FINANCIAL INDUSTRIES CORP
EXHIBIT 10.8 - TEDROW EMPLOYMENT AGREEMENT
<DOCUMENT>
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<FILENAME>tedrow.txt
<DESCRIPTION>EXHIBIT 10.8 - TEDROW EMPLOYMENT AGREEMENT
<TEXT>
                                  EXHIBIT 10.8

                              EMPLOYMENT AGREEMENT

THIS  EMPLOYMENT  AGREEMENT (the  "Agreement")  dated as of the 4th day of June,
2003 ("Agreement Date") by and between Financial Industries Corporation, a Texas
company ("Company"),  and William P. Tedrow ("Executive"),  a resident of Texas.
In  consideration of the mutual  agreements  contained  herein,  the Company and
Executive agree as follows:

                                   ARTICLE I.

                                   DEFINITIONS

The terms set forth  below have the  following  meanings  (such  meanings  to be
applicable  to both the  singular  and  plural  forms,  except  where  otherwise
expressly indicated):

     1.1  "Accrued  Base  Salary"  means the amount of  executive's  Base Salary
          which is accrued but not yet paid as of the Date of termination.

     1.2  "Affiliate" means any Person that directly or indirectly controls,  is
          controlled  by, is under common  control  with,  the Company.  For the
          purposes of this definition, the term "control" when used with respect
          to any Person means (a) the power to direct or cause the  direction of
          management or policies of such Person, directly or indirectly, whether
          through the ownership of voting securities,  by contract or otherwise,
          or (b) for  purposes  of  Section  1.11 and  Article  VII,  the  power
          substantially  to influence  the  direction  of  strategic  management
          policies  of such  Person,  and  provided  the Company has a direct or
          indirect  commercial  relationship with such Person, all as determined
          by the Compensation Committee of the Board or its successor. As of the
          date hereof,  the  Affiliates of the Company  include all companies as
          listed on  Exhibit  21.1 of the  Company s Annual  Report on Form 10-K
          filed on April 18, 2003 with the  Securities  and Exchange  Commission
          and FIC Financial Services, Inc., a Nevada corporation.  The term also
          includes any company  which  becomes an Affiliate of the Company on or
          after the date of this Agreement.

     1.3  "Accrued  Annual  Bonus" means the  amount any Annual Bonus earned but
          not yet paid with  respect to any Fiscal  Year ended prior to the date
          of termination.

     1.4  "Agreement"  -- as  defined  in the  introductory  paragraph  of  this
          Agreement.

     1.5  "Agreement Date" -- as defined in the  introductory  paragraph of this
          Agreement.

     1.6  "Anniversary Date" means any annual anniversary of the Agreement Date.

     1.7  "Base Salary" -- as described in Section 4.1.

     1.8  "Beneficiary" -- as defined in Section 9.2.

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     1.9  "Board"  means the Board of  Directors  of Company  unless the context
          indicates otherwise.


     1.10 "Cause" means any of the following:

          (a)  Executive's  conviction  of,  plea of guilty  to, or plea of nolo
               contendere to a felony (other than a traffic-related felony) that
               involves fraud, dishonesty or moral turpitude;

          (b)  any willful action by Executive  resulting in criminal,  or civil
               liability by a court of competent  jurisdiction  under Federal or
               State workplace  harassment or discrimination  laws; or violation
               of internal Company workplace harassment, discrimination or other
               workplace  policy  under  which  such  action  could be and could
               reasonably be expected to be grounds for immediate termination of
               a member of Senior  Management  (other than mere  failure to meet
               performance goals, objectives,  or measures),  including, but not
               limited to, any finding  against the Company by the EEOC or other
               governmental  entity under Federal or State workplace  harassment
               or  discrimination  laws  wherein  Executive  was the party which
               caused the adverse  finding  against the Company;  or any willful
               action by executive,  wherein after thorough investigation by the
               company,  it is  determined  by the company  that  executive  has
               violated internal company workplace  harassment or discrimination
               policies under which such action could  reasonably be expected to
               be grounds for termination.

          (c)  Executive's  willful  and  intentional  material  breach  of this
               Agreement,

          (d)  Executive's  habitual  neglect of duties,  (other than  resulting
               from  Executive's  incapacity due to physical or mental  illness)
               which results in substantial  financial  detriment to the Company
               or any Affiliate;

          (e)  Executive's  personally engaging in such conduct as results or is
               likely to result in (i)  substantial  damage to the reputation of
               the Company or any Affiliate, as a respectable business, and (ii)
               substantial  financial  detriment  (whether  immediately  or over
               time) to the Company or any Affiliate,

          (f)  Executive's  willful and intentional  material  misconduct in the
               performance  or  gross   negligence  of  his  duties  under  this
               Agreement that results in substantial  financial detriment to the
               Company or any Affiliate,

          (g)  Executive's  intentional  failure  (including a failure caused by
               gross negligence) to cause the Company or any Affiliate to comply
               with applicable law and  regulations  material to the business of
               the Company which results in substantial  financial  detriment to
               the Company or any Affiliate,

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          (h)  Executive's  willful  or  intentional  failure  to  comply in all
               material  respects with a specific written direction of the Chief
               Executive   Officer  of  the  Company  that  is  consistent  with
               reasonable  business  practice  and not  inconsistent  with  this
               agreement and  executive's  responsibility  hereunder;  provided,
               however,  that no such written  direction shall require Executive
               to perform any illegal act.


          (i)  the failure of FICFS to produce a positive Net  Financial  Impact
               for any full fiscal year which begins on or after two years after
               the  effective  date  of this  Agreement.  For  purposes  of this
               clause,  the  determination  of "Net  Financial  Impact"  for any
               period shall include:

               (a)  the Net Income of FICFS, and

               (b)  the   Enterprise   Value   Contribution   of  FICFS  to  FIC
                    (determined  in  accordance   with  the  valuation   process
                    described  in  Exhibit A hereto)  and the GAAP net income of
                    any Insurance  Company owned by FIC as of the effective date
                    of  this  Agreement,  to  the  extent  attributable  to  any
                    insurance  or annuity  policy  production,  either as direct
                    written premium or assumed reinsurance premium, whether such
                    produced  insurance  or annuity  premium  resulted  directly
                    through a New Era  Company,  through  a  contact  made by an
                    employee or agent of a New Era Company;  through a marketing
                    relationship  developed through a New Era Company (including
                    the   relationship   with  Equita  Financial  and  Insurance
                    services of Texas,  Inc.), or income derived from efforts of
                    any employee of a New Era Company,.


                    For purposes of clauses (c),(d), and( e), (f) and (g) of the
                    preceding sentence,  Cause shall not mean the mere existence
                    or occurrence of any one or more of the  following,  and for
                    purposes  of clause  (e) of the  preceding  sentence,  Cause
                    shall not mean the mere existence or occurrence of item (iv)
                    below:

                    (i)  bad judgment,

                    (ii) negligence other than  Executive's  habitual neglect of
                         duties or gross negligence;

                    (iii)any act or  omission  that  Executive  believed in good
                         faith  to have  been  in the  interest  of the  Company
                         (without   intent  of  Executive  to  gain   therefrom,
                         directly  or  indirectly,  a profit to which he was not
                         legally entitled), or

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                    (iv) failure  to  meet  performance  goals,   objectives  or
                         measures;

                    provided,  that for purposes of clauses (c),  (d), (e), (f),
                    (g) and (h), any act or omission  that is curable  shall not
                    constitute Cause unless the Company gives Executive  written
                    notice of such act or omission that  specifically  refers to
                    this  Section  and,  within  10 days  after  such  notice is
                    received by Executive,  Executive  fails to cure such act or
                    omission.

     1.11 "Code" means the Internal  Revenue Code of 1986,  as amended from time
          to time.

     1.12 "Company" means Financial Industries Corporation, a Texas company.

