**Exhibit 10.1**

**SECURED DEBT SETTLEMENT AGREEMENT**

            THIS SECURED DEBTSETTLEMENT AGREEMENT (this "Agreement")is dated effective as of May 16, 2006 by andbetween:

1.         First Preference Mortgage Corp. ("**FPMC**") as Maker of that onecertain Real Estate Lien Note dated July 1, 2004, in the original principal sumof $825,000.00, executed and delivered by First Preference Mortgage Corp., aTexas corporation, and made payable to the order of Citizens State Bank andassigned to Bluebonnet Investments, Ltd. by Assignment dated December 29, 2004("Note 1");

2.         Bluebonnet Investments, Ltd. ("**BIL**") as Lender under the$350,000.00 Promissory Note dated December 13, 2005 ("Note 2") by FirstFinancial Corporation ("FFC");

3.         JRPM Investments, Ltd. ("**JRPM**") as Lender under the $350,000.00Promissory Note dated December 13, 2005 ("Note 3") by FFC; and as Lenderunder the $500,000.00 Promissory Note dated December 13, 2005 ("Note 4")by FFC; and

4.          **FFC** as maker of Notes 2, 3 and 4.

RECITALS

            WHEREAS, Note 1 issecured by liens and security interest in and to certain real propertydescribed in that certain Deed of Trust dated July 1, 2004 executed by FirstPreference Mortgage Corp., a Texas corporation, as Grantor, to Harold E.Allison, III, as trustee and Citizens State Bank as Beneficiary, recorded July1, 2004 as Document No. 2004025985 of the Official Public Records ofMcLennan County, Texas describing certain land located in McLennan County,Texas generally known as a 78.4710 acre tract of land located onHighway 77 in McLennan County, Texas as described in said Deed of Trust("Hwy 77 Property").

            WHEREAS, Note 2, Note3 and Note 4 are also secured by liens and security interests in and to saidHwy 77 Property.

            WHEREAS, Note 3 and Note 4 are secured by:

1.         Liens and security interests in and to certain real property, personalproperty and fixtures at the site owned by Shelter Resources, Inc. ("SRI"),which is a subsidiary of FFC, located at 826 Columbus, Waco, in McLennanCounty, Texas [RE Asset #4201] and located at 823 Washington, Waco, in McLennanCounty, Texas [RE Asset #4301] ("SRI Properties"), under the aDeed of Trust and Security Agreement in favor of FFC;

 

 

----

 

2.         Liens and security interests in and to certain real property, personalproperty and fixtures at the sites owned by First Preference Properties, Inc.("FPPI") located at 901 Columbus, Waco, in McLennan County, Texas [RE Asset#61101] and located at 325 North 9th Street, Waco, in McLennan County Texas[RE Asset #61201] ("FPPI Properties"), under a Deed of Trustand Security Agreement;

3.          Security interests in the stock of SRI, ("SRI Stock");

4.          Security interests in the stock of First Advisory Services, Inc. ("FASStock");

5.          Security interests in the stock of FPMC ("FPMC Stock"); and

6.          Security interests in the stock of FPPI ("FPPIStock").

            WHEREAS, FFC and itssubsidiary FPMC have heretofore entered into certain loan arrangements with theLenders identified herein and has pledged as security for said loans certaincollateral.  In order to provide for the payment of the secured debtoutstanding by FFC and FPMC, the parties have agreed to certain transactions inan effort to resolve the outstanding debt in exchange for certain collateralpledged to secure said debt in lieu of foreclosure and collection proceedings.

            THEREFORE, for thepremises set forth herein and other valuable consideration, FFC, FPMC, BIL andJRPM agree as follows and that all agreements and transactions provided for andagreed to below are effective as of the date of this Agreement, except asotherwise expressly provided below.

AGREEMENTS

            1.         FPMC hasagreed to pay on the date hereof the principal sum of $21,373.17 and accruedinterest on the first lien note (Note 1) in the amount of $1,768.42 for a totalpayment of $23,141.59 and BIL acknowledges receipt thereof.

