, property, sales, use, gross receipts and other taxes (including any interest or penalties relating thereto) and assessments which are due and payable have been duly reported, fully paid and discharged as reported by PSMH, and there are no unpaid taxes which are, or could become a Lien on the properties and assets of PSMH, except as provided for in the PSMH Financial Statements, or have been incurred in the normal course of business of PSMH since that date. All tax returns of any kind required to be filed have been filed and the taxes paid. There are no disputes as to taxes of any nature payable by PSMH.

5.9           Environmental Laws. Each of PSMH and UCMC (i) is in compliance with any and all Environmental Laws; (ii) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its business; and (iii) is in compliance with all terms and conditions of any such permit, license or approval where, in each of the three foregoing cases, the failure to so comply would have or cause, individually or in the aggregate, an Fidelity Material Adverse Effect.

5.10         Compliance. Neither PSMH nor UCMC: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by PSMH or UCMC under), nor has PSMH or UCMC received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it or he is a party or by which it or he or any of their properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or governmental body or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the mortgage industry, except in each case as could not have or reasonably be expected to result in or cause a PSMH Material Adverse Effect.

 

 

5.11           Regulatory Permits. PSMH and UCMC possess all certificates, authorizations and Permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its business as described in the SEC Reports, except where the failure to possess such Permits could not reasonably be expected to result in or cause a PSMH Material Adverse Effect (“PSMH Material Permits”), and neither PSMH nor UCMC has received any notice of proceedings relating to the revocation or modification of any PSMH Material Permit.

5.12           Title to Assets. Each of PSMH and UCMC has good and marketable title in fee simple to all real property owned by it and good and marketable title in all personal property owned by it that is material to the business of PSMH or UCMC, as applicable, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by such entity and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by either PSMH or UCMC are held by it under valid, subsisting and enforceable leases with which such entity is in compliance.

5.13           Patents and Trademarks. Each of PSMH and UCMC has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with its business and which the failure to so have could have or cause a PSMH Material Adverse Effect (collectively, the “PSMH Intellectual Property Rights”). Neither PSMH nor UCMC has received a notice (written or otherwise) that any of the PSMH Intellectual Property Rights used by either PSMH or UCMC violates or infringes upon the rights of any Person. To the knowledge of PSMH and UCMC, all such PSMH Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the PSMH Intellectual Property Rights. Each of PSMH and UCMC has taken reasonable security measures to protect the secrecy, confidentiality and value of all of its intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have or cause a PSMH Material Adverse Effect.

5.14           Insurance. Each of PSMH and UCMC is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which PSMH or UCMC, as applicable, is engaged. Neither PSMH nor UCMC has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

5.15           Litigation. There are no actions, suits, arbitrations, regulatory proceedings or other litigation, proceedings or governmental investigations pending or, to the Knowledge of PSMH or UCMC, threatened against PSMH or UCMC or any of their officers or directors in their capacity as such, or any of their properties or businesses, and neither PSMH nor UCMC has any Knowledge of any facts or circumstances which may reasonably be likely to give rise to any of the foregoing. Neither PSMH nor UCMC is subject to any order, judgment, decree, injunction, stipulation or consent order of or with any court or other Governmental Authority. Neither PSMH nor UCMC has entered into any agreement to settle or compromise any proceeding pending or threatened in writing against it which has involved any obligation for which either PSMH or UCMC or their properties or business has any continuing obligation. There are no claims, actions, suits, proceedings, or investigations pending or, to the Knowledge of PSMH or UCMC, threatened by or against either PSMH or UCMC with respect to this Agreement, the Articles of Merger or the Articles of Exchange, or in connection with the transactions contemplated hereby or thereby, and PSMH and UCMC have no reason to believe there is a valid basis for any such claim, action, suit, proceeding or investigation.

 

 

5.16         Labor Relations. No material labor dispute exists or, to the Knowledge of PSMH or UCMC, is imminent with respect to any of the employees of PSMH or UCMC, which could reasonably be expected to result in or cause a PSMH Material Adverse Effect. None of PSMH or UCMC’s employees is a member of a union that relates to such employee’s relationship with PSMH or UCMC, and neither PSMH nor UCMC is a party to a collective bargaining agreement, and PSMH and UCMC reasonably believe that their relationship with their employees is good. No executive officer, to the Knowledge of PSMH or UCMC, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject either PSMH or UCMC to any liability with respect to any of the foregoing matters. Each of PSMH and UCMC is in material compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have or cause a PSMH Material Adverse Effect.

5.17         Brokers. Neither PSMH nor UCMC nor any of their agents or representatives has retained any finder, broker, agent, financial advisor or other intermediary in connection with the transactions contemplated by this Agreement.