     1.13 "Competitive  Business"  means as of any date any  corporation  (other
          than the Company or any  Affiliate  of the Company) or other Person or
          (and any branch,  office or  operation  thereof)  that  engages in, or
          proposes to engage in:

          (a)  (i) the delivery of any consulting  service,  investment  advice,
               administrative  service to any  educational  institution or city,
               county,  or state  governmental  entity or (ii) the  marketing or
               sale of any form of annuity,  insurance or securities products of
               any kind that either FIC or any  affiliate  as of such date does,
               or has under active  consideration  a proposal to, market or sell
               (any such form of  annuity,  insurance  or  security,  a "Company
               Product") to any educational institution or city, county or state
               governmental entity.

          (b)  any other  business that as of such date is a direct and material
               competitor  of the Company and its  Affiliates to the extent that
               prior to the Date of  Termination  the Company or its  Affiliates
               engaged  at any time  within 12  months  in or had  under  active
               consideration a proposal to engage in such competitive business;

and that is located  anywhere  in the  United  States  where the  Company or its
Affiliates is then engaged in, or has under active  consideration  a proposal to
engage in, any of such activities.

     1.14 "Current CEO" means Eugene E. Payne, the Chairman, President and Chief
          Executive Officer of the Company as of the Agreement Date.

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     1.15 "Date of  Termination"  means the date of the receipt of the Notice of
          Termination by Executive (if such Notice of Termination is given by or
          on behalf of Company) or by Company (if such Notice of  Termination is
          given by  Executive),  or any later date,  not more than 15 days after
          the giving of such Notice of Termination, specified in such notice, as
          of which Executive's  employment with the Company shall be terminated;
          provided, however, that:

          (i)  if Executive's  employment is terminated by reason of death,  the
               Date of Termination shall be the date of Executive's death; and

          (ii) if Executive's  employment is terminated by reason of Disability,
               the Date of Termination  shall be the 30th day after  Executive's
               receipt of the physician's  certification of Disability,  unless,
               before such date,  Executive  shall have  resumed  the  full-time
               performance of Executive's duties; and

          (iii)if Executive  terminates his employment  without Good Reason, the
               Date of  Termination  shall be the 30th day after  the  giving of
               such Notice of Termination; and

          (iv) if no Notice of Termination is provided,  the Date of Termination
               shall be the last  date on which  Executive  is  employed  by the
               Company.

     1.16 .  "Disability" means a mental or  physical  condition  which  renders
          Executive  unable  or  incompetent  to  carry  out  the  material  job
          responsibilities  which Executive held or the material duties to which
          executive  was  assigned at the time the  disability  occurred,  which
          exists for (i) at least 4 consecutive months or (ii) at least 6 months
          in any twelve month period.  The determination as to whether Executive
          is disabled, as defined herein, shall be made by an independent Doctor
          of  Medicine  ("Physician")  selected  by  the  Company.   Before  the
          Executive can be declared to be disabled, such Physician shall provide
          a copy of the  diagnosis of  disability  to the  Executive.  Executive
          shall  have the option to submit a  diagnosis  by a  physician  of his
          choosing  within  (30)  days  of  receiving  the  diagnosis  from  the
          Physician  selected by the  Company.  If the  diagnosis  provided  the
          Physician  selected  by  Executive  finds  that the  Executive  is not
          disabled, the Company and the Executive or the Executive's agent shall
          designate  a mutually  agreeable  third  physician  and obtain a third
          diagnosis within (30) days of receipt of the diagnosis from the second
          physician  selected  by  the  Executive.  The  diagnosis  of  the  two
          physicians in agreement shall then prevail.  The cost of obtaining the
          first and third diagnosis shall be paid by the Company.

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     1.17 "Employment Period" -- as defined in Section 3.1.

     1.18 "Executive"  -- as  defined  in the  introductory  paragraph  of  this
          Agreement.

     1.19 FICFS means FIC Financial  Services,  Inc., a Nevada corporation which
          is, as of the date of this Agreement,  is a wholly-owned subsidiary of
          the Company.


     1.20 "Fiscal  Year" means the  calendar  year,  which is the period used in
          connection  with  the  preparation  of  the   consolidated   financial
          statements of Company.

     1.21 "Good Reason" means the occurrence of any one of the following  events
          unless Executive  specifically agrees in writing that such event shall
          not be Good Reason:

          (a)  any material  breach of the  Agreement by the Company,  including
               any of the following, each of which shall be deemed material:

               (i)  any   material   adverse   change  in  the  title,   status,
                    responsibilities,  authorities  or  perquisites of Executive
                    which is initiated by any person other than the Current CEO;

               (ii) causing or  requiring  Executive  to report to anyone  other
                    than the Chief Executive Officer of the Company;

               (iii)assignment  to Executive of duties  materially  inconsistent
                    with his  position and duties  described in this  Agreement,
                    including   status,    offices,   or   responsibilities   as
                    contemplated  under  Section  2.1or any other  action by the
                    Company which results in an adverse change in such position,
                    status, offices, titles or responsibilities; or

               (iv) any reduction or failure to pay  Executive's  Base Salary in
                    violation of Section 4.1.;

          provided,  that no act or  omission  described  in clauses (i) through
          (iv) of this Section shall  constitute  Good Reason  unless  Executive
          gives Company  written  notice of such act or omission and the Company
          fails to cure such act or omission  within  30-days after  delivery of
          such notice  (except that  Executive  shall not be required to provide
          such notice in case of  intentional  acts or omissions by a Company or
          more than once in cases of repeated acts or omissions); or

          (b)  relocation of the Company's  executive offices or Executive's own
               office  location to a location that is outside the Austin,  Texas
               metropolitan area;

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In the event of an occurrence or omission  constituting  Good Reason,  Executive
shall not be entitled to terminate his  employment for Good Reason unless within
3  months  after  Executive  first  obtains  actual  knowledge  of such an event
constituting  Good Reason,  he notifies Company of the events  constituting such
Good Reason and of his  intention to terminate  employment  for Good Reason by a
Notice of Termination.

     1.22 "New Era Company" means FICFS and any company which is a subsidiary of
          FICFS.

     1.23 "Net Income of FICFS" means the net income of FICFS,  as determined by
          the  Company  in  accordance   with  generally   accepted   accounting
          principles. In determining Net Income, expenses of FICFS shall include
          expenses,   including,  but  not  limited  to,  overhead  and  general
          corporate  expenses of the Company and its  Affiliates,  allocated  to
          FICFS in accordance with expense allocation agreements, procedures and
          policies established by the Company, and its Affiliates.  Such expense
          allocation  agreements  shall  be  consistent  with  the  requirements
          imposed upon the life insurance  company  subsidiaries  of the Company
          under the insurance holding company laws and regulations of the states
          in which such subsidiaries are authorized to conduct business. In lieu
          of  participating   with  the  Company  and  its  Affiliates  in  such
          allocation   agreements  with  respect  to  the  following   "optional
          services", Executive may elect to obtain such "optional services" from
          vendors  other than the Company if such  services are  available  from
          outside  vendors  at a  lesser  cost or are of a higher  quality.  For
          purposes of this Agreement, "optional services" means, and are limited
          to,  general  office   equipment  and  supplies,   personal   computer
          equipment,  printing and general  sales support  functions.  Executive
          acknowledges  that, in no event,  shall  "optional  services"  include
          general corporate functions,  including,  but not limited to, internal
          audit,  accounting,  executive or legal.  To the extent that Executive
          elects to obtain  "optional  services"  from  sources  other  than the
          Company,  the full cost of such  services  shall be  allocated  to the
          expenses of FICFS.

     1.24 "Notice  of  Termination"  means a written  notice of  termination  of
          Executive's  employment  given in  accordance  with Section 7.1 by the
          Company, or by Executive, as the case may be, which sets forth (a) the
          specific  termination  provision in this Agreement  relied upon by the
          party giving such notice,  (b) in reasonable detail the specific facts
          and  circumstances  claimed to provide a basis for such Termination of
          Employment,  and (c) if the Date of Termination is other than the date
          of receipt of such Notice of Termination, the Date of Termination.

