Exhibit 10.10


                          EMPLOYMENT AGREEMENT


     This EMPLOYMENT AGREEMENT (this "Agreement"), dated as of October 15,
1997, is made and entered into by and between Farmers Group, Inc., a Nevada
corporation (the "Company") and John H. Lynch (the "Executive").

     The Executive is presently employed by the Company.

     The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the growth and success of the Company has been
substantial.  The Company, on behalf of itself and its stockholders, desires
to continue to attract and retain well-qualified executive and key personnel
who are an integral part of the management of the Company, such as the
Executive, and to assure itself of continuity of management.  The Executive is
willing to commit himself to continue to serve the Company, on the terms and
conditions herein provided.

     In order to effect the foregoing, the Company and the Executive wish to
enter into an employment agreement on the terms and conditions set forth below.
Accordingly, in consideration of the premises and the respective covenants
and agreements of the parties herein contained, and intending to be legally
bound hereby, the parties hereto agree as follows:

     1.     Employment.  The Company hereby agrees to continue to employ the
            Executive, and the Executive hereby agrees to continue to serve
            the Company, on the terms and conditions set forth herein.

     2.     Term.  This Agreement shall commence on the date set forth above
            (the "Commencement Date") and shall expire on the last day of the
            twenty-fourth (24th) month immediately following the Commencement
            Date, unless further extended or sooner terminated as hereinafter
            provided.  In no event, however, shall the term of the Executive's
            employment hereunder extend beyond the date of the Executive's
            actual retirement in accordance with the Company's retirement
            policies in effect on the date hereof.

            Notwithstanding the foregoing, (a) if a Potential Change in
            Control shall have occurred during the Initial Term or any
            Extended Term, the term of this Agreement shall be extended and
            shall continue in effect through the last day of the twenty-fourth
            (24th) month immediately following the date on which such
            Potential Change in Control occurred and (b) if a Change in
            Control shall have occurred during the Initial Term or any
            Extended Term, the term of this Agreement shall be extended and
            shall continue in effect through the last day of the
            twenty-fourth (24th) month immediately following the date on which
            such Change in Control occurred; provided that, if such Potential
            Change in Control is abandoned prior to the occurrence of a Change
            in Control, this Agreement shall expire in accordance with the
            provisions hereof, without regard to such extension.

     3.     Position and Duties.  The Executive shall continue to serve in his
            current position and shall have such responsibilities, duties and
            authority as he may have as of the date hereof (or any position to

<PAGE>   2

            which he may be promoted after the date hereof) and as may from
            time to time be assigned to the Executive by the Board that are
            consistent with such responsibilities, duties and authority.  The
            Executive shall devote substantially all his working time and
            efforts to the business and affairs of the Company.

     4.     Place of Performance.  In connection with the Executive's
            employment by the Company, the Executive  shall continue to be
            based in his current location, except for required travel on the
            Company's business to an extent substantially consistent with
            the duties of the Executive.

     5.     Compensation and Related Matters.

            (a)    Compensation.  During the period of the Executive's
                   employment hereunder, the Company shall pay to the
                   Executive an annual amount equal to the Executive's Cash
                   Compensation at a rate not less than the rate in effect as
                   of the date hereof or such higher rate as may from time to
                   time be determined by the Board, such compensation to be
                   paid in such installments as are customary from time to
                   time for executive officers of the Company.  This
                   compensation may be increased from time to time in
                   accordance with normal business practices of the Company
                   and, if so increased, shall not thereafter during the term
                   of this Agreement be decreased.  Such compensation shall
                   not be deemed exclusive and shall not prevent the Executive
                   from participating in any other compensation or benefit
                   plan of the Company.  The Cash Compensation payments
                   (including any increased salary payments) hereunder shall
                   not in any way limit or reduce any other obligation of the
                   Company hereunder, and no other compensation, benefit or
                   payment hereunder shall in any way limit or reduce the
                   obligation of the Company to pay the Executive's Cash
                   Compensation hereunder.

            (b)    Expenses.  During the term of the Executive's employment
                   hereunder, the Executive shall be entitled to receive
                   prompt reimbursement for all reasonable and customary
                   expenses incurred by the Executive in performing services
                   hereunder, including all expenses of travel and living
                   expenses while away from home on business or at the request
                   of and in the service of the Company; provided that, such
                   expenses are incurred and accounted for in accordance with
                   the policies and procedures established by the Company.

