IN THE UNITED STATES DISTRICT COURT
                        FOR THE WESTERN DISTRICT OF TEXAS
                                 AUSTIN DIVISION
FINANCIAL INDUSTRIES
CORPORATION

        Plaintiff,                                       CIVIL ACTION NO.
                                                         A03 CA 033 SS
vs.

THE ROY F. AND JOANN COLE
MITTE FOUNDATION, ROY F.
MITTE and JOANN COLE MITTE

        Defendants.


                         COMPROMISE SETTLEMENT AGREEMENT
                               AND MUTUAL RELEASE

     This Compromise  Settlement Agreement and Mutual Release (this "Agreement")
is entered  into between  Financial  Industries  Corporation  ("FIC") and Robert
Bender ("Bender"),  on the one hand, and Roy F. Mitte ("Roy"),  Joann Cole Mitte
("Joann"),  Scott Mitte ("Scott"),  Jan Mitte ("Jan"),  and The Roy F. and Joann
Cole Mitte Foundation (the  "Foundation"),  on the other hand. FIC, Bender, Roy,
Joann,  Scott,  Jan and the  Foundation are each referred to herein as a "Party"
and sometimes  collectively  referred to herein as the  "Parties";  Roy,  Joann,
Scott,  Jan, and the Foundation  are sometimes  referred to herein as the "Mitte
Parties."

                                    RECITALS

     WHEREAS,  FIC filed suit against Roy, Joann, and the Foundation in the case
styled Financial  Industries  Corporation v. Roy F. Mitte, Joann Cole Mitte, and
The  Roy F.  and Joann Cole Mitte  Foundation,  Cause No. A03 CA 033 SS,  United
States  District Court for the Western  District of Texas,  Austin Division (the
"Litigation");

     WHEREAS,  FIC's claims in the  Litigation  relate to alleged  circumstances
that are more fully described in the "Financial  Industries Corp.  Report of the
Audit  Committee  of the Board of Directors  Concerning  Payment of the Personal
Expenses of the Chairman" dated September 17, 2002, (the "Mitte Audit"), and the
Report of Internal Audit Concerning  Payment of Mitte  Foundation  Expenses (the
"Foundation  Audit").  All  references  to  the  Litigation  in  this  Agreement
expressly include and encompass the claims and alleged circumstances relating to
or arising out of the Mitte Audit and the Foundation Audit;

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<PAGE>


     WHEREAS,  FIC's  claims  in the  Litigation  also  relate  to  the  alleged
impropriety of certain donations, particularly a $1 million donation from FIC to
the  Foundation,  made in January 2002. All references to the Litigation in this
Agreement  expressly include and encompass the claims and alleged  circumstances
relating to or arising out of any such donations by FIC to the Foundation in any
and all years (the "Donations");

     WHEREAS,  Roy has  asserted  that he was  wrongfully  terminated  from  his
position  as  Chairman  of the Board and Chief  Executive  Officer of FIC.  Roy,
Joann,  and the Foundation have filed certain  counterclaims  against FIC in the
Litigation  seeking,  among other things,  damages for breach of contract of the
Employment   Agreement  (as  hereinafter  defined)  between  Roy  and  FIC.  All
references to the Litigation in this Agreement  expressly  include and encompass
the  claims  and  alleged  circumstances  relating  to or  arising  out of Roy's
Employment Agreement or the termination thereof;

     WHEREAS,  the  Mitte  Parties  presently  beneficially  own,  collectively,
1,627,610  shares(1) (the  "Mitte  Stock") of common stock,  $0.20 par value per
share, of FIC (such class of stock being referred to as "Common Stock");

     WHEREAS, on January 20, 2003, the Mitte Parties made demand that FIC call a
special meeting of shareholders;

     WHEREAS,  on February 10, 2003, FIC and the Mitte Parties agreed that FIC's
annual meeting of shareholders  would be held on May 9,  2003, in return for the
Mitte Parties' withdrawal of their demand for an earlier special meeting;

     WHEREAS,  FIC and the Mitte Parties thereafter entered into discussions and
negotiations  toward a mutually  acceptable  compromise  settlement,  and in the
course of such  discussions  agreed to delays in the outside date for the annual
meeting of shareholders, most recently to June 12, 2003;

     WHEREAS,  the Parties  desire to  compromise  and settle the  disputes  and
controversies  between  them,  including,  without  limitation,  all  claims and
counterclaims that were, or could have been, brought in the Litigation; and

     WHEREAS,  the Parties  intend that the full terms and  conditions  of their
compromise and settlement be set forth in this Agreement.

     NOW THEREFORE, in consideration of the recitals,  covenants,  releases, and
agreements contained herein, and for other good and valuable consideration,  the
receipt and  adequacy  of which is hereby  acknowledged,  the  Parties  agree as
follows:

----------------------
1 Includes  1,552,206  shares of Common  Stock owned by the  Foundation,  35,520
shares of Common Stock held for Roy's benefit in FIC's Employee Stock  Ownership
Plan,  39,820  shares of Common Stock held by Roy  personally,  and 64 shares of
Common Stock held for Scott's  benefit in FIC's Employee Stock  Ownership  Plan.
Does not include 6,600 shares of Common Stock issuable upon exercise of employee
stock options held by Roy.

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<PAGE>


     1.0 Payments.

     1.1 In  consideration  for the  cancellation  of the  Employment  Agreement
(defined in Section 4) and the  relinquishment of Roy's rights  thereunder,  and
for the general release and other  provisions set forth herein,  FIC will pay to
Roy the sum of THREE MILLION DOLLARS ($3,000,000.00) in full satisfaction of all
amounts due and allegedly due to Roy from FIC, and all amounts due and allegedly
due to FIC from Roy and the  Foundation,  with respect to claims  made,  or that
could have been made, in connection  with the  Employment  Agreement,  the Mitte
Audit, the Foundation Audit (including without limitation, the Donations and any
and all of the factual  circumstances  and matters  addressed in the  Foundation
Audit), and/or the Litigation.

     In consideration  for the Foundation  withdrawing its request for a special
meeting,  granting its proxy to FIC or its  designees  under  certain  terms and
conditions  described  herein,  and for the general release and other provisions
set forth herein,  FIC specifically  agrees that it is relinquishing  its claims
against the  Foundation  without any  monetary  payments  by the  Foundation  in
relation to the alleged expenses and reimbursement claims identified in, arising
out of,  connected with or related in any way to the Litigation,  the Foundation
Audit and/or the Donations.