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   1.25 "Person" means any individual, sole proprietorship, partnership, joint
          venture,    limited   liability   company,    trust,    unincorporated
          organization,  corporation,  institution,  public benefit corporation,
          entity  or  government  instrumentality,  division,  agency,  body  or
          department.

     1.26 "Pro-rata  Annual  Bonus" means the product of (i) the Maximum  Annual
          Bonus  multiplied  by (ii) a fraction  of which the  numerator  is the
          number of days which have elapsed in such Fiscal Year through the Date
          of Termination and the denominator of which is 365.

     1.27 "Restricted  Stock" means the shares of common stock, par value $0.01,
          of FICFS  provided to Executive in accordance  with the  provisions of
          Article VI.

     1.28 "Senior  Management"  means Vice  Presidents or the General Counsel of
          the Company.

     1.29 "Taxes" means the incremental  federal,  state, and local income taxes
          payable by Executive with respect to any applicable item of income.

     1.30 "Termination  For Good Reason"  means a  Termination  of Employment by
          Executive for a Good Reason.

     1.31 "Termination  of  Employment"  means a  termination  by the Company or
          Executive  of  Executive's   employment   with  the  Company  and  its
          Affiliates.

     1.32 "Termination  Without  Cause" means a Termination of Employment by the
          Company  for any  reason  other  than  Cause or  Executive's  death or
          Disability.

     1.33 "IRR  Requirements"  shall mean the  internal  rate of return,  net of
          taxes,  established  by the Company or its  subsidiaries  from time to
          time, in its sole discretion;  the parties hereto acknowledge that, as
          of the date of this  Agreement,  the target  internal rate of return ,
          using industry average expense assumptions, so established is 11%.

                                     - 8 -


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                                   ARTICLE II.

                                     DUTIES

     2.1  Duties.   During  the  Employment  Period  (as  hereinafter  defined),
          Executive  agrees to serve as (i) the President of FICFS and (ii) Vice
          President  of the Company and will,  subject to the  direction  of the
          Company's Chief Executive Officer, perform duties of substantially the
          same  character  as those  ordinarily  performed by persons in similar
          positions.  Such duties  shall  include  participation  with the Chief
          Financial Officer and the Controller in the general supervision of the
          investment activities of FIC and FICFS, consistent with the investment
          guidelines approved from time to time by the board of directors of the
          Company.  Executive will report to the Chief Executive  Officer of the
          Company.  Executive shall devote his best efforts and skill, attention
          and energies to the business and affairs of the Company on a full time
          basis in order to  discharge  the duties of Executive  hereunder.

     2.2  Directives.  During the Employment Period,  Executive shall follow the
          lawful  directives of the CEO which are consistent  with stated policy
          of the  Board of  Directors  of the  Company.  During  the  Employment
          Period,  Executive shall perform the duties assigned to him, and shall
          devote his full business  time,  attention  and effort,  excluding any
          periods of disability,  vacation,  or sick leave to which Executive is
          entitled, to the affairs of the Company and shall use his best efforts
          to promote the  interests  of the  Company.  The  Executive  shall not
          engage  in any other  business  or  commercial  activity  for  profit,
          including  service on the board of directors of any corporation  other
          than the Company,  without the prior  written  consent of the CEO. The
          preceding sentence is not intended to prevent Executive from acting as
          a passive investor in any business which does not involve the personal
          efforts of Executive.  The Executive and the Company acknowledges that
          his business time is not limited to a fixed number of hours per week.


                                  ARTICLE III.

                                EMPLOYMENT PERIOD

     3.1  Employment Period.  Subject to the termination  provisions hereinafter
          provided, the term of Executive's employment under this Agreement (the
          "Employment  Period")  shall  begin on the  Agreement  Date and end on
          March 31, 2009.  The  employment  of Executive by Company shall not be
          terminated other than in accordance with Article VII.

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                                   ARTICLE IV.

                                  COMPENSATION

     4.1  Salary.  Executive  shall be paid in  accordance  with normal  payroll
          practices (but not less frequently than monthly) an annual salary at a
          rate of  $250,000  per year  ("Base  Salary").  During the  Employment
          Period,  the Base  Salary  shall be reviewed  periodically  and may be
          increased  from  time to time as  shall  be  determined  by the  Chief
          Executive  Officer and subsequently  ratified by the Board.  After any
          such increase,  the term "Base Salary" shall  thereafter  refer to the
          increased  amount.  Any  increase  in Base  Salary  shall not limit or
          reduce any other  obligation  of the Company to  Executive  under this
          Agreement.  Base Salary  shall not be reduced at any time  without the
          express written consent of Executive.

     4.2  Annual Bonus.  Executive will be eligible for an annual bonus,  not to
          exceed  $200,000 per  year.  The amount of  any annual  bonus shall be
          established  by the CEO on the following  basis:  (i) one-third of the
          amount of the annual  bonus will be based  upon  performance  criteria
          established by the CEO with respect to the operating results of FICFS,
          (ii)  one-third of the amount of the annual bonus will be  established
          by the CEO with  respect  to the  operating  results  of FIC and (iii)
          one-third of the amount of the annual bonus will be  determined at the
          sole discretion of the CEO.

     4.3  Restricted  Stock.  On  the  Effective  Date,  FICFS  shall  award  to
          Executive 60 shares of the common  stock,  par value $0.01,  of FICFS,
          subject to the terms and  provisions  of  Article  VI hereof.  This 60
          shares  shall  evidence a then  current 6%  ownership  interest in the
          common stock of FICFS.  Thereafter,  any adjustments in the issued and
          outstanding  capital  stock of FICFS shall require  Executive's  prior
          written  consent,   but  in  no  event  shall  Executive's   ownership
          percentage be less than 6%.  Executive  acknowledges  that all amounts
          provided  by FIC to FICFS  shall be in the form of loans,  the initial
          loan being for $7.5  million at an interest  rate of 5.4%,  and future
          loans on such terms and  conditions  as agreed to by the  Company  and
          Executive at the time each such loan is provided,  and that the amount
          of such loans shall be taken into account in any valuation of FICFS to
          be made in  accordance  with the  provisions  of this  Agreement.

     4.4  Savings  and  Retirement   Plans.   Executive  shall  be  eligible  to
          participate  during the Employment Period in any Company's savings and
          retirement plans, practices, policies and programs, in accordance with
          the terms thereof,  at the highest available level, if any, applicable
          from time to time to  members  of  Senior  Management,  including  any
          supplemental executive retirement plan.

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     4.5  Stock Options.  Executive  shall be granted options to purchase common
          stock  of  FIC,  in  accordance  with  the  provisions  of the  Option
          Agreement dated June 4, 2003 between the Company and Executive.


                                    ARTICLE V
                                 OTHER BENEFITS

     5.1  Welfare  Benefits.  During the  Employment  Period,  Executive and his
          family shall be eligible to participate  in at the highest level,  and
          shall receive all benefits under, any Company's welfare benefit plans,
          practices,  policies and programs provided or made generally available
          by the  Company  to  Senior  Management  (including  medical,  dental,
          disability,  salary continuance,  employee life, group life, dependent
          life,  accidental  death  and  travel  accident  insurance  plans  and
          programs),  in  accordance  with their terms as in effect from time to
          time.

     5.2  Fringe  Benefits.  During the Employment  Period,  Executive  shall be
          entitled  to  the  following   fringe  benefits  (a)  those  generally
          appplicable to Senior  Management in accordance with their terms as in
          effect  from  time  to  time;  (b) a  monthly  discretionary  business
          development  allowance,  not to exceed  $2,000,  (c) a moving  expense
          allowance of $17,500 payable on the Effective Date.