(a)           Intention Regarding Fidelity. Neither PSMH nor UCMC has any plan or intention: (i) to liquidate the Surviving Corporation; (ii) to merge the Surviving Corporation into another corporation; (iii) to sell or otherwise dispose of any shares of stock of the Surviving Corporation, except for transfers and successive transfers described in Treasury Regulation Section 1.368-2(k) or transfers and successive transfers to one or more corporations controlled in each transfer by the transferor corporation (within the meaning of Section 368(c) of the Code); or (iv) to cause the Surviving Corporation to sell or otherwise dispose of any of its assets, except for (w) dispositions made in the ordinary course of business, (x) transfers and successive transfers described in Treasury Regulation Section 1.368-2(k) or transfers and successive transfers to one or more corporations controlled in each transfer by the transferor corporation (within the meaning of Section 368(c) of the Code), (y) dispositions after which Fidelity would continue to hold the amount of assets set forth in Section 4.15(a) following the Merger (assuming the correctness of the representation set forth in Section 4.18), or (z) transfers to partnerships that satisfy the provisions of Treasury Regulation Section 1.368-1(d)(4)(iii)(B).

(b)           Intention Regarding PSMH Common Stock. Neither PSMH or UCMC nor any Person related to PSMH or UCMC within the meaning of Treasury Regulation Sections 1.368 -1(e)(3), (e)(4) and (e)(5) has any plan or intention to repurchase, redeem or otherwise acquire any of the stock of PSMH issued to the Shareholders pursuant to this Agreement following the Merger. Other than pursuant to this Agreement, neither PSMH or UCMC nor any Person related to PSMH or UCMC within the meaning of Treasury Regulation Sections I.368-1(e)(3), (e)(4) and (e)(5) has acquired any Fidelity Common Stock in contemplation of the Merger, or otherwise as part of a plan of which the Merger is a part.

 

 

(c)           Control. Prior to the Merger, PSMH and PSMI will be in control of UCMC, and following the Merger, PSMH and PSMI will be in control of the Surviving Corporation, within the meaning of Section 368(c) of the Code. Neither PSMH nor UCMC has any plan or intention to cause the Surviving Corporation, after the Effective Time, to issue additional shares of stock that would result in PSMH or UCMC losing control of the Surviving Corporation within the meaning of Section 368(c) of the Code.

(d)           Business. Following the Merger, PSMH and UCMC intend to continue the historic business of Fidelity (or, alternatively, if Fidelity has more than one line of business, intends to continue at least one significant line of Fidelity’s historic business) or use a significant portion of Fidelity’s historic business assets in a business, in a manner consistent with Treasury Regulation Section 1.368-1(d).

(e)           Investment Company. Neither PSMH nor UCMC is an “investment company” as defined in Sections 368(a)(2)(F)(iii) and (iv) of the Code.

(f)           Dividends. At the Effective Time, there will be no accrued but unpaid dividends on any stock of PSMH or UCMC.

5.19         Board Approval. The Boards of Directors of PSMH and UCMC, by a special meeting duly called and held or by unanimous written consent, duly adopted resolutions: (a) approving and declaring advisable this Agreement, the Merger and the transactions contemplated hereby; (b) determining that the terms of the Merger are fair to and in the best interests of PSMH and UCMC and their respective shareholders; (c) recommending that the shareholders of UCMC approve and adopt this Agreement and the Merger; and (d) adopting this Agreement, which resolutions have not been modified, supplemented or rescinded and remain in full force and effect.

5.20         Disclosure. All of the disclosure furnished by or on behalf of PSMH or UCMC to either Fidelity or the Shareholders regarding PSMH or UCMC, their businesses and the transactions contemplated hereby, including the disclosure schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

ARTICLE VI.

6.1           Implementing Agreement. Subject to the terms and conditions hereof, each party hereto shall use its or his commercially reasonable efforts to take, or cause to be taken, all appropriate action required of it to consummate and make effective the transactions contemplated by this Agreement.

 

(b)           From and after the date of this Agreement, PSMH and UCMC shall allow Fidelity and the Shareholders, and their representatives access during normal business hours to all of the facilities, properties, books, Contracts, commitments and records of PSMH and UCMC and shall make the officers and employees of PSMH and UCMC available to Fidelity, the Shareholders and their representatives as Fidelity, the Shareholders or their representatives shall from time to time reasonably request. Fidelity, the Shareholders and their representatives shall be furnished with any and all information concerning PSMH and UCMC which Fidelity, the Shareholders or their representatives reasonably request and can be obtained by PSMH or UCMC without unreasonable effort or expense.

(c)           With respect to the information disclosed pursuant to this Section 6.2, the parties shall maintain the confidentiality of any material non-public information furnished by the other Party.