            2.         FFC agreesto pay interest current through the date of this Agreement on the remainingnotes as follows and BIL and JRPM acknowledge receipt of such payments:

a.         On the note payable to BIL in the original principal sum of $350,000.00(Note 2), the total accrued interest through the date of this Agreement in theamount of $1,682.88;

 

2

----

 

b.         On the note payable to JRPM in the original principal sum of $350,000.00(Note 3), the total accrued interest through the date of this Agreement in theamount of $1,682.88;

c.         On the note payable to JRPM in the original principal sum of $500,000.00(Note 4), the total accrued interest through the date of this Agreement in theamount of $2,404.11.

            3.         Theparties agree that, after the foregoing payments, the note balances as of thedate of this Agreement on the notes are as follows:

            

| Notes                   |  | Original Note	Amount |  | Balance As	Of 5/16/2006 |  | Payable By |
|-------------------------|--|----------------------|--|-------------------------|--|------------|
| Note  1 Payable to BIL  |  | $825,000.00          |  | $613,000.00             |  | FPMC       |
| Note  2 Payable to BIL  |  | $350,000.00          |  | $350,000.00             |  | FFC        |
| Note  3 Payable to JRPM |  | $350,000.00          |  | $350,000.00             |  | FFC        |
| Note  4 Payable to JRPM |  | $500,000.00          |  | $500,000.00             |  | FFC        |

            4.         JRPMagrees to transfer and assign to BIL its rights with respect to principal inthe amount of $287,000.00 under Note 3 and cancel and release its third and fourthliens on the Highway 77 Property owned by FPMC as hereinabove described for thetotal consideration of $287,000.00 to be paid by the transfer of 195,500 sharesof ISMC stock at $0.61 per share for a total value of $119,255.00 and thebalance in cash in the amount of $167,745.00.   JRPM and FFC have agreed to thecancellation of all conversion rights under Note 3.

            5.         JRPMagrees to pay off the balance due on a note due to BIL dated August 31,2005 in the original principal amount of $180,000.00, being the renewal andextension of a note dated August 1, 2002 in the original principal amount of$225,000.00 by the payment of the outstanding principal balance of $167,689.81and the payment of $27.57 in interest for the total payment of $167,717.38.

            6.         BIL agreesto release its Second Lien Deed of Trust on the 800 Washington property arisingout of the August 1, 2002 transaction described in a Note and Deed of Trust ofeven date therewith as renewed and extended on August 31, 2005.

            7.         BIL agreesto accept full ownership interest of the Highway 77 Property by Deed from FirstPreference Mortgage Corporation in full payment and satisfaction of all debtsto BIL, including but not limited to those liens acquired from JRPM for theagreed value of $1,250,000.00, in full payment of Note 1 ($613,000.00) and Note2 ($350,000.00) and that portion of Note 3 held by BIL ($287,000.00).  BIL willrelease its First, Second and Third Liens on the Highway 77 Property.

3

----

            8.         JRPMagrees to accept the capital stock of FPI and SRI and provide a total credit of$213,000.00 on notes owed to JRPM as follows:

| Notes                   |  | 5/16/2006	Balance |  | BIL	Credit    |  | Adj	Bal     |  | FPPI or	SRI CR |  | Unpaid	Bal. Due |
|-------------------------|--|-------------------|--|---------------|--|-------------|--|----------------|--|-----------------|
| Note  Payable 	to  JRPM |  | $350,000.00       |  | ($287,000.00) |  | $63,000.00  |  | ($63,000.00)   |  | -0-             |
| Note  Payable 	to  JRPM |  | $500,000.00       |  | -0-           |  | $500,000.00 |  | ($150,000.00)  |  | $350,000.00     |
|                         |  | $850,000.00       |  | ($287,000.00) |  | $563,000.00 |  | ($213,000.00)  |  | $350,000.00     |

            9.         JRPMagrees to convert the remaining unpaid principal balance of $350,000.00 ofNote 4 in the original principal sum of $500,000.00 by converting theremaining $350,000.00 balance of said note to common stock of FFC as it isentitled to do under the terms of the Note Purchase Agreement dated December12, 2005; provided, however, that said conversion shall occur on or afterNovember 15, 2006 and in any event, on or before December 31, 2006.  Inaccordance with the conversion rights contained in said Note PurchaseAgreement, the $350,000.00 unpaid principal balance of said note shall beconvertible at the price of $1.5315249 per share or 228,530 shares of stock.  