     5.3  Success Fee. For Executive's efforts in bringing the transaction known
          as "New Era"  marketing to FIC,  Executive  will be paid by FIC,  upon
          execution  of this  agreement,  a lump  sum of  $400,000.  This Fee is
          ordinary income to the Executive and is subject to appropriate payroll
          taxes.

     5.34 Vacation. During the Employment Period, Executive shall be entitled to
          paid vacation time under the plans, practices,  policies, and programs
          generally  applicable  to members of Senior  Management  in accordance
          with their terms as in effect from time to time.

     5.45 Expenses.  Executive  shall be promptly  reimbursed for all actual and
          reasonable  employment-related  business expenses he incurs during the
          Employment   Period  in  accordance  with  any  Company's   practices,
          policies,  and  procedures  generally  applicable to members of Senior
          Management  in  accordance  with their terms as in effect from time to
          time,  including  the  timely  submission  of  required  receipts  and
          accountings.  Notwithstanding  the  foregoing,  no  expense  shall  be
          reimbursed more than once.

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                                   ARTICLE VI.
                                RESTRICTED STOCK

     6.1  Issuance of Restricted  Stock. On the Effective Date,  Executive shall
          be issued a stock  certificate  in respect of the shares of Restricted
          Stock specified in Section 4.3. Such  certificate  shall be registered
          in the name of Executive, and shall bear the following legend:

          The shares of stock  represented  by this  certificate  are subject to
          restrictions  and  limitations  on  transferability  contained  in the
          Employment  Agreement dated June 4, 2003 between the registered  owner
          and Financial Industries Corporation, a Texas company

The stock  certificate shall be held in the custody of the Company and Executive
shall deliver a stock power, endorsed in blank, relating to such shares.

     6.2  Rights,  Restrictions and Conditions  Applicable to Restricted  Stock.
          Executive shall not be permitted to sell,  transfer,  pledge or assign
          shares of Restricted Stock. Any purported transfer in violation of any
          provision of this Agreement shall be void and  ineffectual,  shall not
          operate to transfer any interest or title in the purported transferee.

          Prior to Repurchase  of the  Restricted  Stock in accordance  with the
          provisions of Section 6.3,  Executive  shall generally have the rights
          of a stockholder of FICFS,  including the right to vote the shares and
          to receive any  dividends  thereon  which are declared by the Board of
          directors of FICFS.

          Until the first Repurchase Event to occur:

          (a)  if there is any  change in the  number of  outstanding  shares of
               capital   stock  (common  or  preferred)  of  FICFS  through  the
               declaration  of stock  dividends,  stock splits or the like,  the
               number of shares of Restricted  Stock granted to Executive  shall
               be automatically  adjusted.  If there is any change in the number
               of outstanding  shares of total stock of FICFS through any change
               in  the  capital  account  of  FICFS,   the  Company  shall  make
               appropriate  adjustments  and/or  modifications  to the number of
               shares of  Restricted  Stock  awarded to  Executive so as to keep
               Executives ownership interest in the common stock of FICFS at 6%.

          (b)  the Company will provide commercially  reasonable efforts support
               to FICFS  in  order  to  assist  Executive  in  implementing  the
               business plan of FICFS approved by the Company.  These reasonable
               efforts  will  include , to the extent  consistent  with  pricing
               assumptions  and expense levels designed to attain the reasonable
               profit  objectives of the Company and its Affiliates,  developing
               products using industry  average expense  levels;  development of
               necessary   reinsurance   accounting   support;   development  of
               sufficient policy processing capability;  maintaining an adequate

                                     - 12 -


<PAGE>


               capital and surplus base in Investors Life  Insurance  Company of
               North  America or Family  Life  Insurance  Company to support the
               insurance  policy  and  annuity  production  of FICFS;  provided,
               however,  that the obligations of the Company hereunder shall not
               include the  development,  marketing or sale of any  insurance or
               annuity  product  which  does  not  meet  the  IRR   Requirements
               established  by the Company or its  subsidiaries  with respect to
               such insurance or annuity product;

          (c)  the  Company  will cause FICFS to prepare  financial  statements,
               based on generally accepted accounting principles,  on a periodic
               basis. The initial  financial  statements shall be for the period
               ended December 31, 2003;  thereafter,  such financial  statements
               shall be prepared on a semi-annual basis.

     6.3  Repurchase  of  Restricted  Stock.

          (a)  On the first date that a  Repurchase  Event  occurs,  the Company
               shall  purchase  all the  shares of  Restricted  Stock  issued to
               Executive  from the Executive  and  Executive  shall sell all the
               shares of Restricted  Stock to the Company in accordance with the
               terms and conditions of this Section (the Repurchase). Repurchase
               Event shall mean any of the following:

               (i)  the   termination  of  this  Agreement  by  the  Company  in
                    accordance   with  Section  7.1  or  by  the   Executive  in
                    accordance with Section 7.1;

               (ii) the termination of this Agreement in accordance with Section
                    7.2;

               (iii)the   termination  of  this  Agreement  in  accordance  with
                    Section 7.3;

               (iv) December 31, 2008,


          (b)  Unless  the  Executive  elects a later  date as  provided  in the
               following  sentence,  the  Repurchase  shall  occur  on the  date
               determined by the Company, but not later than ninety (90) days of
               the  occurrence  of the  first  Repurchase  Event to  occur  (the
               "Repurchase  Date").  Executive  may  elect to defer  the date of
               determination  of the  Repurchase  Price  for a  period  of up to
               twenty-four months following the Repurchase Event, in which case,
               the  Repurchase  Date  shall be not later than  ninety  (90) days
               following the date on which the Repurchase Price is so determined

                                     - 13 -


<PAGE>


          (c)  If the Repurchase occurs pursuant to a Repurchase Event described
               in Section 6.3 (a)(ii),  (iii) or (iv) above, then the Repurchase
               will be calculated in accordance  with the valuation  process set
               forth in  Exhibit A (the  Repurchase  Price ). If the  Repurchase
               occurs  pursuant to a Repurchase  Event  described in Section 6.3
               (a)(i)  above,  then the  Repurchase  Price  will be ten  dollars
               ($10);

          (d)  If the  amount to be paid to  Executive  in  accordance  with the
               provisions  of this  Section 6.3 exceeds $5 million,  the Company
               may, in lieu of paying such excess in cash,  deliver to Executive
               a  subordinated  note  of  the  Company,  such  note  to be for a
               ten-year  term,  with  payments of  principal  and  interest on a
               semi-annual  basis,  and bearing interest at the then- prevailing
               rate for ten-year U.S. Treasury notes, plus 2.5%;

          (e)  The purchase price for the Repurchase will be made by the Company
               no later than ninety (90) days following the  Repurchase  Date in
               cash or other  immediately  available funds (or, if applicable in
               accordance  with the provisions of clause c, above, , in cash and
               notes) to a bank account  designated  in writing by the Executive
               to the Company.  In the event that the Executive fails to provide
               such bank  account  information  to the Company five (5) business
               days prior to the date that such  payment is due, the Company may
               deliver the Repurchase  Price to the Executive in the same manner
               that it delivered the last payment  required  pursuant to Section
               4.1 above.

      6.4 Premium Reporting.

     For  the  period  ending  December  31,  2003,  and  on a  quarterly  basis
     thereafter,  the Company will provide  Executive  with an accounting of all
     premiums which qualify for inclusion in the determination of the Enterprise
     Value  Contribution  to FIC, as set forth in Exhibit A,  hereto.  Following
     each such  reporting  period,  Executive  may,  within 30 days,  notify the
     accounting department and the CEO of FIC, in writing, if Executive does not
     concur with the premium  accounting set forth in such report.  If Executive
     does  not  so  notify  FIC  that  Executive  disagrees  with  such  premium
     accounting  report,  together with an  explanation  of the reasons for such
     disagreement, then the premium accounting set forth in such report shall be
     binding on both  Executive  and the Company.  If FIC and  Executive  cannot
     resolve any disagreements  which involve a premium accounting report,  then
     the matter shall be submitted to mediation as described in 9.16.

