TRIPARTY AGREEMENT



Exhibit
10.7


 


 TRIPARTY AGREEMENT




            THIS TRIPARTY AGREEMENT (this "Agreement") is effective
as of the 16th day of August, 2002, by and between COLONIAL BANK, an Alabama
banking corporation ("Colonial"), CITIZENS STATE BANK, a Texas state
banking corporation, ("Citizens"), and FIRST PREFERENCE MORTGAGE
CORP.,  a Texas corporation ("First
Preference").






R E C I T A L S :






            A.        First
Preference is a mortgage lender which regularly makes residential mortgage
loans, secured by liens on residential real property (each, a "Loan,"
and collectively, the "Loans"). 
The loans are regularly sold by First Preference to investors approved
by Colonial.




            B.         Pursuant
to a Mortgage Warehouse Loan and Security Agreement (the "Colonial/First
Preference" Agreement) between Colonial and First Preference dated as of
December 28, 2000, Colonial makes loans to First Preference secured by certain
of the Loans (each, a "Financed Loan," and collectively the "Financed
Loans").  Under the Colonial/First
Preference Agreement, Colonial holds these Loans and the loan documentation and
forwards these Loans to the investors to which First Preference sells the
Loans.  Upon completion of each such
sale to investors, the proceeds thereof (the "Sales Proceeds") are
remitted by the investors to Colonial, on behalf of First Preference, and
Colonial disburses the Sale Proceeds in accordance with the Colonial/First
Preference Agreement.




            C.        Pursuant
to (i) a Loan Participation Agreement ( the "Participation
Agreement") dated as of the 16th day of August, 2002, by and between
Citizens and First Preference, Citizens has entered into a purchase/sale
agreement with First Preference under which Citizens, at its option, may
purchase from time to time participation interests in certain of the Loans
originated by First Preference,  as
evidenced by mortgage notes and secured by liens and mortgages (or deeds of
trust) on residential real property, investor commitments, and other mortgage
loan documentation relating to such Loans, all as more particularly described
in the Participation Agreement.   (Each
such Loan in which Citizens purchases a participation interest from First
Preference is a "Participated Loan," and, collectively, the
"Participated Loans," for purposes hereof.) 
It is anticipated that all of the proceeds from the sale by First
Preference to Citizens of the participation interest in each Participated Loan
will be used by First Preference to fund the loan.




            D.        The
Participation Agreement contemplates that upon the sale of the Participated
Loans by First Preference to investors, First Preference will repurchase from
Citizens the participation interest owned by Citizens in the Participated
Loan.  In connection with each such sale
to investors, a portion of the Sales Proceeds remitted by the investor to
Colonial, on behalf of First Preference, will be paid to Citizens in connection
with the repurchase by First Preference of Citizens' participation interest
under the Participation Agreement.




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            E.          As a
condition to the periodic purchase by Citizens of a participation interest in
such  Loans and the use of the proceeds
thereof to fund the Loan, Citizens desires that Colonial agree to act as
collateral agent on behalf of Citizens with regard to the Participated Loans,
and, upon receipt by Colonial of the Sales Proceeds from the investors, to
transmit to Citizens a portion of the Sales Proceeds received by Colonial equal
to the purchase price paid by Citizens to First Preference for the
participation interest (the "Purchase Price"), and Colonial has agreed to do
so, all  upon the terms and conditions
set forth in this Agreement.






            NOW, THEREFORE, in consideration of the premises
and the mutual covenants and promises herein contained, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:






            1.         Recitals.  The recitals to this Agreement set forth
above are true and correct and hereby are made a part of this Agreement as
though fully set forth herein.