     1.2 (a) Subject to the  provisions  of Section  1.2(b),  the payments to be
made by FIC  pursuant to Section  1.1 above will be made in three  equal  annual
installments of One Million  Dollars  ($1,000,000),  beginning on June 1,  2003,
with a like  payment  on June 1,  2004 and June 1,  2005,  by wire  transfer  or
cashier's  or  certified  check.  In the  event of the death of Roy prior to the
completion of FIC's payment  obligations  in this  Agreement,  FIC will continue
making payments in accordance with this Section 1.2 to Joann or, in the event of
the death of Joann prior to the completion of FIC's payment  obligations in this
Agreement,  to Roy's  estate or Joann's  estate,  as  applicable,  or his or her
devisees,  legatees,  heirs or other  appropriate  assigns  or  appointees.  The
Parties agree that FIC's failure to make a timely  payment due to Roy,  Joann or
such other persons in  accordance  with this Section 1.2,  after written  notice
delivered to FIC and the failure of FIC to cure by making such payment within 10
days  following  receipt of such notice,  will result in (i) the  immediate  and
automatic  termination  of any  obligation  of the  Mitte  Parties  set forth in
Sections 2.1 of this Agreement,  and (ii) the  acceleration of any and all FIC's
remaining payment obligations under this Agreement.

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<PAGE>


     (b) Roy  agrees to  provide to FIC,  promptly  following  the filing of his
federal  income tax return on Form 1040 for each of the years ended December 31,
2003, 2004 and 2005, a duly executed  Internal Revenue Service Form 4669 (or any
successor form) which reports as ordinary income the $1,000,000 installment paid
to Roy by FIC pursuant to Section  1.2(a) in such calendar  year (each,  a "Form
4669").  Notwithstanding  anything to the  contrary  contained  in this  Section
1.2(b),  in the event that Roy fails to provide to FIC a Form 4669 with  respect
to the year ended  December 31, 2003 prior to June 1, 2004,  FIC shall hold back
from the $1,000,000  installment payable to Roy on such date pursuant to Section
1.2(a), the amount of $270,000 until such time as Roy delivers such Form 4669 to
FIC.  In the event that Roy fails to provide to FIC a Form 4669 with  respect to
the year ended December 31, 2004 prior to June 1, 2005, FIC shall hold back from
the  $1,000,000  installment  payable  to Roy on such date  pursuant  to Section
1.2(a), the amount of $270,000 until such time as Roy delivers such Form 4669 to
FIC. With respect to the third $1,000,000  installment payable to Roy on June 1,
2005  pursuant  to Section  1.2(a),  FIC shall hold back from such  payment  the
amount of $270,000 until such time as Roy (i) delivers a duly executed Form 4669
with  respect to the year ended  December 31, 2005 or (ii) directs FIC to pay to
the Internal Revenue Service such amount as an estimated tax payment;  provided,
that in the case of clause (ii),  Roy shall still be obligated to deliver to FIC
a duly  executed  Form 4669 for the year ended  December 31, 2005 as required by
this Section 1.2(b).  In the event of the death of Roy, Roy's  obligations under
this  Section  1.2(b)  may be  fulfilled  by Joann or by the  executor  of Roy's
estate, which shall be considered performance by Roy for all purposes.

     1.3 In the event of a Change of Control  (as defined  below) of FIC,  FIC's
payment  obligations as set forth in Sections 1.1 and 1.2 above shall accelerate
and become  immediately  payable in full at the time of such  Change of Control;
provided,  however,  that FIC shall  hold back from the  amount  payable  upon a
Change of Control,  the sum of $270,000  per  $1,000,000  installment  paid as a
result of the Change of Control (it being agreed that any such amounts held back
by FIC will be paid to Roy following the delivery by Roy of a duly executed Form
4669 for the year in which the Change of Control occurred). For purposes of this
Agreement,  a  "Change  of  Control"  shall  mean the  occurrence  of any of the
following:  (i) any person, entity or group within the meaning of Sections 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
becoming  the  beneficial  owner  (within the meaning of Rule 13d-3  promulgated
under the Exchange Act) of more than fifty percent (50%) of the combined  voting
power of the then outstanding  voting  securities  entitled to vote generally in
the election of the Board of Directors of FIC; (ii) a merger,  reorganization or
consolidation  whereby FIC's equity holders existing  immediately  prior to such
merger,  reorganization or consolidation do not,  immediately after consummation
of such  reorganization,  merger or  consolidation,  own more than fifty percent
(50%) of the combined voting power of the surviving entity's  outstanding voting

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<PAGE>


securities  entitled to vote generally in the election of the Board of Directors
of the surviving entity, as determined immediately after such sale; or (iii) the
sale of all or substantially all of FIC's assets to any person, entity or group,
in a single transaction or a series of similar transactions,  within the meaning
of Sections  13(d) or 14(d) of the Exchange Act in which FIC, any  subsidiary of
FIC,  or  FIC's  equity  holders  existing   immediately   prior  to  such  sale
beneficially  own less than fifty percent (50%) of the combined  voting power of
such acquiring entity's outstanding voting securities entitled to vote generally
in the election of directors, as determined immediately after such sale.

     2.0 Proxy; Sale of Mitte Stock; Annual Shareholders Meeting.

     2.1 Subject to the  conditions in this Section  2.1(a)  through (e) and all
other terms of this Agreement, the Mitte Parties will grant to any persons named
as proxies by FIC in any proxy  statement filed with the Securities and Exchange
Commission by the  management  of FIC for the purpose of soliciting  proxies for
any annual or special meeting of shareholders of FIC their irrevocable proxy for
any and all  shares of Common  Stock  held by any of the Mitte  Parties  for the
following purposes:

(a) For so long as FIC  complies  with the  provisions  of Section  2.4 below by
providing a Purchase  Offer (as defined below) as therein  provided,  such proxy
may be voted "for" all nominees for the Board of Directors of FIC named on FIC's
proxy  statement,  "against"  any  proposal  by a person  other than FIC for the
removal of any members of the Board of Directors,  "withheld" as to any nominees
for the Board of Directors  proposed by any person other than FIC, "against" any
proposal  by any  person  other  than FIC to amend  the  bylaws or  articles  of
incorporation of FIC, and in accordance with the  recommendation of the Board of
Directors of FIC or at their  discretion  as permitted  by  applicable  law with
respect to any shareholder  proposal  submitted pursuant to Rule 14a-8 under the
Exchange Act. FIC expressly  agrees,  warrants and  represents  that it will not
propose at the 2003 annual shareholders meeting any amendment to the articles of
incorporation or bylaws of FIC that would increase the ownership threshold for a
shareholder's  ability  to call a special  meeting of  shareholders.  Such proxy
shall not extend to any other  matters  that may be proposed by FIC at an annual
or special  meeting during such Purchase Period in which the proxy is in effect,
including   without   limitation,   any  other  amendment  to  the  articles  of
incorporation  or bylaws of FIC,  any action  relative to a merger of FIC or the
sale of all or  substantially  all of the assets of FIC, or the issuance or sale
by FIC of any of its equity securities.