                                    - 14 -


<PAGE>


                                  ARTICLE VII.

                              TERMINATION BENEFITS

     7.1  Termination for Cause or Other than for Good Reason, etc.

          (a)  If Company terminates  Executive's  employment with the Companies
               for Cause or Executive  terminates his employment  other than for
               Good Reason, death or Disability, the Executive shall be entitled
               to receive  immediately  after the Date of Termination a lump sum
               amount  equal to the sum of  Executive's  Accrued Base Salary and
               Executive shall not be entitled to receive any severance or other
               payment,  other than (i) any amounts Executive may be entitled to
               pursuant  to Article  VI,  hereunder  and (ii)  compensation  and
               benefits  which relate to or derive from  Executive's  employment
               with the Company on or prior to the Date of Termination and which
               are otherwise  payable in case of termination  for Cause or other
               than for Good Reason, death or Disability, as applicable.

          (b)  Executive's  employment  may be terminated  for Cause only if (i)
               Company provides  Executive (before the Date of Termination) with
               at least  twenty days  advance  written  notice and  specifies in
               detail in  writing  the  basis of a claim of Cause  and  provides
               Executive,  with or without counsel, at Executive's  election, an
               opportunity  to be heard and present  arguments  and  evidence on
               Executive's  behalf , (ii) the  Chief  Executive  Officer  of the
               Company  determines that the acts or omissions  constitute  Cause
               which  Executive  failed to cure after being given an opportunity
               to cure if  required  by Section  1.11,  and to the  effect  that
               Executive's  employment  should be terminated for Cause and (iii)
               Company  thereafter  provides  Executive a Notice of  Termination
               which  specifies  in  detail  the  basis of such  Termination  of
               Employment for Cause.

     7.2  Termination  for  Death  or  Disability.  If,  before  the  end of the
          Employment Period,  Executive's employment terminates due to his death
          or  Disability,  Executive or his  Beneficiaries,  as the case may be,
          shall  be   entitled  to  receive   immediately   after  the  Date  of
          Termination,  a  lump  sum  amount  which  is  equal  to  the  sum  of
          Executive's  Accrued Base Salary,  Accrued Annual Bonus,  unreimbursed
          expenses and any amounts  which  Executive may be entitled to pursuant
          to Article VI, hereunder.

                                     - 15 -


<PAGE>


     7.3  Termination  Without  Cause  or for  Good  Reason.  In the  event of a
          Termination  Without Cause or a Termination for Good Reason (in either
          case  occurring  during the  Employment  Period),  Executive  shall be
          entitled to receive the following:


          a)   promptly  after the date of  termination,  (but in no event later
               than ten business days after the date of  termination) a lump sum
               amount equal to the sum of (i) the unpaid amount on the remaining
               portion of Executive's  Accrued Base Salary for the year in which
               the termination  occurs (measured from the date of termination to
               the Anniversary  Date);  plus (ii) the Pro-rata Annual Bonus that
               was  potentially  earnable  for  the  Fiscal  Year in  which  the
               termination occurred; plus any reimbursable expenses.

          b)   promptly  after the date of  termination,  (but in no event later
               than ten business days after the date of  termination) a lump sum
               amount  equal  the sum of (i) the Base  Salary  and the  Pro-rata
               Annual  Bonus for the Fiscal  Year during  which the  termination
               occurs,  multiplied  by (ii) the number of full Fiscal Years from
               the January 1st next following the last day of the Fiscal Year in
               which such termination  occurs to December 31, 2006 (but not less
               than two years);

          (c)  the  benefits  specified  in Section 5.1 and Section 5.2 to which
               Executive  is  entitled  as of the date of  termination,  for the
               greater of (i) the number of months remaining in the initial term
               of the agreement or (ii) twenty-four months following the date of
               termination.

               Notwithstanding  anything  herein to the  contrary,  the benefits
               provided in Section 7.3 shall be provided  only upon  Executive's
               execution of a release and waiver as described in Section 7.5

                                     - 16 -


<PAGE>


     7.4  Other Rights.  This Agreement  shall not prevent or limit  Executive's
          continuing or future participation in any benefit, bonus, incentive or
          other  plan,  program or policy  provided by the Company and for which
          Executive may qualify,  and shall not impair the  Company's  rights to
          amend or terminate any benefit, bonus, incentive or other plan program
          or policy;  provided  however that no such  amendment  or  termination
          shall treat Executive less favorably than other Senior  Management and
          Executive's benefits,  bonus and incentives in the aggregate shall not
          be reduced.  Amounts which are vested  benefits or which  Executive is
          otherwise  entitled to receive  under any plan,  program or policy and
          any other  payment or benefit  required by law at or after the Date of
          Termination shall be payable in accordance with such plan,  program or
          policy  or  applicable  law  execept  as  expressly  modified  by this
          Agreement.

     7.5  Waiver and Release.  Notwithstanding anything here in to the contrary,
          upon any Termination of Employment (other than due to death)

          (a)  the Executive shall execute a release and waiver in form mutually
               agreed by  Executive  and the Company  (which  agreement  neither
               party shall  unreasonably  withhold) which releases,  waives, and
               forever  discharges  the  Company,  its  Affiliates,   and  their
               respective   subsidiaries,   affiliates,   employees,   officers,
               shareholders,  members, partners,  directors,  agents, attorneys,
               predecessors,  successors  and assigns,  from and against any and
               all  claims,  liabilities,  demands,  causes  of  action,  costs,
               expenses,  attorneys' fees, damages and obligations of every kind
               and  nature in law,  equity,  or  otherwise,  known and  unknown,
               suspected and unsuspected,  disclosed and undisclosed,  including
               but not limited to any and all such  claims and demands  directly
               or  indirectly  arising out of or in any way  connected  with the
               Executive's  employment  with and  services  as a director of the
               Company  and  its  Affiliates;   claims  or  demands  related  to
               compensation or other amounts under any compensatory arrangement,
               stock,  stock options,  or any other  ownership  interests in the
               Company or any Affiliate,  vacation pay, fringe benefits, expense
               reimbursements,   severance  benefits,   or  any  other  form  of
               compensation or equity;  claims  pursuant to any federal,  state,
               local law, statute of cause of action including,  but not limited
               to, the federal Civil Rights Act of 1964, as amended; the federal
               Age  Discrimination  in Employment  Act of 1967, as amended;  the
               federal  Americans  with  Disabilities  Act of  1990;  tort  law,
               contract law;  wrongful  discharge,  discrimination;  defamation;
               harassment;  or emotional  distress;  provided  that  Executive's
               waiver and release  shall not relieve the  Companies  from any of
               the following obligations, to the extent they are to be performed
               after the date of the release and waiver:  (i) payment of amounts
               due under  Sections 7.1, 7.2 or 7.3, as  applicable  and (ii) any

                                     - 17 -


<PAGE>


               obligations  under  the.  second  sentence  of Section  7.4;  and
               provided  further that (x) neither  party shall release the other
               from his or its obligations under Article VIII of this agreement,
               to the extent such obligations are to be performed after the Date
               of  Termination,  and (y) Executive  shall not be precluded  from
               defending  against  Cause Claims (as defined in Section  7.5(b));
               and

          (b)  the Company  shall  execute a release and waiver in form mutually
               agreed by  Executive  and the Company  (which  agreement  neither
               party shall  unreasonably  withhold) which releases,  waives, and
               forever    discharges    the   Executive   and   his   executors,
               administrators,  successors and assigns, from and against any and
               all  claims,  liabilities,  demands,  causes  of  action,  costs,
               expenses,  attorneys' fees, damages and obligations of every kind
               and  nature in law,  equity,  or  otherwise,  known and  unknown,
               suspected and unsuspected,  disclosed and undisclosed,  including
               but not limited to any and all such  claims and demands  directly
               or  indirectly  arising out of or in any way  connected  with the
               Executive's  employment  with or  service  as a  director  of the
               Company  and  its  Affiliates,  but  excluding  any  such  claims
               liabilities,   demands,   causes  of  action,  costs,   expenses,
               attorneys' fees, damages or obligations  arising out of or in any
               way connected  with events,  acts or conduct giving rise to or in
               any way connected with Executive's  Termination of Employment for
               Cause ("Cause Claims"), provided, however, that (i) neither party
               shall release the other from his or its obligations under Article
               VIII of this agreement,  to the extent such obligations are to be
               performed after the Date of Termination, and (ii) Executive shall
               not be precluded from defending against Cause Claims.