6.3           Preservation of Business. Subject to the terms of this Agreement, from the date of this Agreement until the Closing Date, each of Fidelity, PSMH, and UCMC, as the case may be, shall operate only in the ordinary and usual course of business consistent with past practice, and shall use reasonable commercial efforts to: (a) preserve intact its present business organization, as the case may be; (b) preserve the good and advantageous relationships of USMC, PSMH, UCMC, as the case may be, with employees and other Persons material to the operation of their respective businesses; and (c) not permit any action or omission within its control which would cause any of the representations or warranties of Fidelity, the Shareholders, PSMH, or UCMC, as the case may be, contained herein to become inaccurate in any material respect or any of the covenants of Fidelity, the Shareholders, PSMH, or UCMC, as the case may be, to be breached in any material respect.

6.4           Conduct of Business. Neither PSMH, UCMC, nor Fidelity shall engage in any extraordinary transactions affecting the transactions contemplated by this Agreement without the other party or parties’ prior written consent, including, without limitation the following: (i) the Shareholders shall not transfer or dispose of his shares of Fidelity, grant any options or rights to such shares, or in any way encumber the shares; (ii) Fidelity shall not issue any equity shares or rights to purchase or instruments convertible into equity shares of Fidelity; (iii) neither PSMH, UCMC, nor Fidelity shall pay any dividends or redeem any securities; (iv) neither PSMH, UCMC, nor Fidelity shall borrow any funds or incur any debt or other obligations; and (v) no party hereto shall take any action which would have a material negative effect on the proposed Merger.

6.5           Certain Notices. From and after the date of this Agreement until the Effective Time, each party hereto shall promptly notify the other party hereto of: (a) the occurrence, or non-occurrence, of any event that would be likely to cause any condition to the obligations of any party to effect the Merger and the other transactions contemplated by this Agreement not to be satisfied; or (b) the failure of Fidelity, PSMH, or UCMC, as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it pursuant to this Agreement which would reasonably be expected to result in any condition to the obligations of any party to effect the Merger and the other transactions contemplated by this Agreement not to be satisfied; provided, however, that the delivery of any notice pursuant to this Section 6.5 shall not cure any breach of any representation or warranty requiring disclosure of such matter prior to the date of this Agreement or otherwise limit or affect the remedies available hereunder to the party receiving such notice.

(a)           Each of Fidelity and the Shareholders shall use commercially reasonable efforts to obtain all consents, approvals, certificates and other documents required in connection with the performance by it, him, or her of this Agreement and the consummation of the transactions contemplated hereby. Fidelity and the Shareholders shall make all filings, applications, statements and reports to all Governmental Authorities and other Persons that are required to be made prior to the Closing Date by or on behalf of Fidelity or the Shareholders, as applicable, pursuant to Applicable Law in connection with this Agreement and the transactions contemplated hereby.

 

(b)           Each of PSMH and UCMC shall use commercially reasonable efforts to obtain all consents, approvals, certificates and other documents required in connection with the performance by it of this Agreement and the consummation of the transactions contemplated hereby. PSMH and UCMC shall make all filings, applications, statements and reports to all Governmental Authorities and other Persons that are required to be made prior to the Closing Date by or on behalf of PSMH or UCMC pursuant to Applicable Law or otherwise in connection with this Agreement and the transactions contemplated hereby.

6.7           Shareholder Approval. The Shareholders shall provide Shareholder Approval of the Merger and this Agreement, and the transactions contemplated thereby and hereby, as soon as practicable following the date of this Agreement. UCMC shall provide Shareholder Approval of the Merger and this Agreement, and the transactions contemplated thereby, as soon as practicable following the date of this Agreement.

6.8           Supplemental Information. From time to time prior to the Closing, Fidelity and the Shareholders, on the one hand, and PSMH and UCMC, on the other hand, shall promptly disclose in writing to the other any matter hereafter arising which, if existing, occurring or known at the date of this Agreement would have been required to be disclosed to the other parties hereto or which would render inaccurate any of the representations, warranties or statements set forth in ARTICLE IV and ARTICLE V, respectively, hereof.

6.9           Access to Management of PSMH and UCMC. From and after the date of this Agreement and through the Closing, each of the Shareholders is hereby granted the reasonable  opportunity to ask questions of the presidents or other executive officers of PSMH and UCMC and to receive answers concerning the terms and conditions of the transactions contemplated by this Agreement.

6.10         Tax-Free Reorganization Treatment.

(a)           Fidelity, the Shareholders, PSMH, and UCMC shall use their commercially reasonable efforts, and cause their respective Affiliates to use their commercially reasonable efforts, to take or cause to be taken any action necessary for the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code. Neither Fidelity, the Shareholders, PSMH, nor UCMC shall, nor shall they permit any of their respective representatives or Affiliates to, take or cause to be taken any action that could reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

(b)           This Agreement is intended to constitute, and the parties hereto hereby adopt this Agreement as, a “plan of reorganization” within the meaning Treasury Regulation Sections 1.368-2(g) and 1.368-3(a). Each of Fidelity, the Shareholders, PSMH, and UCMC shall report the Merger as a reorganization within the meaning of Section 368 of the Code, unless otherwise required pursuant to a “determination” within the meaning of Section 1313(a) of the Code.