            2.         Purchase
of Participation Interests.  On a
periodic basis, First Preference will offer to sell to Citizens and Citizens
may purchase from First Preference a participation interest ("Participation
Interest") in certain of the Loans identified by First Preference pursuant to
the Participation Agreement between Citizens and First Preference.  Citizens will fund its purchase of the
Participation Interest by wire transferring the Purchase Price directly to
Colonial (in accordance with Colonial's wire instructions set forth in Exhibit
A attached hereto) for the benefit of First Preference, which will in turn
transfer the money for the funding of the Loan.  Any such funds transferred by Citizens to Colonial shall be held
by Colonial in trust for the benefit of Citizens until disbursed for the
funding of the Loan.  These funds shall
not be considered to be general assets of Colonial.  At the time of each such purchase of a Participation Interest by Citizens
from First Preference in the Loans, First Preference and Citizens shall provide
to Colonial a notice that the Participation Interest will be purchased by
Citizens and the Purchase Price and the percentage of the Participation
Interest, and the Loan shall become a Participated Loan.  Upon receipt of such notice, Colonial shall
mark its records to reflect that Citizens holds the Participation Interest
therein.




            3.         Colonial
to Continue to Hold and Ship Participated Loans; Collateral Agent.  Notwithstanding the purchase by Citizens of
a Participation Interest from First Preference in any of the Loans, Colonial
shall continue to hold all Participated Loans in accordance with the terms and
conditions of the Colonial/First Preference Agreement and this Agreement and,
upon direction of First Preference, to ship such Participated Loans to the
appropriate investor for purchase under a bailee letter in the form
contemplated by the Colonial/First Preference Agreement.  Each such bailee letter to an investor shall
continue to instruct such investor to forward payment to Colonial for the Participated
Loans as set forth in such bailee letter. Subject to the foregoing provisions
of this Section 3 which provide that Colonial shall continue to act solely upon
First Preference's direction with regard to such Participated Loans, Colonial
agrees to hold such Participated Loans as collateral agent on behalf of
Citizens and to make payment to Citizens of the Purchase Price applicable
thereto in accordance with the provisions of Section 4 hereof.




 




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            4.         Payment
of Proceeds from Sale of Participated Loans; Delivery of Returned Participated
Loans.




            (a)        Colonial
agrees that the Purchase Price relating to such Participated Loans shall be
paid to Citizens from the Sales Proceeds, free and clear of any rights,
interests, claims, or demands whatsoever of Colonial, including without
limitation, any rights of set off, recoupment, and the like, all of which
rights, interests, claims, and demands, if any, are hereby waived and released
by Colonial.  Colonial agrees that it
will not claim or have any interest in any Participated Loans, including any
security interest therein or assignment thereof, and hereby waives and releases
any such interest.  To the extent, but
only to the extent, that Colonial receives any such Sales Proceeds, Colonial
agrees promptly to remit the portion of such Sales Proceeds equal to the
Purchase Price to Citizens no later than the next business day following
receipt thereof by Colonial by wire transfer in accordance with Citizens's wire
instructions set forth in Exhibit B hereto. 
First Preference hereby authorizes and directs Colonial to remit to
Citizens the portion of such Sales Proceeds equal to the Purchase Price as
provided above in this Section 4, and waives any right First Preference may
have to direct or receive notice of such remittances.




            (b)        In the
event that an investor does not timely make payment for any Participated Loan
transmitted by Colonial to such investor under the bailee letter referenced in
Section 3 hereof, First Preference and/or Citizens shall have sole
responsibility to pursue collection of such Sales Proceeds from such investor
and, upon collection of same, to remit the portion of such Sales Proceeds equal
to the Purchase Price to Citizens, and Colonial not have any responsibility to
First Preference or to Citizens to pursue collection thereof and shall not have
liability to First Preference or to Citizens in the event that such Sales
Proceeds are uncollected.  Further, in
the event that an investor fails to purchase any Participated Loan transmitted
by Colonial to such investor under the bailee letter referenced in Section 3
hereof and returns to Colonial the documentation relating to such Participated
Loan, Colonial, upon receipt of same, shall deliver such documentation to First
Preference or, upon prior joint written direction of Citizens, to Citizens and,
upon such delivery, shall have no further liability or obligation to First
Preference or Citizens with respect to such Participated Loan.




            (c)        Any Sales
Proceeds received by Colonial from investors shall be held by Colonial in trust
for the benefit of the parties entitled to such Sales Proceeds, including First
Preference and Citizens.  These Sales
Proceeds shall not be considered to be general assets of Colonial.