          (c)  Executive  hereby agrees that the execution of this  Agreement is
               adequate  consideration for the execution of such a release,  and
               hereby acknowledges that the Company would not have executed this
               Agreement had Executive not agreed to execute such a release

                                     - 18 -


<PAGE>


                                  ARTICLE VIII.

                              RESTRICTIVE COVENANTS

     8.1  Non-Competition.  During  the  period  that  Executive  is  an  active
          employee of the Company and for a period of:

               (i)  five (5) years  thereafter if the  termination of employment
                    is pursuant to Section 7.1 or the  Disability  provisions of
                    Section 7.2, and

               (ii) two years  thereafter  if the  termination  of employment is
                    pursuant to Section 7.3

               (the Non-competition Period), Executive will not:

          (a)  engage or participate in, become employed by, serve as a director
               of,  or  render  advisory  or  consulting  or other  services  in
               connection with any competitive business;

          (b)  directly or indirectly,  for himself or on behalf of another, (i)
               solicit any  customers of the Company or its  Affiliates  for the
               benefit of any business  directly or  indirectly  in  competition
               with the  business  of the  Company  or its  Affiliates,  or (ii)
               request, advise or induce any person who is a customer, employee,
               contractor, vendor, or lessor of the Company or its Affiliates to
               withdraw,  curtail,  or cancel,  or engage in any other  activity
               that could adversely  affect,  the  relationship  such person has
               with the Company or its  Affiliates.(b)  directly or  indirectly,
               for himself or on behalf of another, (i) solicit any customers of
               the Company or its  Affiliates  for the  benefit of any  business
               directly or  indirectly in  competition  with the business of the
               Company or its Affiliates,  or (ii) request, advise or induce any
               person who is a customer, employee, contractor, vendor, or lessor
               of the Company or its Affiliates to withdraw, curtail, or cancel,
               or engage in any other activity that could adversely affect,  the
               relationship such person has with the Company or its Affiliates.

         (c)  directly  or  indirectly,  for  himself or on behalf of  another,
               solicit  for   employment  or   engagement   as  an   independent
               contractor,  or for any other similar purpose, any person who was
               in the six-month period preceding the solicitation,  or is at the
               time of the solicitation,  an employee or independent  contractor
               of the Company or its Affiliates.

                                     - 19 -


<PAGE>


     8.2  Confidentiality. The Company agrees to disclose to Executive from time
          to time Confidential  Information which may be necessary for Executive
          to perform  under this  Agreement.  Executive  agrees that he will not
          directly or indirectly,  acting alone or in  conjunction  with others,
          disclose  to  any  person,   firm  or  corporation  any   Confidential
          Information.  Confidential  Information shall include all confidential
          or proprietary  information  of the Company,  its Affiliates or FICFS,
          including,  without  limitation,  all  marketing  techniques,  pricing
          information,  business  plans,  ideas  and  opportunities,   financial
          statements   and   projections,   specialized   customer   information
          concerning unique or novel marketing  habits,  any special products or
          services  that the  Company,  its  Affiliates  or FICFS  may  offer or
          provide to its  customers  or its agent  force form time to time,  all
          past or  present  customer  lists and  contacts  of the  Company,  its
          Affiliates  or FICFS  (regardless  of whether  obtained  by or through
          Executive's efforts,  directly or indirectly,  or handled by Executive
          for the Company,  its  Affiliates or FICFS ), all trade,  technical or
          technological   secrets,  any  details  of  organization  or  business
          affairs,  any processes,  services,  compensation and other employment
          practices,  research,  pricing practices,  price lists and procedures,
          purchasing,   accounting,   production,   operations,    organization,
          finances, any other information,  method,  technique or system, or any
          other confidential or proprietary information relating to the business
          of  the  Company,   its  affiliates  or  FICFS.   Notwithstanding  the
          foregoing, Confidential Information shall not be deemed to include any
          information which (i) is or becomes generally  available to the public
          or known by a knowledgeable person in the industry (except as a result
          of  Executive  s  breach  of this  Agreement)  or  (ii) is or  becomes
          lawfully  available to Executive  on a  non-confidential  basis from a
          third party  without,  to the  Executive s  knowledge,  breach by that
          third  party  of  any   obligation  of  confidence   concerning   that
          Confidential  Information.  Nothing herein shall prevent disclosure of
          any Confidential Information if, upon the advice of counsel, Executive
          is compelled to disclose such Confidential Information,  provided that
          Executive provides notice of any such compelled disclosure so that the
          Company may seek a protective order or confidential treatment.

    8.3  Reasonableness of Restrictive Covenants.

          (a)  Executive  acknowledges that the covenants  contained in Sections
               8.1  and  8.2  are  reasonable  in the  scope  of the  activities
               restricted, the geographic area covered by the restrictions,  and
               the duration of the  restrictions,  and that such  covenants  are
               reasonably necessary to protect the Company's  relationships with
               its   employees,   clients  and  suppliers.   Executive   further
               acknowledges  such  covenants  are  essential  elements  of  this
               Agreement and that, but for such covenants, the Company would not
               have entered into this Agreement.

                                     - 20 -


<PAGE>


          (b)  The  Company  and  Executive   have  each  consulted  with  their
               respective  legal  counsel and have been advised  concerning  the
               reasonableness   and  propriety  of  such  covenants.   Executive
               acknowledges  that his  observance of the covenants  contained in
               Sections  8.1 and 8.2 will not deprive him of the ability to earn
               a livelihood or to support his dependents.

     8.4  Right to Injunction; Survival of Undertakings.

          (a)  In  recognition  of the  necessity  of the  limited  restrictions
               imposed by Sections 8.1 and 8.2, the parties  agree that it would
               be impossible to measure  solely in money the damages that any of
               the Company  would suffer if Executive  were to breach any of his
               obligations under such Sections.  Executive acknowledges that any
               breach of any provision of such Sections would irreparably injure
               the Company. Accordingly, Executive agrees that the Company shall
               be entitled,  in addition to any other  remedies to which Company
               may  be  entitled  under  this  Agreement  or  otherwise,  to  an
               injunction to be issued by a court of competent jurisdiction,  to
               restrain  any  actual  breach,  or  threatened  breach,  of  such
               provisions,  and Executive  hereby waives any right to assert any
               defense that any of the Company has to adequate remedy at law for
               any such breach.

          (b)  If a court determines that any of the covenants  included in this
               Article  VIII are  unenforceable  in whole or in part  because of
               such covenant's  duration or  geographical  or other scope,  such
               court may modify the duration or scope of such provision,  as the
               case may be, so as to cause such  covenant  as so  modified to be
               enforceable.

          (c)  All of the  provisions  of this  Article  VIII shall  survive any
               Termination  of Employment  without regard to (i) the reasons for
               such termination or (ii) the expiration of the Employment Period.

          (d)  Company  shall  have any  further  obligation  to pay or  provide
               severance or benefits  hereunder if a court  determines  that the
               Executive has breached any covenant in this Article VIII.

                                     - 21 -


<PAGE>


                                   ARTICLE IX.