            (c)    Other Benefits.  The Executive shall be entitled to
                   continue to participate in all Company and Parent
                   compensation, incentive, welfare or benefit plans or
                   arrangements, as well as any plan or arrangement whereby
                   the Executive may acquire securities of the Company or
                   Parent in effect on the date hereof in which the Executive
                   is participating, or subsequent plans or arrangements
                   providing the Executive with substantially similar benefits
                   thereunder, including without limitation the Company's
                   Employees' Profit Sharing and Savings Plan, Employees'
                   Pension Plan, Farmers Stock Incentive Plan, Employees'
                   Stock Ownership Plan, the Farmers Executive Incentive
                   Program (the "EIP"), the Premier Award Unit Plan (the
                   "Premier Plan") and any other plan or arrangement to
                   receive and exercise stock options or stock appreciation
                   rights, supplemental pension plan, insured medical
                   reimbursement plan, automobile benefits, executive
                   financial planning, group life insurance plan, personal
                   catastrophe liability insurance, medical, dental, accident
                   and disability plans (each a "Benefit Plan").  The
                   Executive shall be entitled to participate in or

<PAGE>   3

                   receive benefits under any Benefit Plan made available by
                   the Company in the future to its executives and key
                   management employees, subject to and on a basis consistent
                   with the terms, conditions and overall administration of
                   such plans and arrangements.  Nothing paid to the Executive
                   under any Benefit Plan presently in effect or made available
                   in the future shall be deemed to be in lieu of the salary
                   payable to the Executive pursuant to paragraph (a) of this
                   Section.  Any payments or benefits payable to the Executive
                   hereunder in respect of any calendar year during which the
                   Executive is employed by the Company for less than the
                   entire such year shall, unless otherwise provided in the
                   applicable Benefit Plan be prorated in accordance with the
                   number of days in such calendar year during which he is
                   so employed.

            (d)    Vacations.  The Executive shall be entitled to no less than
                   the number of vacation days in each calendar year, and to
                   compensation in respect of earned but unused vacation days,
                   determined in accordance with the Company's vacation policy
                   as in effect on the date hereof.

            (e)    Services Furnished.  The Company shall furnish the
                   Executive with office space, stenographic assistance and
                   such other facilities and services as shall be suitable to
                   the Executive's position and adequate for the performance
                   of his duties as set forth in Section 3 hereof.

     6.     Termination.  Without prejudice to Section 2 hereof, the
            Executive's employment hereunder may be terminated without any
            breach of this Agreement only under the following circumstances:

            (a)    Death.  The Executive's employment hereunder shall
                   terminate upon his death.

            (b)    Disability.  If, (i) as a result of the Executive's
                   incapacity due to physical or mental illness, the Executive
                   shall have been absent from his duties with the Company on
                   a full-time basis for the entire period of six (6)
                   consecutive months, and within thirty (30) days after
                   written "Notice of Termination" (as defined in Section 12
                   below) is thereafter given by the Company (which may occur
                   before or after the end of such six month period) the
                   Executive shall not have returned to the performance of his
                   duties hereunder on a full-time basis, or (ii) the
                   Executive becomes eligible for benefits under the Company's
                   long-term disability plan or any successor plan, the
                   Company may terminate this Agreement and the Executive's
                   employment hereunder for "Disability."

            (c)    Cause.  The Company may, in writing and without prior
                   notice, terminate the Executive's employment hereunder for
                   Cause (except as otherwise provided in clause (iv) of
                   subsection 13(d)(iv)).  Notwithstanding the foregoing, the
                   Executive shall have the right to contest his termination
                   for Cause (for purposes of this Agreement) by mediation in
                   accordance with the provisions of this Agreement as set
                   forth in Section 17 herein.

            (d)    Termination by the Executive.  The Executive may terminate
                   his employment hereunder for Good Reason.  For purposes of
                   any determination regarding the existence of Good Reason,
                   any claim by the Executive that Good Reason exists shall be
                   presumed to be

<PAGE>   4

                   correct unless the Company establishes to the then existing
                   Compensation Committee of the Board that Good Reason does
                   not exist.