     (b) For so long as FIC complies with the provisions of Section 2.4 below by
providing a Purchase  Offer (as defined below) as therein  provided,  such proxy
may be voted in the manner  specified in Section 2.1(a) above.  In addition,  to
the extent such matter is proposed by FIC at the 2004 annual meeting,  or at any
annual or special meeting of shareholders  after such 2004 annual meeting,  such
proxy,  if then in effect,  may be voted "for" an  amendment  to the articles of
incorporation  of FIC to (i) raise the ownership  threshold for a  shareholder's
ability to call a special  meeting of  shareholders  to 30% or (ii) provide that

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<PAGE>


cumulative  voting  shall  not be  permitted  in the  election  of the  Board of
Directors of FIC.  Such proxy shall not extend to any other  matters that may be
proposed by FIC at an annual or special  meeting  during any Purchase  Period in
which the proxy is in effect, including without limitation,  any other amendment
to the  articles of  incorporation  or bylaws of FIC,  any action  relative to a
merger of FIC, the sale of all or substantially all of the assets of FIC, or the
issuance or sale by FIC of any of its equity securities.

     (c) With respect to any other matters not  addressed in Section  2.1(a) and
2.1(b),  the Common Stock held by the Mitte  Parties will be voted in accordance
with the written instructions provided by the Mitte Parties.

     (d) THE PROXY GRANTED  PURSUANT TO THIS SECTION 2.1 WILL BE IRREVOCABLE AND
COUPLED  WITH AN INTEREST  BUT IS SUBJECT TO  TERMINATION  AS  PROVIDED  HEREIN.
Concurrent with the execution and delivery of this Agreement,  the Mitte Parties
shall  execute  and  deliver to FIC the proxy  attached  hereto as Exhibit A. In
furtherance  of the provisions of this Section 2.1, the Mitte Parties agree that
they will not, so long as such proxy is in effect with  respect to any shares of
Mitte  Stock  pursuant  to this  Agreement,  (i)  solicit  proxies or  consents,
directly or indirectly, or become a "participant" in any "solicitation" (as such
terms are  defined  in  Regulation  14A under the  Exchange  Act) of  proxies or
consents to vote,  or seek to advise or influence any person with respect to the
voting of, the Common  Stock of FIC,  other than in  accordance  with the formal
recommendation of the Board of Directors of FIC with respect to any such matter;
(ii)  with  respect  to the  Common  Stock of FIC (a)  form or join any  "group"
(within the meaning of Section  13(d)(3) of the Exchange  Act) after the date of
this  Agreement  or (b) in the  event  that the  Mitte  Parties  or any of their
respective  affiliates  have  formed or joined any such group  prior to the date
hereof,  participate in or benefit from any  additional  action by such group or
any member  thereof  after the date of this  Agreement  that would  constitute a
violation of this Section 2.1 if  undertaken  by such group or the Mitte Parties
or any such affiliate alone;  (iii) disclose any intention,  plan or arrangement
inconsistent  with any of the  foregoing;  (iv)  call for a special  meeting  of
shareholders  in which  directors  of FIC will be  elected  or  removed;  or (v)
advise,  assist or  encourage  any other  person in  connection  with any of the
foregoing.

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<PAGE>


     (e) For clarity and as otherwise provided herein, the proxy in this Section
2.1,  will  immediately  and  automatically  terminate  if FIC fails  (after any
applicable  notice and cure period) to timely make any of the payments  provided
for in Sections  1.1, 1.2 or 1.3; or fails to produce a bona fide  purchaser who
makes a Purchase  Offer  before  the end of any  applicable  Purchase  Period as
provided  for in  Section  2.4;  or if FIC fails,  within 10 days  after  having
received  written  notice from a Mitte Party of such failure,  to fulfill in all
material  respects  its  obligations  under  Section  2.2 or Section 6.1 of this
Agreement;  provided,  however,  the termination of the proxy as provided for in
this  Section  2.1(e)  shall not work to  terminate or reduce in any respect the
obligations of FIC otherwise provided in this Agreement.

     (f) Unless previously  terminated in accordance with applicable  provisions
of this Agreement, the proxy granted pursuant to this Section 2.1 will terminate
on May 15, 2005.

     2.2 The Mitte Parties collectively  beneficially own as of the date of this
Agreement  (not  including  the stock option  shares  referenced  in footnote 1)
1,627,610  shares of FIC Common Stock.  On or prior to June 1, 2003, (a) FIC (or
another bona fide  purchaser or  purchasers)  shall  purchase  39,820  shares of
Common  Stock  held by Roy at a  purchase  price of $14.64 per share and (b) FIC
shall pay to Roy in  consideration  of the  cancellation  of 6,600  options (the
"Options")  to acquire  Common Stock held by Roy on the date of this  Agreement,
the amount of $42,636 less any applicable  withholding taxes. The stock purchase
agreement to be used in the purchase and sale transaction  referred to in clause
(a) above,  as well as for any other purchase and sale  transactions  under this
Agreement,  including,  without limitation,  transactions under Sections 2.3 and
2.4: (i) shall not contain any seller warranties and representations (other than
as to ownership,  authority to sell, enforceability,  and that the shares are to
be conveyed free of liens, proxies,  voting agreements and similar impediments);
(ii)  will not call for any  legal  opinions;  and  (iii)  will not call for any
indemnities  post-closing,  other than with respect to the matters referenced in
(i) above.  Following  receipt by Roy of the  payment  referred to in clause (b)
above, Roy acknowledges and agrees that the Options shall be cancelled and of no
further  force or effect  and that Roy shall have no  further  rights  under any
Option Agreement between Roy and FIC which governs the terms of such Options.

     2.3 On or prior to June 1, 2003,  FIC (or another  bona fide  purchaser  or
purchasers)  shall purchase  35,502 shares of Common Stock  attributable  to Roy
under the FIC Employee  Stock  Ownership  Plan at a purchase price of $14.64 per
share.

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<PAGE>


     2.4 (a) During the periods ending August 15, 2003,  May 15, 2004,  November
15,  2004 and May 15, 2005 (each,  a "Purchase  Period"),  FIC agrees to use its
commercially reasonable efforts to locate a bona fide purchaser or purchasers to
purchase at least 388,052  shares of Common Stock held by the Foundation in each
such period for a cash  purchase  price of $14.64 per share (or, in the event of
any period in which the  Foundation  owns less than 388,052  shares,  the amount
then held); provided, however, that, notwithstanding the foregoing, in the event
that FIC locates a bona fide  purchaser or  purchasers  during any such Purchase
Period  to  purchase  more than  388,052  shares  of  Common  Stock  held by the
Foundation,  the entire  excess  amount shall be applied to any future  Purchase
Period(s)  as FIC may direct and shall have the effect of reducing the number of
shares of Common Stock that must be the subject of a Purchase  Offer (as defined
below) in any subsequent  Purchase Period(s) for FIC to retain the proxy granted
to it in this Agreement in accordance with the provisions of Section 2.4(b).