(c)           Notwithstanding the foregoing, neither PSMH or UCMC, nor any representative of, or legal counsel or consultant for, PSMH or UCMC warrants that the Merger will qualify as a tax-free reorganization.

 

 

6.11           Exclusive Dealing. From the date of this Agreement until Closing or termination hereof pursuant to Section 11.1, neither Fidelity nor any of the Shareholders shall, directly or indirectly, through any representative or otherwise, solicit, negotiate with or in any manner encourage, discuss or accept any proposal of any other person relating to the acquisition of Fidelity, shares of its capital stock purchased from Fidelity or any of the Shareholders, or its assets or business, in whole or in part, whether through direct purchase, merger, consolidation, or other business combination.

6.12           Appointment as Director. At the Closing, UCMC shall appoint James Pulsipher as a director of UCMC, to serve until his successor is elected and qualified, except as otherwise provided in the bylaws of UCMC in effect from time to time or as otherwise required by law.

6.13           Employment Agreements. Within thirty (30) days following the termination of the existing employment agreement of James Pulsipher, UCMC shall enter into an employment agreement with Mr. Pulsipher in form substantially as set forth in Exhibit A-1 and at Closing UCMC shall enter into an employment agreement with Jared Peterson in form substantially as set forth in Exhibit A-2 (collectively the “Employment Agreements”).

6.14           Employee Stock Bonuses. Prior to Closing, Fidelity and PSMH shall arrange for the granting of stock bonuses under the 2002 Stock Option Stock Issuance Plan, or any similar plan, of PSMH to certain employees of Fidelity. The President of Fidelity and the Board of Directors of PSMH shall reasonably determine jointly the recipients of the bonus shares, the number of shares to be issued to each recipient, any vesting requirements, and any other provisions reasonably applicable to such grants. The bonus shares shall be issued promptly following Closing.

6.15           Distribution of Assets. Prior to Closing Fidelity and PSMH shall reasonably determine the assets of Fidelity to remain in such entity at Closing.

6.16           Universal Agreement. The Parties acknowledge that Fidelity is a party to a Stock Purchase Agreement with Universal Lending Corporation. The terms of the Stock Purchase Agreement allow for an in kind repurchase of Fidelity assets (“Repurchase Option”). Fidelity will exercise its Repurchase Option within five (5) days of the execution of this Agreement. Fidelity cannot perform this Agreement until and unless the Repurchase Option is closed pursuant to the Stock Purchase Agreement. Therefore, Closing of this Agreement is contingent upon the Closing of the Repurchase Option within ninety (90) days of the exercise of the Repurchase Option. In the event that the Repurchase Option has not been closed within ninety (90) days of the execution of this Agreement, the Parties may agree to extend the Closing to a mutually agreeable time to accommodate closing of the Repurchase Option. If the Parties fail to agree on an extension of the Closing date for this Agreement this Agreement shall terminate.

ARTICLE VII.

The obligations of PSMH and UCMC under this Agreement are subject to the satisfaction (or waiver by PSMH and UCMC) of the following conditions precedent on or before the Closing Date:

7.1           Representations and Warranties . Without supplementation after the date of this Agreement, the representations and warranties of Fidelity and the Shareholders contained in this Agreement shall be, with respect to those representations and warranties qualified by any materiality standard, true and correct in all respects, as of the Closing Date, and with respect to all other representations and warranties, true and correct in all material respects, as of the Closing Date, with the same force and effect as if made as of the Closing Date.

 

 

7.2           Compliance with Agreements and Covenants. Fidelity and the Shareholders shall have performed and complied in all material respects with all of their covenants, obligations and agreements contained in this Agreement to be performed and complied with by them on or prior to the Closing Date.

7.3           Officer’s and Shareholders’ Certificate. PSMH and UCMC shall have been furnished with a certificate (dated as of the Closing Date and in form and substance reasonably satisfactory to PSMH and UCMC), executed by an executive officer of Fidelity and by the Shareholders, certifying to the fulfillment of the conditions specified in subsections 7.1 and 7.2 hereof.

7.4           Consents and Approvals. Fidelity and the Shareholders shall have received written evidence satisfactory to PSMH and UCMC that all consents and approvals required for the consummation of the transactions contemplated hereby have been obtained, and all required filings have been made.

7.5           No Material Adverse Change. At the Closing Date, except as anticipated by this Agreement, there shall have been no material adverse change in the assets, liabilities, prospects, financial condition or business of Fidelity or the Shareholders. Between the date of this Agreement and the Closing Date, there shall not have occurred an event that would reasonably be expected to constitute an Fidelity Material Adverse Effect.

7.6           Actions or Proceedings. No action or proceeding by any Governmental Authority or other Person shall have been instituted or threatened which: (a) is likely to constitute an Fidelity Material Adverse Effect; or (b) could enjoin, restrain or prohibit, or could result in substantial damages in respect of, any provision of this Agreement or the consummation of the transactions contemplated hereby.