 




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            5.         Fees
to Colonial.  Colonial shall not be
entitled to any fees or payments from Citizens for acting under this
Agreement.  Any fee or payments for
Colonial's services under this Agreement shall be paid to Colonial by First
Preference.




            6.         Standard
of Care.  Colonial shall exercise
reasonable care in the custody and preservation of the Participated Loans in
its possession to the extent required by applicable statutes and in any event
shall be deemed to have exercised reasonable care if it (i) takes such action
for that purpose as First Preference or Citizens shall reasonably request in
writing (but no omission to comply with any request of First Preference or
Citizens shall of itself be deemed a failure to exercise reasonable care), or
(ii) exercises at least the same degree of care as it would exercise with
respect to a like transaction in which it alone is interested.




            7.         Limitation
on Obligations.  Colonial agrees to
use its best judgment and good faith in the performance of any duties and
responsibilities required pursuant to Sections 2, 3, and 4 of this Agreement
and shall incur no liability to First Preference or Citizens for any acts or
omissions on the part of Colonial except as may result from Colonial's gross
negligence or willful misconduct occurring in connection with the performance
of any such duties or responsibilities. 
Except for performance of its obligations as set forth in Sections 2, 3,
and 4 hereof, Colonial does not assume, and shall not have any obligation or
liability to First Preference or to Citizens with respect to, any Participated
Loan.  Colonial shall be entitled to
rely upon any notice, document, correspondence, request, or directive received
by it from First Preference or Citizens, as the case may be, which Colonial
believes to be genuine and to have been signed or presented by the proper and
duly authorized officer or representative thereof, and shall not be obligated
to inquire as to the authority or power of any person so executing or
presenting such documents or as to the truthfulness of any statements set forth
therein.  In Colonial's discharge of any
such duties and responsibilities, First Preference agrees to indemnify Colonial
in the manner and to the extent set forth in Section 8 hereof.  Colonial shall have no duties or
responsibilities to First Preference or Citizens except as expressly provided
in Sections 2, 3, and 4 of this Agreement or by law or by any other agreements
to which Colonial is a party, and Colonial shall not be obligated to recognize,
nor have any liability or responsibility to, First Preference or Citizens under
any instrument to which Colonial is not a party.  In case any Participated Loan held by Colonial shall be attached
or levied upon under any order of court, or if the delivery of any such
Participated Loan shall be stayed or enjoined by any order of the court,
Colonial is expressly authorized to obey and comply with all writs, orders,
judgments, or decrees so entered or issued, and Colonial shall not be liable to
First Preference or Citizens or to any other person by reason of such compliance.




            8.         First
Preference Indemnity.  First
Preference hereby agrees, on demand, to indemnify and hold harmless Colonial
(and its directors, officers, agents, and employees) to the fullest extent
permitted by law, from and against any and all claims, losses, liabilities,
actions, suits, judgments, demands, costs, and expenses (including reasonable
attorneys' fees and expenses) of whatever nature incurred by Colonial (or its
directors, officers, agents, and employees) hereunder or in connection
herewith, unless such claims, losses, liabilities, actions, suit, judgment,
demands, costs, or expenses shall arise directly from willful misconduct or
gross negligence on the part of Colonial or its directors, officers, agents, or
employees.  Attorneys' fees and expenses
incurred in enforcing, or an appeal from, a judgment pursuant hereto shall be
recoverable separately from and in addition to any other amount included in
such judgment, and this clause is intended to be severable from the other
provisions of this Agreement and to survive and not be merged into such
judgment.  The covenants contained in
this Section 8 shall survive the termination of this Agreement.




 




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            9.         Other
Documents.  Colonial, First
Preference, and Citizens will, upon the request of another party hereto,
execute and deliver to the other parties such further documents and statements
and do or cause to be done such further acts or things as the other party may
reasonably require to carry out the transactions contemplated by this Agreement
or to vest or confirm any right granted in this Agreement.




            10.       Successors
and Assigns.  This Agreement is
binding on the parties hereto and their respective successors and
permitted.  This Agreement is not
assignable by any party hereto.