     For  purposes  of example  only,  if a Purchase  Offer were made during the
Purchase  Period  ended  August 15,  2003 for  500,000  shares of Common  Stock,
388,052 of such shares of Common Stock shall be applied to the  Purchase  Period
ended August 15, 2003 in satisfaction of FIC's  obligations under Section 2.4(b)
for such Purchase Period and the remaining  111,948 shares of Common Stock shall
be applied to any future Purchase Period(s) as FIC may direct. Consequently,  if
a  Purchase  Offer  were made for  388,052  shares of Common  Stock  during  the
Purchase  Period  ended May 15, 2004 and for 276,104  shares of Common Stock for
the  Purchase  Period  ended  November  15,  2004,  FIC  would be deemed to have
satisfied the provisions of Section 2.4(b) for the continuation of the proxy for
the periods  ended May 15,  2004 and  November  15, 2004 by applying  the excess
111,948  shares of Common Stock from the Purchase Offer made during the Purchase
Period ended August 15, 2003 to the Purchase Period ended November 15, 2004. For
the avoidance of doubt,  shares of Common Stock subject to a Purchase  Offer (as
defined below) shall count towards the foregoing  amounts even if the Foundation
elects not to accept such Purchase Offer.

     (b) In the event  that a third  party  introduced  by FIC makes a bona fide
offer or offers to purchase for cash at the  purchase  price of $14.64 per share
(in one  transaction  or a series of  transactions)  at least 388,052  shares of
Common Stock held by the  Foundation  during each separate  Purchase  Period (or
such lesser amounts as are described in Section 2.4(a) to the extent applicable)
(collectively,  in any one Purchase Period, a "Purchase Offer"),  then the proxy
given  pursuant to Section  2.1 above will remain in effect with  respect to all
shares of FIC  Common  Stock  held the Mitte  Parties  until the end of the next
Purchase Period or until earlier released by FIC. For the avoidance of doubt, if
a third party  purchaser or  purchasers  introduced or arranged by FIC offers to
buy shares of Common  Stock held by the  Foundation  in the  amounts  and at the
price of $14.64 per share by the end of each Purchase  Period  specified in this
Section  2.4,  the proxy given  pursuant  to Section  2.1 above shall  remain in
effect until the end of the next Purchase Period,  whether or not the Foundation
accepts such Purchase  Offer.  Also for the avoidance of doubt,  if FIC fails to
produce a third party  purchaser or  purchasers  who offers to purchase at least
388,052 shares of Common Stock held by the Foundation (or such lesser amounts as
are described in Section 2.4(a) to the extent  applicable)  during such Purchase
Period at the price of $14.64  per share by the end of the  applicable  Purchase
Period  specified in this Section 2.4, then the proxy given  pursuant to Section

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2.1 above shall immediately terminate. Except as provided in the proviso to this
sentence, the Mitte Parties shall be under no obligation to sell any such shares
of Mitte  Stock for which a Purchase  Offer is made,  but the proxy  relating to
such shares of Mitte Stock shall remain in effect so long as the Purchase  Offer
is made in  accordance  with the terms of this Section 2.4;  provided,  however,
that in the event that FIC or a third party or parties make a bona fide Purchase
Offer to buy up to 517,402  shares of Common Stock held by the  Foundation  at a
purchase  price  of  $14.64  per  share  on or prior to  August  15,  2003,  the
Foundation  shall be obligated to sell such shares if FIC or such third party or
parties tender the purchase price to the Foundation on or prior to such date. In
consideration of the agreements of the Foundation set forth in this Section 2.4,
FIC and its subsidiaries agree not to sell, issue, transfer or convey any shares
of Common Stock to a third party for cash between the date hereof and August 15,
2003, without first directing such third party to purchase the desired number of
shares (up to 517,402 shares) of Common Stock from the Foundation. Any violation
of the immediately preceding sentence by FIC or its subsidiaries shall result in
an immediate termination of the proxy described in Sections 2.1 and 2.4.

     (c)  Notwithstanding  anything  in  this  Agreement  to the  contrary,  the
foregoing  provisions  of this  Section 2.4 shall in no way  obligate FIC or any
other  person to make a Purchase  Offer with respect to shares of Mitte Stock or
consummate any such purchase  (other than the purchase of shares of Common Stock
held by Roy  pursuant to Sections  2.2 and 2.3),  and a  consequence  under this
Agreement of the failure of the Purchase  Offer being made or purchase  pursuant
thereto being  consummated  following the Mitte Parties' election to accept such
offer shall include the  termination  of the proxy granted  hereby at the end of
the respective  Purchase  Period with respect to the shares of Common Stock held
by the Mitte Parties. Any purchaser of shares pursuant to this Section 2.4 shall
acquire such shares free of the proxy.

     (d) The  obligations  of FIC under this  Section  2.4 relate  solely to the
1,552,206  shares of Common Stock owned by the Foundation as of the date of this
Agreement  and do not  extend  to any  shares of Common  Stock  acquired  by the
Foundation  or any of the Mitte Parties  after the date of this  Agreement.  The
applicability  of the proxy  described in Sections 2.1 and 2.4 relates solely to
the shares of Common  Stock set forth on  Schedule A attached  hereto and do not
extend to any shares of Common Stock  acquired by the  Foundation  or any of the
Mitte Parties after the date of this Agreement.

     2.5  This  Agreement  shall  supercede  any and  all  prior  agreements  or
understandings between FIC and the Mitte Parties with respect to the record date
for and the date of the 2003 Annual Meeting of Shareholders, and each of FIC and
the Mitte  Parties  agree  that the  Board of  Directors  of FIC shall  have the
absolute  and sole  discretion  to set the record date and meeting  date for the
2003 Annual Meeting of Shareholders and any future shareholders meetings subject
to applicable law with respect thereto.  Notwithstanding  the foregoing,  unless
required by applicable law or order of any court of competent jurisdiction,  FIC
agrees that the annual  meeting of  shareholders  held in 2004 and 2005 shall be
held after June 10th of each respective year.

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<PAGE>


     2.6 In the event that the Mitte Parties  transfer any shares of Mitte Stock
to any third party by sale,  gift or otherwise,  other than in  accordance  with
Section 2.4 of this  Agreement,  the proxy  granted to FIC in Section 2.1 hereof
shall  survive  any such  transfer  to a third party  unless  (i) FIC  agrees in
writing at the time of such  transfer  to  terminate  the proxy with  respect to
those shares of Mitte Stock,  (ii) such  third-party  transferee does not, after
giving  effect to the  transfer  of the Mitte  Stock,  beneficially  own (either
individually  or  collectively  with any other person for which such third party
would be deemed to be part of a "group" as defined in Sections 13(d) or 14(d) of
the Exchange Act) more than two percent (2%) of the then  outstanding  shares of
FIC Common Stock or (iii) such transfer is effected in the open-market  pursuant
to the  provisions  of Rule 144 under the  Securities  Act or under an effective
registration  statement.  In furtherance of the foregoing,  concurrent  with the
execution and delivery of this Agreement,  the Mitte Parties shall tender to FIC
all certificates representing the Mitte Shares and FIC shall place the following
legend upon such certificates and return such certificates to the Mitte Parties:

     THE SHARES  REPRESENTED BY THIS  CERTIFICATE  ARE SUBJECT TO AN IRREVOCABLE
PROXY DATED AS OF MAY 15, 2003 WITH RESPECT TO THE VOTING OF SUCH SHARES. A COPY
OF SUCH IRREVOCABLE PROXY MAY BE OBTAINED FROM FINANCIAL INDUSTRIES  CORPORATION
AT ITS PRINCIPAL EXECUTIVE OFFICES.