7.7           Approval of Exchange. The Shareholders shall have approved this Agreement and the Merger contemplated hereby in accordance with the Colorado Act.

7.8           Compliance with Securities Laws. PSMH and UCMC shall be satisfied that the issuance of the PSMH Common Stock in connection with Merger shall be exempt from registration under Regulation D of the Securities Act and Section 4(2) of the Securities Act and all applicable state securities laws, and that, unless expressly waived by PSMH and UCMC n writing, each of the Shareholders is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated by the SEC under the Securities Act.

ARTICLE VIII.

The obligations of Fidelity and the Shareholders under this Agreement are subject to the satisfaction (or waiver by Fidelity and the Shareholders) of the following conditions precedent on or before the Closing Date:

8.1           Representations and Warranties. Without supplementation after the date of this Agreement, the representations and warranties of PSMH and UCMC contained in this Agreement shall be, with respect to those representations and warranties qualified by any materiality standard, true and correct in all respects, as of the Closing Date, and with respect to all other representations and warranties, true and correct in all material respects, as of the Closing Date, with the same force and effect as if made as of the Closing Date.

8.2           Compliance with Agreements and Covenants. PSMH and UCMC shall have performed and complied in all material respects with all of their covenants, obligations and agreements contained in this Agreement to be performed and complied with by it on or prior to the Closing Date.

 

8.3           Officers’ Certificates. Fidelity and the Shareholders shall have been furnished with a certificate (dated as of the Closing Date and in form and substance reasonably satisfactory to Fidelity and the Shareholders), executed by an executive officer of PSMH and UCMC, certifying to the fulfillment of the conditions specified in subsections 8.1 and 8.2 hereof.

8.4           No Material Adverse Change. At the Closing Date, there shall have been no material adverse change in the assets, liabilities, financial condition or business of PSMH or UCMC. Between the date of this Agreement and the Closing Date, there shall not have occurred an event that would reasonably be expected to constitute a PSMH Material Adverse Effect.

8.5           Actions or Proceedings. No action or proceeding by any Governmental Authority or other Person shall have been instituted or threatened which: (a) is likely to constitute a PSMH Material Adverse Effect; or (b) could enjoin, restrain or prohibit, or could result in substantial damages in respect of, any provision of this Agreement or the consummation of the transactions contemplated hereby.

8.6           Approval of Exchange. UCMC shall have approved this Agreement and the Merger contemplated hereby in accordance with the Colorado Act.

8.7           Closing of Repurchase Option. Fidelity shall have closed the Repurchase Option as provided in Section 6.16 hereof.

8.8           Purchase of Building. PSMH or one of its subsidiaries shall have entered into a letter of intent with FMC Properties LLC to purchase the office building owned by such entity.

ARTICLE IX.

9.1           Fidelity and Shareholders Closing Deliveries. At the Closing, in addition to any other documents or agreements required under this Agreement, Fidelity and the Shareholders shall deliver to PSMH and UCMC the following:

(a)           Resolutions of the Board of Directors of Fidelity approving and authorizing the execution, delivery and performance of this Agreement, the consummation of the transactions contemplated hereby and thereby, including the Merger;

(b)          The certificate required pursuant to subsection 7.3 hereof

(c)           A legal opinion of Fidelity legal counsel, substantially in the form of Exhibit B attached hereto;

(d)          The executed Articles of Merger and Articles of Exchange;

(g)          An executed representation form from each of the Shareholders furnished by counsel for PSMH evidencing compliance with federal and state securities laws by Fidelity and the Shareholders in form as set for in Exhibit C; and

 

(h)           All other instruments and documents that PSMH or its counsel, in the reasonable exercise of their reasonable discretion, shall deem to be necessary: (i) to fulfill any obligation required to be fulfilled by Fidelity or the Shareholders on the Closing Date; and (ii) to evidence satisfaction of any conditions to Closing.

9.2           PSMH and UCMC Closing Deliveries. At the Closing, in addition to any other documents or agreements required under this Agreement, PSMH and UCMC shall deliver to Fidelity and the Shareholders the following:

(a)           Resolutions of the Board of Directors of PSMH and UCMC approving and authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby, including the Merger, the appointment of Mr. Pulsipher as a director of UCMC, and the Employment Agreements;

(b)

The certificate required pursuant to subsection 8.3 hereof;

(c)           A legal opinion of PSMH legal counsel, substantially in the form of Exhibit D attached hereto;

(d)

The executed Articles of Merger and Articles of Exchange;

(e)

The Employment Agreements duly executed by UCMC;

(f)

A copy of the license issued by the State of Colorado to UCMC;

(g)           Irrevocable instructions to the transfer agent of PSMH to issue and deliver to the Shareholders at Closing stock certificates representing the PSMH Shares; and

(h)           All other instruments and documents that Fidelity or its counsel, in the reasonable exercise of their reasonable discretion, shall deem to be necessary: (i) to fulfill any obligation required to be fulfilled by PSMH or UCMC on the Closing Date; and (ii) to evidence satisfaction of any conditions to Closing.