                                  MISCELLANEOUS

     9.1  Approvals.  The Company  represents  and  warrants to Executive it has
          taken all corporate action necessary to authorize this Agreement.

     9.2  No Mitigation.  In no event shall Executive be obligated to seek other
          employment or take any other action to mitigate the amounts payable to
          Executive under any of the provisions of this Agreement, nor shall the
          amount of any payment hereunder be reduced by any compensation  earned
          as a result of Executive's employment by another employer, except that
          any  continued  welfare  benefits  provided for by Article 7 shall not
          duplicate  any benefits  that are provided to Executive and his family
          by such other employer and shall be secondary to any coverage provided
          by such other employer.  The Company s obligation to make the payments
          provided for in this Agreement and otherwise  perform the  obligations
          hereunder  shall not (unless  Executive  is  terminated  for Cause) be
          affected  by  any  circumstances,   including  set-off,  counterclaim,
          recoupment,  defense or other claim, right or action which the Company
          may have against Executive.

     9.3  Beneficiary.  If Executive  dies prior to receiving all of the amounts
          payable to him in  accordance  with the terms and  conditions  of this
          Agreement,   such   amounts   shall   be  paid   to  the   beneficiary
          ("Beneficiary")  designated  by  Executive  in writing to the  Company
          during his  lifetime,  or if no such  Beneficiary  is  designated,  to
          Executive's  estate.  Such payments shall be made in a lump sum to the
          extent so payable  and,  to the extent not  payable in a lump sum,  in
          accordance with the terms of this  Agreement.  Such payments shall not
          be less than the amount payable to Executive as if Executive had lived
          to the date of payment  and were the  payee.  Executive,  without  the
          consent  of any prior  Beneficiary,  may  change  his  designation  of
          Beneficiary  or  Beneficiaries  at any  time or  from  time to time by
          submitting to the Company a new designation in writing.

     9.4  Assignment; Successors. This Agreement is personal to Executive and he
          may not assign his duties or  obligations  under it.  Company  may not
          assign its  respective  rights and  obligations  under this  Agreement
          without the prior written consent of Executive,  except to a successor
          to the  Company's  business  which  expressly  assumes  the  Company's
          obligations hereunder in writing. This Agreement shall be binding upon
          and inure to the benefit of Executive,  his estate and  Beneficiaries,
          the Company and its  successors and permitted  assigns.  Company shall
          require any  successor  to all or  substantially  all of the  business
          and/or  assets  of  such  Company,  whether  direct  or  indirect,  by
          purchase, merger,  consolidation,  acquisition of stock, or otherwise,
          expressly  to assume and agree to perform  this  Agreement in the same
          manner and to the same  extent as such  Company  would be  required to
          perform if no such succession had taken place.

                                     - 22 -


<PAGE>


     9.5  Non-alienation.  Except as is  otherwise  expressly  provided  herein,
          benefits  payable  under  this  Agreement  shall not be subject in any
          manner  to  anticipation,   alienation,  sale,  transfer,  assignment,
          pledge,  encumbrance,  charge,  garnishment,  execution or levy of any
          kind,  either  voluntary  or  involuntary,  prior  to  actually  being
          received by Executive, and any such attempt to dispose of any right to
          benefits payable hereunder shall be void.

     9.6  Severability.  If all or any part of this  Agreement is declared to be
          unlawful or invalid,  such  unlawfulness or invalidity shall not serve
          to  invalidate  any  portion  of this  Agreement  not  declared  to be
          unlawful  or  invalid.  Any  provision  so  declared to be unlawful or
          invalid shall,  if possible,  be construed in a manner which will give
          effect to the terms of such provision to the fullest  extent  possible
          while remaining lawful and valid.

     9.7  Amendment;  Waiver.  This  Agreement  shall not be amended or modified
          except by written  instrument  executed  by Company and  Executive.  A
          waiver of any term,  covenant or condition contained in this Agreement
          shall not be deemed a waiver of any other term, covenant or condition,
          and any waiver of any default in any such term,  covenant or condition
          shall not be deemed a waiver of any later  default  thereof  or of any
          other term, covenant or condition.

     9.8  Arbitration.  Any dispute,  controversy  or claim arising out of or in
          connection with or relating to this Agreement or any breach or alleged
          breach   thereof   shall  be  submitted  to  and  settled  by  binding
          arbitration  in  Austin,  Texas,  in  accordance  with the  Commercial
          Arbitration Rules of the American  Arbitration  Association (or at any
          other place or under any other form of arbitration mutually acceptable
          to the  parties  so  involved).  Any  dispute,  controversy  or  claim
          submitted for resolution  shall be submitted to three (3) arbitrators,
          each  of  whom  is  a  nationally  recognized  executive  compensation
          specialist.  The Company  shall select one  arbitrator,  the Executive
          shall select one arbitrator and the third arbitrator shall be selected
          by the first two  arbitrators.  Any award  rendered shall be final and
          conclusive  upon the parties and a judgment  thereon may be entered in
          the highest court of a forum, state or federal,  having  jurisdiction.
          The expenses of the arbitration shall be borne equally by the parties,
          except that in the discretion of the arbitrators any award may include
          the fees and costs of a party's attorneys if the arbitrator  expressly
          determines  that the party  against  whom such  award is  entered  has
          caused  the  dispute,   controversy   or  claim  to  be  submitted  to
          arbitration in bad faith or as a dilatory tactic. No arbitration shall
          be  commenced  after the date when  institution  of legal or equitable
          proceedings  based  upon such  subject  matter  would be barred by the
          applicable  statute of  limitations.  Notwithstanding  anything to the
          contrary contained in this Section 9.8 or elsewhere in this Agreement,
          either party may bring an action in the Travis County,  Texas District
          Court,  in order to maintain the status quo ante of the  parties.  The
          "status quo ante" is defined as the last peaceable, uncontested status
          between the parties.  However,  neither the party  bringing the action
          nor the  party  defending  the  action  thereby  waives  its  right to
          arbitration of any dispute,  controversy or claim arising out of or in
          connection or relating to this Agreement.  Notwithstanding anything to
          the  contrary  contained  in this  Section  9.8 or  elsewhere  in this
          Agreement,  either  party  may seek  relief  in the  form of  specific

                                     - 23 -


<PAGE>


          performance,  injunctive or other equitable relief in order to enforce
          the  decision  of  the  arbitrator.  The  parties  agree  that  in any
          arbitration commenced pursuant to this Agreement, the parties shall be
          entitled to such discovery  (including  depositions,  requests for the
          production of documents and  interrogatories) as would be available in
          a  federal  district  court  pursuant  to Rules 26  through  37 of the
          Federal Rules of Civil Procedure. In the event that either party fails
          to comply with its discovery obligations hereunder,  the arbitrator(s)
          shall have full power and  authority  to compel  disclosure  or impose
          sanctions  to the  full  extent  of Rule  37,  Federal  Rules of Civil
          Procedure.

     9.9  Notices.  All notices  hereunder  shall be in writing and delivered by
          hand,  by  nationally-recognized   delivery  service  that  guarantees
          overnight delivery,  or by first-class,  registered or certified mail,
          return receipt requested, postage prepaid, addressed as follows:


                If to Company, to:      Financial Industries Corporation
                                        6500 River Place Blvd., Building One
                                        Austin, Texas 78730
                                        Attention: Theodore A. Fleron,
                                        Vice President and General Counsel
                                        Facsimile No.:  (512) 404-5051


                If to Executive, to:    At his most recent home address on file
                                        with the Company

          Either  party may from time to time  designate a new address by notice
          given in accordance with this Section.  Notice shall be effective when
          actually received by the addressee.

     9.10 Counterparts. This Agreement may be executed in multiple counterparts,
          each of which  shall be  deemed  to be an  original,  but all of which
          together will constitute one and the same instrument.

     9.11 Captions.  The  captions  of  this  Agreement  are  not a part  of the
          provisions hereof and shall have no force or effect.