     Upon termination of the proxy in accordance with this Agreement,  the Mitte
Parties shall tender to FIC any remaining  certificates  representing  the Mitte
Shares and FIC shall promptly remove the foregoing legend from such certificates
and return such certificates to the Mitte Parties.

     Subject to the  limitations  of this  Section  2.6,  the Mitte  Parties may
dispose  of  their  stock  in  a  donative  transaction  to  any  charitable  or
educational organization exempt from taxation under the Internal Revenue Code at
any time with the transferee receiving such shares free of the proxy.

     3.0 Dismissal of Litigation; Resignations.

     3.1  Promptly  following  the first  payment from FIC to Roy as provided in
Section  1.2,  and the  purchase of 39,820  shares of Roy's stock as provided in
Section 2.2, the parties shall cause their  attorneys of record to file with the
Court a Joint Motion to Dismiss with  Prejudice,  in the form attached hereto as
Exhibit B, dismissing the Litigation  with prejudice.  None of the Parties shall
file this  Agreement  with the Court or disclose the terms of this  Agreement to
the Court (unless so ordered by the Court), and the above-described Joint Motion
shall  merely  state  that the  Parties  have  executed a  settlement  agreement
resolving  all of the claims  between them.  The Parties  hereby agree that each
Party shall be solely responsible for its own attorneys' fees and costs incurred
in connection with this Litigation and the negotiations leading to the execution
of this Agreement.

                                     - 10 -


<PAGE>


     3.2 Upon the  filing  with the  Court of a Joint  Motion  to  Dismiss  with
Prejudice,  Roy and Scott shall tender  resignations to FIC from their positions
on the Board of Directors of FIC and any of its subsidiaries, and as any officer
of FIC and any of its  subsidiaries.  Upon such  resignations,  all compensation
(including  directors'  fees)  previously  paid or  payable to Roy and Scott for
service  on the  Board  of  Directors  of FIC or any of its  subsidiaries  shall
immediately terminate,  and FIC shall have no further obligation to Roy or Scott
other than as set forth in this Agreement.

     4.0 Cancellation of Employment Agreement; Releases.

     4.1 Employment  Agreement.  Each of FIC and Roy  acknowledge and agree that
the Employment Agreement dated February 25, 1982, by and between FIC and Roy, as
amended by the First Amendment to Employment Agreement dated as of April 4, 2001
(the "Employment Agreement"), is cancelled and of no further force and effect.

     4.2  General  Release  by FIC.  FIC,  on behalf  of itself  and each of its
current  and  former  directors,  officers,   shareholders,   employees,  parent
companies,  subsidiaries,  affiliates,  member firms, predecessors,  successors,
assigns, trustees, agents, attorneys, accountants, insurers, and representatives
of any kind, if any, and Bender  (collectively,  the "FIC  Releasing  Parties"),
hereby covenant not to sue and fully,  finally,  and forever generally  RELEASE,
SURRENDER, REMISE, ACQUIT, AND FOREVER DISCHARGE the Mitte Parties, individually
and   collectively,   and  their   current  and  former   directors,   officers,
shareholders,  employees,  parent companies,  subsidiaries,  affiliates,  member
firms,  predecessors,  successors,  family,  heirs,  executors,  administrators,
assigns, trustees, agents, attorneys, accountants, insurers, and representatives
of any kind, if any (collectively,  the "Mitte Released  Parties"),  jointly and
severally,  from any and all claims, disputes,  demands,  actions,  liabilities,
damages,  suits  (whether  at  law or in  equity),  promises,  accounts,  costs,
expenses,  setoffs,  contributions,  attorneys'  fees and/or causes of action of
whatever kind or character,  whether past,  present,  future,  KNOWN OR UNKNOWN,
liquidated or unliquidated, accrued or unaccrued, or which may hereinafter arise
as a result of the discovery of new and/or additional facts  (collectively,  the
"Claims"), which the FIC Releasing Parties have had, may now have or might claim
to  have,  or may  have  in the  future  against  the  Mitte  Released  Parties,
INCLUDING,  WITHOUT LIMITATION,  ANY AND ALL STATUTORY AND COMMON LAW CLAIMS FOR
BREACH OF EXPRESS OR IMPLIED  CONTRACT,  TORTIOUS  INTERFERENCE  WITH  CONTRACT,
PROMISSORY ESTOPPEL, BREACH OF IMPLIED COVENANTS,  SPECIFIC PERFORMANCE,  BREACH
OF FIDUCIARY DUTY, INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS,  NEGLIGENCE, AN
ACCOUNTING, FRAUD, NEGLIGENT MISREPRESENTATION, FRAUDULENT INDUCEMENT, INCLUDING
FRAUDULENT INDUCEMENT TO ENTER INTO THIS AGREEMENT, INFRINGEMENT OF INTELLECTUAL
PROPERTY, MISAPPROPRIATION OF TRADE SECRETS, CONVERSION, OR ANY OTHER CLAIM THAT
ARISES  PRIOR  TO THE  EFFECTIVE  DATE  OF  THIS  AGREEMENT,  including  without

                                     - 11 -


<PAGE>


limitation claims arising out of, in any way relating to, or in connection with:
(1) the  Litigation;  (2) the Mitte Audit;  (3) the  Foundation  Audit;  (4) the
Donations;  (5) the Employment  Agreement or the termination thereof; (6) Roy's,
Scott's and/or Bender's service, actions and conduct as an officer, director, or
employee  of FIC or of each  other;  (7) the demand by the Mitte  Parties  for a
special  meeting  of  shareholders;  or (8) any other  claims  that were or with
reasonable  diligence  could have been asserted in the Litigation or that are in
any way  related to items (2)  through  (7)  immediately  above,  except for the
obligations contained in this Agreement.