ARTICLE X.

10.1         Indemnification.

(a)           Fidelity and the Shareholders, jointly and severally, covenant and agree to defend, indemnify and hold harmless PSMH and UCMC, their officers, directors, and each person who controls PSMH or UCMC within the meaning of the Securities Act from and against any damages (including reasonable attorneys’, accountants’, and experts’ fees, disbursements of counsel, and other related costs and expenses) arising out of or resulting from: (A) any inaccuracy in or breach of any representation or warranty made by Fidelity or the Shareholders in this Agreement; or (B) the failure of Fidelity or the Shareholders to perform or observe fully any covenant, agreement or provision to be performed or observed by such party pursuant to this Agreement.

(b)           PSMH and UCMC, jointly and severally, covenant and agree to defend, indemnify and hold harmless Fidelity and the Shareholders, USMC’s officers, directors, and each person who controls Fidelity within the meaning of the Securities Act from and against any damages (including reasonable attorneys’, accountants’, and experts’ fees, disbursements of counsel, and other related costs and expenses) arising out of or resulting from: (A) any inaccuracy in or breach of any representation or warranty made by PSMH or UCMC in this Agreement; or (B) the failure by PSMH or UCMC to perform or observe any covenant, agreement or condition to be performed or observed by it pursuant to this Agreement.

 

 

10.2         Third Party Claims.

(a)           If any party entitled to be indemnified pursuant to Section 10.1 (an “Indemnified Party”) receives notice of the assertion by any third party of any claim or of the commencement by any such third person of any actual or threatened claim, action, suit, arbitration, hearing, inquiry, proceeding, complaint, charge or investigation by or before any governmental entity or arbitrator and an appeal from any of the foregoing (any such claim or Action being referred to herein as an “Indemnifiable Claim”) with respect to which another party hereto (an “Indemnifying Party”) is or may be obligated to provide indemnification, the Indemnified Party shall promptly notify the Indemnifying Party in writing (the “Claim Notice”) of the Indemnifiable Claim; provided, that the failure to provide such notice shall not relieve or otherwise affect the obligation of the Indemnifying Party to provide indemnification hereunder, except to the extent that any damages directly resulted or were caused by such failure.

(b)           The Indemnifying Party shall have thirty (30) days after receipt of the Claim Notice to undertake, conduct and control, through counsel of its own choosing, and at its expense, the settlement or defense thereof, and the Indemnified Party shall cooperate with the Indemnifying Party in connection therewith; provided, that (A) the Indemnifying Party shall permit the Indemnified Party to participate in such settlement or defense through counsel chosen by the Indemnified Party (subject to the consent of the Indemnifying Party, which consent shall not be unreasonably withheld), provided that the fees and expenses of such counsel shall not be borne by the Indemnifying Party, and (Bi) the Indemnifying Party shall not settle any Indemnifiable Claim without the Indemnified Party’s consent. So long as the Indemnifying Party is vigorously contesting any such Indemnifiable Claim in good faith, the Indemnified Party shall not pay or settle such claim without the Indemnifying Party’s consent, which consent shall not be unreasonably withheld.

(c)           If the Indemnifying Party  does  not  notify the Indemnified Party within thirty (30) days after receipt of the Claim Notice that it elects to undertake the defense of the Indemnifiable Claim described therein, the Indemnified Party shall have the right to contest, settle, or compromise the Indemnifiable Claim in the exercise of its reasonable discretion; provided, that the Indemnified Party shall notify the Indemnifying Party of any compromise or settlement of any such Indemnifiable Claim.

10.3         Indemnification Non-Exclusive. The foregoing indemnification provisions are in addition to, and not in derogation of, any statutory, equitable, or common-law remedy any party may have for breach of representation, warranty, covenant or agreement.

ARTICLE XI.

11.1         Agreement Termination. Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated and the Merger contemplated hereby may be abandoned at any time prior to the Closing Date, only as follows:

(a)           by mutual written agreement of PSMH and Fidelity;

 

(b)           by PSMH or UCMC (if neither PSMH nor UCMC is then in material breach of its obligations under this Agreement) if: (i) a material default or breach shall be made by Fidelity or the Shareholders with respect to the due and timely performance of any of its or his covenants and agreements contained herein and such default is not cured within thirty (30) days; (ii) Fidelity or the Shareholders makes an amendment or supplement to any schedule hereto and such amendment or supplement reflects an Fidelity Material Adverse Effect after the date of this Agreement; (iii) an Fidelity Material Adverse Effect shall have occurred after the date of this Agreement; (iv) the Board of Directors of Fidelity withdraws its recommendation of the Merger, if given, or recommends to holders of Fidelity Common Stock the approval of any transaction other than the Merger; (v) the Shareholders fail to approve this Agreement as provided in this Agreement; or (vi) Closing shall not have occurred on or before August 31, 2011;

ARTICLE XII.