            11.       Termination.  This Agreement may be terminated by any
party hereto upon thirty (30) days written notice to the other parties.  No termination shall affect any obligations
of the parties with regard to any Participated Loans in existence at the time
of such termination.




            12.       Complete
Agreement.  This Agreement,
including all Exhibits hereto, constitutes the full understanding among the
parties hereto with respect to the subject matter of this Agreement, and no
statements, written or oral, made prior to or at the signing of this Agreement
shall vary or modify the terms of this Agreement.  No amendment, modification, or release from any provision of this
Agreement shall be effective unless in writing and executed by or on behalf of
the party or parties to be charged therewith and shall be effective only in the
specific instance and for the specific purpose for which given.




            13.       Enforceability
of Agreement.  This Agreement shall
continue to be enforceable as among the parties hereto in the event of any
bankruptcy, insolvency, reorganization, arrangement, adjustment, winding up,
liquidation, dissolution, composition, or other similar relief granted or
occurring with respect to any party hereto, and shall be applicable to any and
all distributions or applications of proceeds of any of the Participated Loans
made by any receiver, trustee, debtor-in-possession, or other person.




            14.       Amendments.  No amendment, modification, termination, or
waiver of any provision of this Agreement, or consent to any departure by any
party therefrom, shall in any event be effective unless the same shall be in
writing and signed by each of the parties hereto, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.




            15.       Counterparts.  This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.




 




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            16.       Fees
and Costs.  In connection with any
litigation brought to enforce or interpret this Agreement, the prevailing party
shall be entitled to recover all costs therein incurred, including reasonable
attorneys' fees, whether incurred at trial, on rehearing, retrial, or appeal,
or in any bankruptcy proceeding.




            17.       Governing
Law.  This Agreement shall be
governed by the laws of the State of Florida.




                        IN WITNESS WHEREOF, each of the
parties hereto has caused this Agreement to be executed, sealed, and delivered,
as applicable, by their duly authorized officers on the day and year first
above written.




                                                                         





  	FIRST
PREFERENCE:
	  
	FIRST
PREFERENCE MORTGAGE CORP.
	  
	By:
/s/ David W. Mann
	Name:
David W. Mann
	Title:
President









STATE OF TEXAS




COUNTY OF MCLENNAN






            This instrument was acknowledged before me on the ______
day of August, 2003, by Annie Laurie Miller, Executive Vice President of
First Preference Mortgage Corp., a Texas corporation, on behalf of said
corporation.








                                                                         



  	__________________________________
	Notary
Public in and for
	the
State of Texas


















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  	          COLONIAL:
	  
	          COLONIAL
BANK
	          By:
_____________________________
	         Name:_______________________ 

      Title:
_______________________















STATE OF FLORIDA




COUNTY OF ORANGE




            On this ____ day of August, 20021, personally appeared
_______________________, as ___________________________ of COLONIAL BANK, an
Alabama banking corporation, and before me executed the attached Triparty
Agreement, dated as of August ____, 2002, on behalf of the corporation.




            IN WITNESS WHEREOF, I have hereunto set my hand and
official seal in the County and State last aforesaid.






                                     







  	Signature of Notary Public-State
of Florida
	  
	Print Name: Notary Public, State
of Florida 
	Personally Known 
	Produced Identification
	Type of Identification
	                           (NOTARIAL
SEAL)











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  	 CITIZENS:
	  
	CITIZENS
STATE BANK
	  
	By:
_______________________________
	Name:
Harold E. Allison, III
	Title:
Senior Vice President











 








STATE OF TEXAS 




COUNTY OF TYLER 






            This instrument was acknowledged before me on the ______
day of August, 2003, by Harold E. Allison, III, Senior Vice President of
Citizens State Bank, a Texas banking 
corporation, on behalf of said corporation.








                                                                    



  	 __________________________________
	Notary
Public in and for
	the
State of Texas

















 

 



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EXHIBIT A




Colonial's Wire Instructions






Colonial BHAM

201 East Pine Street

Orlando, FL 32801

ABA #0620-0131-9

for credit to the Investor
Funding Account of

Citizens State Bank of
Woodville


Account No.




 



 

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EXHIBIT B




Citizens' Wire Instructions










 

 

 

 

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