     4.3 General Release by Mitte Released  Parties.  The Mitte Released Parties
hereby covenant not to sue and fully,  finally,  and forever generally  RELEASE,
SURRENDER,  REMISE,  ACQUIT,  AND FOREVER  DISCHARGE the FIC Releasing  Parties,
individually and collectively,  jointly and severally,  from any and all Claims,
which the Mitte Released  Parties have had, may now have or might claim to have,
or may have in the future against the FIC Releasing Parties, INCLUDING,  WITHOUT
LIMITATION, ANY AND ALL STATUTORY AND COMMON LAW CLAIMS FOR BREACH OF EXPRESS OR
IMPLIED  CONTRACT,  TORTIOUS  INTERFERENCE WITH CONTRACT,  PROMISSORY  ESTOPPEL,
BREACH OF IMPLIED  COVENANTS,  SPECIFIC  PERFORMANCE,  BREACH OF FIDUCIARY DUTY,
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS,  NEGLIGENCE, AN ACCOUNTING, FRAUD,
NEGLIGENT MISREPRESENTATION, FRAUDULENT INDUCEMENT, INFRINGEMENT OF INTELLECTUAL
PROPERTY, MISAPPROPRIATION OF TRADE SECRETS, CONVERSION, OR ANY OTHER CLAIM THAT
ARISES  PRIOR  TO THE  EFFECTIVE  DATE  OF  THIS  AGREEMENT,  including  without
limitation claims arising out of, in any way relating to, or in connection with:
(1) the  Litigation;  (2) the Mitte Audit;  (3) the  Foundation  Audit;  (4) the
Donations;  (5) the Employment  Agreement or the termination thereof; (6) Roy's,
Scott's and/or Bender's service, actions and conduct as an officer, director, or
employee  of FIC or of each  other;  (7) the demand by the Mitte  Parties  for a
special  meeting  of  shareholders;  or (8) any other  claims  that were or with
reasonable  diligence  could have been asserted in the Litigation or that are in
any way  related to items (2)  through  (7)  immediately  above,  except for the
obligations contained in this Agreement. The Parties specifically agree that the
terms of the General  Release in Section  4.3 do not in any way impact,  affect,
impair,  release, waive or otherwise discharge the right of the Mitte Parties to
request a special shareholders meeting of FIC after the termination of the proxy
provided herein for any reason.

     4.4 Preservation of Certain  Matters.  Notwithstanding  the foregoing,  the
parties  expressly  agree that the foregoing  release given by the Mitte Parties
does not in any manner  constitute a release by Roy of any employee  benefits to
which he is entitled, including without limitation:  employee disability or life
insurance;  rights under any employee  retirement  income plan; rights under any
401(k) plan,  employee stock  ownership plan or similar plan; and any rights Roy
has or may have to continue any such  benefits at his own expense  following the
execution of this Agreement.

     4.5 Intended Beneficiaries.  These general releases shall be binding on and
run to the  benefit of each of the  Parties  hereto and all of the  present  and
former predecessors,  successors, subsidiaries, affiliates, servants, attorneys,
agents, employees,  officers,  directors,  shareholders,  partners,  principals,
heirs,  assigns, and representatives of the Parties hereto and the other persons
and entities listed in this provision.

                                     - 12 -


<PAGE>


    5.0  Arbitration.  All  Parties  agree,  if  necessary,  to  arbitrate  any
irreconcilable issues relative to this Agreement in binding arbitration before a
panel  of  three  arbitrators.   If  the  parties  cannot  agree  on  the  three
arbitrators,  the panel shall be selected by the  presiding  judge of the Travis
County, Texas district courts. Any such arbitration will not exceed one day, and
will be based  solely upon the  documentary  submissions,  affidavits,  and oral
argument, and will not include witness testimony. By signing this Agreement, the
Parties  understand  that by  agreeing  to binding  arbitration  for any dispute
arising out of this  Agreement  the Parties are giving up any rights to have the
dispute  litigated  in a court or jury trial.  The  agreement  by the Parties to
binding  arbitration  is completely  voluntary.  The  prevailing  party shall be
entitled to recover reasonable fees and expenses (including  attorneys' fees) in
any such arbitration.

     6.0 General Provisions.

     6.1  Health  Insurance.  To the  extent  permitted  by FIC's  plans and the
insurer  thereof as in effect  from time to time,  FIC will  continue  Roy's and
Joann's current health insurance  coverage as currently in effect for five years
from the date of this Agreement at no cost to Roy or Joann. In the event that at
any  time  during  such  five  year  period,   the  plan  or  insurer   thereof,
notwithstanding   commercially  reasonable  efforts  by  FIC  to  continue  such
coverage, does not permit Roy and Joann to continue to participate in such plan,
FIC will provide Roy and Joann with an  aggregate  maximum  annual  allowance of
$10,000 (pro rated for any partial  year) for the  remainder  of such  five-year
period.

     6.2  Confidentiality  Agreement.  The Parties to this  Agreement  and their
attorneys agree that this Agreement shall be strictly  confidential and no Party
(or that Party's successors,  assigns, agents, attorneys,  employees, employers,
representatives,  or any other person or entity  against whom this  Agreement is
enforceable  or  their  respective  successors,   assigns,  agents,   attorneys,
employees,  employers,  or  representatives)  may  disclose  the  terms  of this
Agreement  or furnish a copy of this  Agreement  to any other  person or entity,
except as is expressly required by law, rule, regulation, or legal process or as
is required and necessary to be disclosed to shareholders,  employees, officers,
directors,   investors,   insurers,   attorneys,  the  Securities  and  Exchange
Commission,  securities  exchanges,  or governmental agencies in connection with
any disclosure,  filing, business necessity, or contractual obligation, or as is
necessary or is required for obtaining  tax,  legal,  or financial  advice.  Any
person  to whom  such  information  is  disclosed  shall be  informed  that this

                                     - 13 -


<PAGE>


Agreement is confidential.  The Parties  specifically  agree that each and every
term of this  Section 6.2 applies to any and all  information  in the custody or
control  of Bender or FIC that  Bender  has ever  prepared,  written,  acquired,
attained, or gained during his employment with FIC or otherwise, that relates or
pertains in any way to items (1) through (8)  described in the release  language
in Sections 4.2 and 4.3.  Notwithstanding the provisions of this paragraph,  the
Parties to this  Agreement and their  attorneys  agree and consent that they are
permitted to state the following  regarding the terms of this Agreement and only
the following (or substantially  similar words to this effect):  "The Parties to
the Litigation have settled all of their claims against each other.  None of the
parties to the Litigation admitted any liability, or that any of the claims that
either party had against the other were valid and/or enforceable. The Litigation
was resolved to the mutual satisfaction of all the Parties."

     6.3  Indemnification.  (a) FIC shall  indemnify,  defend,  and hold, to the
maximum extent  permitted under  applicable law, the Mitte Parties harmless from
and against any and all losses, claims, judgments,  liabilities, amounts paid in
settlement,  fines, court costs, pre- and post-judgment interest and other costs
or  expenses   (including   reasonable  fees  and   disbursements   of  counsel)
(collectively "Damages") to which any of the Mitte Parties may become subject or
may incur as a result of being made, or  threatened  with being made, a party to
any proceeding at law or in equity or before any  governmental  agency or board,
arising  out of or based in whole or in part on their  holding  the  position of
officer or director of FIC or any of its subsidiaries or their  participation as
a party in negotiating  and entering into this  Agreement,  except to the extent
that (i) a court of competent jurisdiction  determines in a final,  unappealable
judgment  that  such  Damages  would  not  qualify  for  indemnification   under
applicable law or (ii) such Damages relate to investigations by any governmental
agency  related to the matters  raised in or by the Mitte Audit,  the Foundation
Audit or the Donations.  As to any such action or threatened  action,  FIC shall
advance  reasonable   documented   out-of-pocket  legal  defense  costs  to  the
appropriate  Mitte Party, if such party agrees as provided in the Texas Business
Corporation Act to reimburse such expenses if required.  FIC shall also take all
steps reasonably  necessary to assure that the Mitte Parties are covered, in the
same manner that other former officers and directors are generally covered, with
respect to actions  arising  during their terms as or by reason of their service
as  officers  or  directors  of FIC or its  subsidiaries,  under any officer and
director liability policy.