12.1         Certain Definitions.  As used herein, the following terms shall have the meanings set forth below:

“Affiliate” shall mean any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.

“Applicable Law” shall mean all Laws, to the extent applicable to any Person.

“Contract” shall mean any contract, lease, commitment or understanding, sales order, purchase order, agreement, indenture, mortgage, note, bond, instrument or license, whether written or verbal, which is intended or purports to be a binding and enforceable agreement.

 

“Fidelity Material Adverse Effect” shall mean any change or effect that is, or is reasonably likely to be, materially adverse to the business, assets and liabilities (taken together), financial condition or operations or results of operations of Fidelity and its subsidiaries, taken as a whole; provided, however, that none of the following shall be deemed (either alone or in combination) to constitute such a change or effect: (a) (i) any adverse change attributable to the announcement or pendency of the transactions contemplated by this Agreement; or (ii) any adverse change attributable to or conditions generally affecting (A) the mortgage banking or brokerage industries as a whole; (B) the United States economy or financial markets in general; or (C) any foreign economy or financial markets in any location where Fidelity has material operations or sales; (b) any act or threat of terrorism or war anywhere in the world, any armed hostilities or terrorist activities anywhere in the world, any threat or escalation of armed hostilities or terrorist activities anywhere in the world or any governmental or other response or reaction to any of the foregoing; or (c) any action by Fidelity approved or consented to in writing by PSMH.

“Governmental Authority” shall mean: (a) the government of the United States: (b) the government of any foreign country; (c) the government of any state or political subdivision of the government of the United States or the government of any foreign country; or (d) any entity, body or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Knowledge” shall mean, as it relates to PSMH, the actual knowledge of Ron Hanna, in each case upon reasonable inquiry; as it relates to UCMC, the actual knowledge of Jeffrey R Smith, in each case upon reasonable inquiry; and as it relates to Fidelity, the actual knowledge of James Pulsipher, in each case upon reasonable inquiry.

“Law” shall mean any law, statute, regulation, ordinance, rule, order, decree, judgment, consent decree, settlement agreement or governmental requirement enacted, promulgated, entered into, agreed or imposed by any Governmental Authority.

“Lien” shall mean any mortgage, lien, charge, restriction, pledge, security interest, option, lease or sublease, claim, right of any third party, easement, encroachment or encumbrance upon any of the assets or properties of any Person.

“Permit” shall mean a permit, license, registration, certificate of occupancy, approval or other authorization issued by any Governmental Authority.

“PSMH Material Adverse Effect” shall mean any change or effect that is, or is reasonably likely to be, materially adverse to the business, assets and liabilities (taken together), financial condition or operations or results of operations of PSMH or UCMC, taken as a whole; provided, however, that none of the following shall be deemed (either alone or in combination) to constitute such a change or effect: (a)(i) any adverse change attributable to the announcement or pendency of the transactions contemplated by this Agreement; or (ii) any adverse change attributable to or conditions generally affecting the United States economy or financial markets in general; (b) any act or threat of terrorism or war anywhere in the world, any armed hostilities or terrorist activities anywhere in the world, any threat or escalation of armed hostilities or terrorist activities anywhere in the world or any governmental or other response or reaction to any of the foregoing; or (c) any action by PSMH or UCMC approved or consented to in writing by Fidelity.

 

 

“SEC” shall mean the U.S. Securities and Exchange Commission.

“Shareholder Approval” shall mean the approval of the Merger, this Agreement, and the transactions contemplated hereby by the Shareholders in accordance with the Articles of Incorporation and Bylaws of Fidelity and the Colorado Act and by PSMI in accordance with the Articles of Incorporation and Bylaws of UCMC and the New Jersey Act.

12.2         Other Definitions. In addition to the terms set forth in Section 11.1 and elsewhere in this Agreement, each of the following terms is defined in the section set forth opposite such term:

Defined Term		Location
Agreement		Preamble
Articles of Exchange		§1.2
Articles of Merger		§1.2
Claim Notice		§10.2(a)
Closing		§3.1
Closing Date		§3.1
Code		Recitals
Colorado Act		Recitals
Effective Date		§1.2
Effective Time		§1.2
Employment Agreement		§6.13
Environmental Laws		§4.9
Fidelity		Preamble
Fidelity Common Stock		§2.1
Fidelity Financial Statements		§4.5
Fidelity Intellectual Property Rights		§4.13
Fidelity Material Permits		§4.11
GAAP		§5.5
Indemnifiable Claim		§10.2(a)
Indemnified Party		§10.2(a)
Indemnifying Party		§10.2(a)
Merger		Recitals
New Jersey Act		Recitals
NRS		Recitals
PSMH		Preamble
PSMH Common Stock		§2.1
PSMH Financial Statements		§5.5
PSMH Intellectual Prperty Rights		§5.13
PSMH Material Permits		§5.11
PSMH Shares		§2.1
PSMI		Preamble
SEC Reports		§5.5
Shareholders		Preamble
Surviving Corporation		§1.1
UCMC		Preamble

 

 

12.3           Expenses. Except as otherwise expressly provided herein, each party hereto shall bear its own expenses with respect to this Agreement and the transactions contemplated hereby.