     9.12 Entire  Agreement.  This Agreement forms the entire agreement  between
          the parties hereto with respect to the subject matter contained in the
          Agreement  and shall  supersede  all prior  agreements,  promises  and
          representations regarding employment, compensation, severance or other
          payments contingent upon termination of employment, whether in writing
          or otherwise.

     9.13 Applicable  Law. This Agreement  shall be interpreted and construed in
          accordance with the laws of the State of Texas,  without regard to its
          choice of law principles.

                                     - 24 -


<PAGE>


     9.14 Survival of Executive's  Rights.  All of Executive's rights hereunder,
          including his rights to compensation and benefits, and his obligations
          under  Article  VIII  hereof,   shall  survive  the   termination   of
          Executive's employment or the termination of this Agreement.

     9.15 Joint  and  Several  Liability.  The  obligations  of the  Company  to
          Executive under this Agreement shall be joint and several.

     9.16 Mediation. Any dispute or controversy under this Agreement which calls
          for resolution via Mediation  shall be resolved in accordance with the
          procedures  set forth in this  Section  9.16.  The party  submitting a
          claim for Mediation  shall give written notice to the other party that
          they wish to invoke the  provisions  of this Section 9.16  ("Notice of
          Mediation").  Thereafter, FIC shall select one mediator (any reference
          to mediator  herein may also  include an  arbitrator),  the  Executive
          shall select one mediator and the third  mediator shall be selected by
          the first two  mediators.  The parties shall mediate the matter within
          twenty  (20) days of receipt of the Notice of  Mediation  by the party
          receiving  such  notice.  If the parties  cannot reach an agreement at
          such  mediation,  the parties  hereby  agree that the three  mediators
          shall reach a decision regarding the dispute or controversy within ten
          (10) days of the mediation  date. Such decision by the mediators shall
          be binding on both the  Company  and  Executive.  The  expenses of the
          Mediation  shall be borne  equally by the parties,  except that in the
          discretion  of the  mediators any award may include the fees and costs
          of either party's if the mediator expressly  determines that the party
          against  whom  such  award  is  entered  has  caused  the  dispute  or
          controversy to be submitted to Mediation in bad faith or as a dilatory
          tactic.

     9.17 Key Man Life  Insurance.  The Company  reserves  the right to purchase
          "key man" life  insurance  policy on the life of  Executive,  with the
          Company named as the owner and  beneficiary  of such policy.  The face
          amount of such policy shall be  determined by the Company from time to
          time.  Executive  shall  cooperate  with the  Company  and the insurer
          selected  by  the  Company  in   connection   with  the  issuance  and
          continuation of any such policy.

                                     - 25 -


<PAGE>



     IN WITNESS  WHEREOF,  the parties have executed this  Agreement on the date
     first above written.


     FINANCIAL INDUSTRIES CORPORATION


     By:_______________________________

     Name:_____________________________

     Title:____________________________



     EXECUTIVE:  ______________________
                 WILLIAM P. TEDROW

                                     - 26 -


<PAGE>


                                    Exhibit A

     If the Repurchase of Executive's  stock in FICFS (as defined in Section 6.3
of this Agreement)  occurs  pursuant to a Repurchase  Event described in Section
6.3 (a)(ii),  (iii) or (iv), the  determination of the Repurchase Price shall be
made in accordance with the valuation process set forth in this Exhibit A.

     The  Repurchase  Price for purposes of said  Section 6.3 (a)(ii),  (iii) or
(iv) shall be six percent (6%) of A minus B plus C, where:


          "A" is the value  resulting  from the  Valuation  Criteria  applied to
          FICFS,  as  described  below,  "B"  is  $7.5  million,  which  is  the
          difference  between (a) the value of the New Era Companies acquired by
          FICFS  concurrent  with the Effective Date of this  Agreement,  as set
          forth in the fairness opinion of Advest Corporation ($14 million), and
          (b)  the  amount  loaned  by FIC to  FICFS  to  acquire  such  New Era
          Companies; provided, however, if the Repurchase Event occurs after the
          third  anniversary of the effective date of this Agreement,

          "B" shall be zero for purposes of the  determination of the Repurchase
          Price, and

          "C" is the value  resulting  from the  Enterprise  Value  Contribution
          described below.

     A. FICFS

     Valuation  Criteria.  The Company  shall appoint an  independent  valuation
expert to value the FICFS  subsidiary on a going concern basis,  using generally
accepted  evaluation  techniques  consistent  with the approach  taken by Advest
Corporation  in its  fairness  opinion  conducted  for FIC's Board of  Directors
during the second quarter of 2003. The valuation will value FICFS without taking
a  deduction  or  discount  of such value that is greater  than is in the Advest
fairness opinion for [I] any "minority interest"  considerations;  [ii] the lack
of concurrent  marketability of the enterprise;  [iii] the lack of liquidity for
any equity interests;  or [iv] any restrictions placed on the transfer of equity
interests  by  virtue  of  regulatory  change  of  control  or other  compliance
requirements.  The valuation will take into consideration  historical  financial
results,  the maturity of FICFS at the valuation  date, and to the extent deemed
appropriate,  will  adjust the "risk  premium"  from the Advest  Valuation.  The
valuation  will also consider the growth  characteristics  of the business;  its
market  position  within its target  market;  and the reputation and stature the
company has achieved in its marketplace.

                                  Exhibit A-1


<PAGE>



     If, within 15 days after Executive  receives the valuation  prepared by the
independent  valuation expert retained Company,  Executive  notifies the Company
that he is not in agreement with such valuation,  the dispute shall be submitted
to arbitration in accordance with the procedure set forth in Section 9.8 of this
Agreement;  provided,  however,  each arbitrator shall be a qualified  valuation
expert with  experience in life insurance  company  operations.  The arbitration
panel shall conduct the valuation  process in accordance with the procedures set
forth above.

     C. Enterprise Value Contribution to FIC

     Concurrent with the valuation  process of FICFS,  the Company will initiate
an actuarial  valuation of the block of insurance and annuity policies  produced
by or through FICFS  (including,  without  limitation,  production by or through
Equita Financial and Insurance  Services of Texas, Inc. (Equita) pursuant to the
agreement dated as of June 4, 2003 between Equita and the life insurance company
subsidiaries of the Company), its employees and agents. The Chief Actuary of the
Company shall conduct the valuation.  The valuation shall be conducted as if the
entire block of business was being sold.  The  valuation  will be conducted on a
"GAAP Book Value  Basis".  The  valuation  will not  include  any  deduction  or
discount of such value for [I] any "minority interest" considerations;  [ii] the
lack  of  concurrent   marketability  of  the  block  of  business;   [iii]  any
restrictions  placed on the transfer of equity interests by virtue of regulatory
change of  control  or  compliance  requirements;  or [iv] the tax  consequences
resulting  from the deemed  transfer of the book of  business.  The actuary will
take into  account a minimum of 15 years of  expected  profits  from the book of
business, and will use a discount rate appropriate for transactions of this type
but in no event greater than the ten-year U.S. Treasury Note Rate, plus 7% . The
actuary  will  be  directed  to use  expense  levels  consistent  with  industry
averages.  Once the actuary has arrived at the "Present Value of Future Profits"
for the block of business, the GAAP profits from the book of business from prior
periods will be added to arrive at a Total  Enterprise Value  Contribution  from
produced insurance.

     If, within 15 days after Executive  receives the valuation  prepared by the
Company,  Executive  notifies the Company that he is not in agreement  with such
valuation,  the dispute shall be submitted to arbitration in accordance with the
procedure set forth in Section 9.8 of this Agreement;  provided,  however,  each
arbitrator  shall be a  qualified  actuary  with  experience  in life  insurance
company operations. The arbitration panel shall conduct the valuation process in
accordance with the procedures set forth above.

                                  Exhibit A-2


</TEXT>
</DOCUMENT>