     (b) The  Parties  do not  believe  that FICA  applies  to the  transactions
contemplated by this Agreement. Notwithstanding the foregoing, in the event that
FICA is subsequently assessed, Roy agrees,  promptly following notice by FIC, to
pay to FIC his  allocable  share of any such amount and to indemnify FIC for any
related costs,  interest and/or penalties which are assessed against FIC for the
failure to have previously withheld or paid such FICA amounts.

                                     - 14 -


<PAGE>


     6.4 Warranties of Good-Faith  Efforts.  Each Party hereby expressly agrees,
and warrants and represents that: he, she, or it (i) will not initiate,  incite,
promote  or assist in any civil or  criminal  actions  against  any of the other
parties,  including the Foundation,  FIC, FIC Management,  Bender,  or any Mitte
family member, except as expressly required by law; (ii) will not publish in any
way any disparaging remarks, descriptions, summaries, or statements about any of
the other  parties  relating  in any way to the  other  parties,  including  the
Foundation,  FIC, FIC Management,  Bender, or any Mitte family member, except as
such statements are expressly required to give a fair and accurate assessment as
expressly  required by law and/or any governmental  authority for any regulatory
filing;  and (iii) recognizes and  acknowledges  that FIC may be required by the
Securities  Exchange  Commission to modify any proxy  materials  relating to the
2003 Annual Shareholders' Meeting or other meetings. FIC will use all reasonable
efforts to exclude as much discussion as possible of the disputes concerning the
Litigation,  the Mitte Audit, the Foundation Audit, the Donations, and any other
disputes between FIC, the Foundation, and the Mitte Parties, except as expressly
required and demanded by the  Securities  and Exchange  Commission in connection
with such proxy  statement  or that which is  required  in such proxy  statement
pursuant to Rule 14a-9 under the Exchange Act, or in any other public filings in
order to make the statements made therein,  in light of the circumstances  under
which  they  were  made,  not  misleading.  Additionally,  the  Parties  further
acknowledge  that FIC has  responded by providing  documents  and  witnesses for
interviews in response to an investigation  initiated by the Texas Department of
Insurance  and  that  FIC  will  continue  to  respond   appropriately  to  such
investigation if required by law.

     6.5 Authority to Release and Settle.  Each Party hereby expressly  warrants
and represents  that:  (i) it is the lawful owner of all Claims herein released;
(ii) it has full power and express authority to settle and release the Claims as
set forth in this Agreement; (iii) it has not made any assignment or transfer of
those Claims, including but not limited to assignment or transfer by subrogation
or by  operation  of law;  (iv) it  knows of no person or entity that intends to
assert a claim by,  through,  under,  or on behalf of such Party;  (v) it is not
relying upon any statements, understandings,  representations,  expectations, or
agreements  other than those expressly set forth in this  Agreement;  (vi) it is
represented  and has been advised by counsel in connection  with this Agreement,
which such Party executes wholly  voluntarily  and of its own choice,  volition,
judgment,  belief and knowledge,  after  consultation  with such counsel and not
under coercion or duress;  (vii) it has made its own  investigation of the facts
and is relying  solely  upon its own  knowledge  and the advice of its  counsel;
(viii) it has no  expectation  that the other Party will disclose facts material
to this Agreement;  and (ix) it  knowingly  waives any claim that this Agreement
was induced by any  misrepresentation  or nondisclosure and any right to rescind
or avoid this Agreement based upon presently  existing facts,  known or unknown.
The  Parties  agree  and  stipulate  that  each  Party  is  relying  upon  these
representations   and  warranties  in  entering  into  this   Agreement.   These
representations and warranties shall survive the execution of this Agreement.

                                     - 15 -


<PAGE>


     6.6  Severability  and  Savings  Clause.   Should  any  clause,   sentence,
provision,  paragraph or part of this  Agreement for any reason  whatsoever,  be
adjudged  by any  court  of  competent  jurisdiction,  or be held  by any  other
competent   governmental   authority   having   jurisdiction,   to  be  invalid,
unenforceable,  or illegal, such judgment or holding shall not affect, impair or
invalidate  the  remainder  of this  Agreement,  but  shall be  confined  in its
operation to the specific clause, sentence, provision, paragraph or part of this
Agreement  directly  involved,  and the  remainder of this  Agreement,  wherever
practicable, shall remain in full force and effect.

     6.7 GOVERNING LAW AND VENUE.  THIS AGREEMENT SHALL BE EXCLUSIVELY  GOVERNED
BY AND  CONSTRUED  ACCORDING  TO THE LAWS OF THE STATE OF TEXAS  EXCEPT THAT ANY
CONFLICTS OF LAW RULE  REQUIRING  REFERENCE TO THE LAWS OF ANOTHER  JURISDICTION
SHALL BE DISREGARDED. EXCLUSIVE VENUE SHALL LIE IN TRAVIS COUNTY, TEXAS.

     6.8 Further  Assurances.  The Parties  agree that they shall,  from time to
time, execute, acknowledge, and deliver, or cause to be executed,  acknowledged,
and  delivered  to the other  Parties  instruments,  agreements,  lien  waivers,
releases, and other documents as each Party shall reasonably request in order to
further  evidence the releases and other covenants  described in this Agreement,
including,  but not limited to, the Agreed  Judgment of Dismissal in conformance
with Section 3.1.  The Parties further agree that the releases contracted herein
shall be broadly and comprehensively construed.

     6.9 Entire Agreement  Clause.  This Agreement  contains and constitutes the
entire  agreement  and  understandings  of the Parties and  supersedes as of the
execution date all prior negotiations,  discussions,  undertakings or agreements
of any sort whatsoever,  whether oral or written,  or any claims that might have
ever  been  made  by  one  Party  against  any  opposing  Party.  There  are  no
representations,  agreements,  or inducements  except as set forth expressly and
specifically in this Agreement.

     6.10 Amendments in Writing.  This Agreement may only be amended or modified
by a  written  instrument  that  has  been  executed  by the  Parties  and  that
unequivocally  indicates  the Parties'  intention to modify this  Agreement.  No
waiver  of any  breach  of this  Agreement  shall  be  construed  as an  implied
amendment or agreement to amend or modify any provision of this Agreement.

     6.11 No  Author.  All  terms  and  provisions  of this  Agreement,  and the
drafting of this Agreement,  have been negotiated by the Parties at arm's length
and to mutual agreement, with consideration by and participation of
each, and no party shall be deemed the scrivener of this Agreement.