12.4           Amendment. This Agreement may only be amended, modified or supplemented pursuant to a written agreement signed by each of the parties hereto.

12.5           Survival of Representations and Warranties. All covenants, representations and warranties made herein shall survive the making of this Agreement and shall continue in full force and effect for a period of one year from the Effective Time, at the end of which period no claim may be made with respect to any such covenant, representation, or warranty unless such claim shall have been asserted in writing to the indemnifying party during such period.

12.6           Press Release; Public Announcements. The parties shall not make any other public announcements in respect of this Agreement or the transactions contemplated herein without prior consultation and written approval by the other party as to the form and content thereof, which approval shall not be unreasonably withheld. Notwithstanding the foregoing, any party may make any disclosure which its counsel advises is required by applicable law or regulation, in which case the other party shall be given such reasonable advance notice as is practicable in the circumstances and the parties shall use their best efforts to cause a mutually agreeable release or announcement to be issued.

12.7           Notices. All notices, consents, waivers, requests, instructions, or other communications required or permitted hereunder shall be in writing, and shall be deemed to have been duly given if (a) delivered personally (effective upon delivery), (b) sent by a reputable, established international courier service (effective one business day after being delivered to such courier service), or (c) mailed by certified mail, return receipt requested, postage prepaid (effective three business days after being deposited in the U.S. mail), addressed as follows (or to such other address as the recipient may have furnished for such purpose pursuant to this Section):

If to Fidelity and the Shareholders:

700 Belford Avenue

Grand Junction, CO 81501

with a copy (which shall not constitute notice) to:

Mike Russell

Attorney at Law

200 Grand Avenue

Suite 600

Grand Junction, CO  81501

and:

If to PSMH and UCMC:

1112 N. Main St.

Roswell, NM  88201

Attn:  Ron Hanna, President

 

 

with a copy (which shall not constitute notice) to:

 

Ronald N. Vance

Attorney at Law

1656 Reunion Avenue

Suite 250

South Jordan, Utah  84095

or to such other individual or address as a party hereto may designate for itself by notice given as herein provided.

12.8           Waivers. The failure of a party hereto at any time or times to require performance of any provision hereof shall in no manner affect the right of such party at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty.

12.9           Interpretation. The headings preceding the text of Articles and Sections included in this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender herein shall not limit any provision of this Agreement. The use of the terms “including” or “include” shall in all cases herein mean “including, without limitation” or “include, without limitation,” respectively.

12.10         Applicable Law and Venue. This Agreement and the rights and duties of the parties hereto shall be construed and determined in accordance with the laws of the State of New Mexico (without giving effect to any choice or conflict of law provisions), and any and all actions to enforce the provisions of this Agreement shall be brought in a court of competent jurisdiction in the State of New Mexico and in no other place.

12.11         Attorneys’ Fees. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties will be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled.

12.12         Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that no assignment of any rights or obligations shall be made by any party without the prior written consent of all the other parties hereto.

12.13         No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto and, to the extent provided herein, their respective directors, officers, employees, agents and representatives, and no provision of this Agreement shall be deemed to confer upon other third parties any remedy, claim, liability, reimbursement, cause of action or other right.

12.14         Further Assurances. Upon the reasonable request of the parties hereto, the other parties hereto shall, on and after the Closing Date, execute and deliver such other documents, releases, assignments and other instruments as may be required to effectuate completely the transactions contemplated by this Agreement.

12.15         Severability. If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions hereof shall remain in full force and shall not be affected thereby, and there shall be deemed substituted for such invalid, illegal or unenforceable provision a valid, legal and enforceable provision as similar as possible to the provision at issue.

 

 

12.16         Remedies Cumulative. The remedies provided in this Agreement shall be cumulative and shall not preclude the assertion or exercise of any other rights or remedies available by law, in equity or otherwise.

12.17         Entire Understanding. This Agreement sets forth the entire agreement and understanding of the parties hereto and supersedes all prior agreements, letters of intent, arrangements and understandings between the parties.

12.18         Exhibits and Schedules. Each of the exhibits, schedules, or similar attachments referenced in this Agreement is annexed hereto and is incorporated herein by this reference and expressly made a part hereof.

12.19         Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile transmissions of any signed original document, or transmission of any signed facsimile document, shall constitute delivery of an executed original. At the request of any of the parties, the parties shall confirm facsimile transmission signatures by signing and delivering an original document.