            10.       Further Assurances.  The parties hereto will execute,acknowledge and deliver in recordable form and upon demand of the other, anyother instruments or agreements reasonably required in order to carry out theprovisions of this Agreement or to effectuate the intent and purposes hereof.

            11.       No Third Party Beneficiaries; No Modification. The partieshereto do not intend the benefits of this Agreement to inure to any otherPerson. This Agreement may not be changed or terminated orally, but only by anagreement in writing signed by the partyagainst whom enforcement of any change is sought. 

            12.       Successors and Assigns.  This Agreement shall bind allsuccessors and permitted assigns of each Lenderand shall inure to the benefit of all successors and permitted assigns of each Lender.

            13.       Counterpart Originals.  This Agreement may be executed incounterpart originals, each of which shall constitute an original, and all ofwhich together shall constitute one and the same agreement.

            14.       Legal Construction.  In all respects, including, withoutlimitation, matters of construction and performance of this Agreement and theobligations arising hereunder, this Agreementshall be governed by, and construed in accordance with, the internal laws ofthe State of Texas applicable to agreements intended to be whollyperformed within the State of Texas.

            15.       No Waiver; Remedies.  No failure on the part of each party to exercise, and no delay inexercising, any right hereunder shall operate as a waiver thereof, nor shallany single or partial exercise of any right hereunder preclude any other orfurther exercise thereof or the exercise of any other right. The remediesherein provided are cumulative and not exclusive of any remedies provided bylaw.

            16.       No Joint Venture.  Nothing provided herein is intended tocreate a joint venture, partnership, tenancy-in-common or joint tenancyrelationship between or among any of theparties hereto.

 

4

----

            17.       Captions.  The captions in this Agreement are insertedonly as a matter of convenience and for reference, and are not and shall not bedeemed to be a part hereof.

            18.       Conflicts.  In theevent of any conflict, ambiguity or inconsistency between the terms andconditions of this Agreement and the terms and conditions of any otherDocuments, the terms and conditions of this Agreement shall control.

            19.       Severability.  In theevent that any provision of this Agreement or the application hereof toany party hereto shall, to any extent, be invalid or unenforceable under anyapplicable statute, regulation, or rule of law, then such provision shall bedeemed inoperative to the extent that it may conflict therewith and shall bedeemed modified to conform to such statute, regulation or rule of law, and theremainder of this Agreement and the application of any such invalid orunenforceable provisions to parties, jurisdictions or circumstances other thanto whom or to which it is held invalid or unenforceable, shall not be affectedthereby nor shall same affect the validity or enforceability of any otherprovision of this Agreement.

 

[SEE ATTACHEDSIGNATURE PAGE]

----

IN WITNESS WHEREOF, the parties have executedthis Agreement as of the date and year first set forth above.

 

"FFC"

FIRST FINANCIAL CORPORATION

 

By:       /s/David W. Mann, Pres.         

 

Name:David W. Mann                        

 

Title:  President

 

 

 

 

"FPMC"

FIRSTPREFERENCE MORTGAGE CORP. 

 

By:/s/David W. Mann, Chairman of the Bd. 

 

Name: David W. Mann  

 

Title:  President

 

 

 

"JRPM"

JRPMINVESTMENTS, LTD.

 

 

By:      /s/ David W. Mann, G.P.                      

            DavidW. Mann, General Partner 

 

                        and

 

By: RAM Investors, Inc., General Partner

 

 

By:       /s/David W. Mann, Pres.                     

            DavidW. Mann, President

 

 

 

6

----

 

 

"BIL"

BLUEBONNETINVESTMENTS, LTD. 

 

By: Bluebonnet Enterprises, Inc., 

ItsGeneral Partner

 

 

By:       /s/  David W. Mann, Pres.                   

            DavidW. Mann, President

 

 

 

 

7