                                     - 16 -


<PAGE>


     6.12  Construction.  Words  used in the  Agreement  of any gender or neuter
shall be  construed  to include any other  gender or neuter  where  appropriate.
Words  used in this  Agreement  that are  either  singular  or  plural  shall be
construed to include the other where appropriate.

     6.13  Captions  and  Headings.  The  Parties  agree that the  captions  and
headings  contained in this Agreement are for convenience  only and shall not be
deemed to constitute a part of this Agreement.

     6.14  Multiple  Counterparts.  This  Agreement  may be executed in multiple
counterparts,  any and all of which may contain the  signatures of less than all
the Parties and all of which shall be construed  together as a single  document.
Each counterpart shall be fully effective as an original when all of the Parties
have  executed  this  Agreement.  Such  counterparts  may  also be  executed  by
telefaxed signature.

     6.15 No Admission of Fault.  Neither the  execution of this  Agreement  nor
compliance  with its terms,  nor the  consideration  provided for herein,  shall
constitute or be construed as an admission of any fault, wrongdoing or liability
whatsoever on the part of any of the Parties, or any of their agents, attorneys,
representatives, or employees, but is in full settlement of disputed issues, and
all such liability is expressly denied.

     6.16 No Waiver.  The  failure by any of the  Parties to this  Agreement  to
enforce at any time, or for any period of time,  any one or more of the terms or
conditions of this Agreement or a course of dealing  between the Parties,  shall
not be a waiver of such terms or conditions or of such Party's right  thereafter
to enforce each and every term and condition of this Agreement.

     6.17 The Effective  Date.  The Effective  Date of this Agreement is May 15,
2003.

            [The remainder of this page is intentionally left blank.]

                                     - 17 -


<PAGE>


     IN WITNESS  WHEREOF,  each of the Parties have duly  executed and delivered
this Agreement as of this 15th day of May, 2003.



FINANCIAL INDUSTRIES CORPORATION



By:   /s/ Eugene E. Payne
    ______________________________
    Eugene E. Payne
    Its President


      /s/ Robert Bender
    ______________________________
    Robert Bender


      /s/ Roy F. Mitte
    ______________________________
    Roy F. Mitte


      /s/ Joann Cole Mitte
    ______________________________
    Joann Cole Mitte


     /s/ Scott Mitte
    ______________________________
    Scott Mitte


     /s/ Jan Mitte
    ______________________________
    Jan Mitte



    THE ROY F. AND JOANN COLE MITTE FOUNDATION


    By:    /s/
        __________________________

    Name:  _______________________

    Title:  ______________________

                                     - 18 -


<PAGE>


                                                                      Exhibit A

                                IRREVOCABLE PROXY


     KNOW  ALL MEN BY  THESE  PRESENTS,  That the  undersigned  shareholders  of
Financial Industries  Corporation,  a Texas corporation (the "Corporation") does
hereby appoint any such persons named as proxies in any Proxy Statement filed by
the Corporation  with the Securities and Exchange  Commission with full power of
substitution,  as the true and lawful  attorney and proxy of the undersigned for
and in his,  her or its name,  place,  and stead to attend all  meetings  of the
shareholders of the Corporation,  and to vote the shares of common stock,  $0.20
par value per share, of the Corporation  specified on Schedule A  hereto and any
additional shares that may be acquired by the undersigned after the date hereof,
at any and all  meetings of the  shareholders  or any  adjournment  thereof with
respect  to the  matters  expressly  set forth in  Section  2.1 of that  certain
Compromise Settlement Agreement and Mutual Release dated as of May 15, 2003 (the
"Settlement  Agreement")  among the  undersigned,  the  Corporation  and  Robert
Bender.  The  undersigned  hereby  affirm that this proxy is given in connection
with the  Settlement  Agreement  and that this proxy is COUPLED WITH AN INTEREST
AND IS  IRREVOCABLE  BUT IS SUBJECT TO TERMINATION AS PROVIDED IN THE SETTLEMENT
AGREEMENT, and each of the undersigned hereby ratifies and confirms all that the
proxy holders may lawfully do or cause to be done by virtue hereof.

     IN WITNESS  WHEREOF,  each of the  undersigned has set his, her or its hand
this 15th day of May, 2003.




                                        ____________________________________
                                        Roy F. Mitte



                                        ____________________________________
                                        Joann Cole Mitte



                                        ____________________________________
                                        Scott Mitte



                                        ____________________________________
                                        Jan Mitte

                                        THE ROY F. AND JOANN COLE
                                        MITTE FOUNDATION

                                        By:  _______________________________

                                        Name:  _____________________________

                                        Title:  ____________________________



                                   Exhibit A


<PAGE>



                                                                     Exhibit B

                 FORM OF JOINT MOTION TO DISMISS WITH PREJUDICE



                       IN THE UNITED STATES DISTRICT COURT
                        FOR THE WESTERN DISTRICT OF TEXAS
                                 AUSTIN DIVISION

FINANCIAL INDUSTRIES
CORPORATION


     Plaintiff,                                     CIVIL ACTION NO.
                                                      A03 CA 033 SS
vs.

THE ROY F. AND JOANN COLE
MITTE FOUNDATION, ROY F.
MITTE and JOANN COLE MITTE

     Defendants.


                        ORDER OF DISMISSAL WITH PREJUDICE


     Plaintiff   Financial    Industries    Corporation   and   Defendants   and
counter-plaintiffs  Roy F.  Mitte,  Joann Cole  Mitte,  and The Roy F. Mitte and
Joann Cole Mitte Foundation,  through their counsel, have by Motion informed the
Court that they have  reached a mutually  acceptable  compromise  settlement  of
their disputes,  under the terms of which they have agreed to dismiss all claims
and counterclaims herein on the terms set out herein.
It is accordingly

     ORDERED that this action, and all claims and counterclaims asserted herein,
is hereby  DISMISSED,  with  prejudice to the filing of any claims that were, or
with  reasonable  diligence  could have been  asserted  herein.  Costs are taxed
against the party or parties originally incurring same.

     SIGNED this ____ day of _____________, 2003.





                                                _______________________________
                                                UNITED STATES DISTRICT JUDGE



                                   Schedule A


<PAGE>



                                   SCHEDULE A


                                SHARES OF COMMON
                           STOCK INITIALLY SUBJECT TO
                                IRREVOCABLE PROXY


Record Holder                    Number of Shares             Certificate No(s).


Roy F. Mitte                          75,340(2)
Joann Cole Mitte                           0
Scott Mitte                               64(3)
The Roy F. and Joann
  Cole Mitte Foundation            1,552,206








-------------------------

2 Such amount  includes  35,520  shares of Common  Stock held for Roy F. Mitte's
benefit in the Corporation's Employee Stock Ownership Plan.

3 Such amount is held for Scott Mitte's  benefit in the  Corporation's  Employee
Stock Ownership Plan.



                                   Schedule A