     7.     Compensation During Disability or Upon Termination.

            (a)    During any period that the Executive fails to perform his
                   duties hereunder as a result of incapacity due to physical
                   or mental illness ("Disability Period"), the Executive
                   shall continue to receive his full salary at the rate then
                   in effect for such period until his employment is
                   terminated pursuant to Section 6(b) hereof; provided that,
                   payments so made to the Executive during the Disability
                   Period shall be reduced by the sum of the amounts, if any,
                   payable to the Executive at or prior to the time of any
                   such payment under disability benefit plans of the Company
                   or under the Social Security disability insurance program,
                   and which amounts were not previously applied to reduce any
                   such payment.

            (b)    If the Executive's employment is terminated by his death,
                   the Company shall pay any amounts due to the Executive
                   under Section 5 through the date of his death in accordance
                   with Section 11(b).

            (c)    If the Executive's employment is terminated by the Company
                   for Cause or by the Executive for other than Good Reason,
                   the Company shall pay the Executive his full salary through
                   the Date of Termination at the rate in effect at the time
                   Notice of Termination is given and the Company shall have
                   no further obligations to the Executive under this
                   Agreement.

            (d)    If (1) in breach of this Agreement, the Company shall
                   terminate the Executive's employment other than for
                   Disability pursuant to Section 6(b) or for Cause (it being
                   understood that a purported termination for Disability
                   pursuant to Section 6(b) or for Cause which is disputed and
                   finally determined not to have been proper shall be a
                   termination by the Company in breach of this Agreement) or
                   (2) the Executive shall terminate his employment for Good
                   Reason, then, subject to the provisions of Section 10
                   hereof, the Company shall:

                   (i)   pay the Executive his full annual base salary through
                         the Date of Termination at the rate in effect at the
                         time Notice of Termination is given and all other
                         unpaid amounts, if any, to which the Executive is
                         entitled as of the Date of Termination under any
                         Benefit Plan at the time such payments are due;

                   (ii)  subject to the provisions of Section 9 hereof, in
                         lieu of any further salary payments to the Executive
                         for periods subsequent to the Date of Termination,
                         pay as liquidated damages to the Executive an amount
                         equal to the Executive's Cash Compensation (as defined
                         below), times a fraction the numerator of which is the
                         number of months remaining in the then current term of
                         the Agreement, and the denominator of which is twelve
                         (12), such payment to be made in a lump sum in cash,
                         on or before the fifth day following the Date of
                         Termination;

<PAGE>   5

                   (iii) subject to the provisions of Section 9 hereof,
                         arrange to provide the Executive for two (2) years
                         (or such shorter period as Executive may elect), with
                         disability, life, accident and health insurance
                         substantially similar to those insurance benefits
                         which Executive is receiving immediately prior to the
                         Notice of Termination (including coverage for
                         dependents at the same per person cost as the
                         Executive is then paying); provided that, benefits
                         otherwise receivable by Executive pursuant to this
                         subsection 6 (d)(iii) shall be reduced to the extent
                         comparable benefits are actually received by the
                         Executive during such two (2) year period following
                         his termination (or such shorter period elected by
                         the Executive), and any such benefits actually
                         received by Executive shall be reported by him to the
                         Company;

                   (iv)  subject to the provisions of Section 9 hereof, pay
                         the Executive a benefit under the Premier Plan (or
                         other long term incentive plan) as if he had
                         terminated employment by reason of his retirement
                         (without regard to whether the Executive has, and
                         without deeming the Executive to have, reached his
                         normal retirement age) and as if any remaining
                         performance criteria and any time period of service
                         requirement had been waived; and

                   (v)   subject to the provisions of Section 9 hereof, pay to
                         the Executive a single lump sum payment equal to the
                         excess of (x) over (y), where (x) is equal to the
                         present lump sum value of the combined pension
                         benefits that the Executive would receive under the
                         Employees' Pension Plan (the "Pension Plan"), taking
                         into account Article XV thereof, the Employee
                         Benefits Restoration Plan (the "Restoration Plan")
                         and providing supplemental pension benefits
                         (collectively, the "Plans"), at his earliest benefit
                         commencement date under the Pension Plan computed by
                         increasing, in the case of each Plan, the number of
                         years of credited service actually taken into account
                         under each Plan as of the date of his termination of
                         employment, or, if earlier, the termination of the
                         Pension Plan, by two (2) years, and (y) is equal to
                         the present lump sum value of the combined pension
                         benefits actually payable to the Executive on his
                         earliest benefit commencement date under the Pension
                         Plan (taking into account Article XV thereof), the
                         Restoration Plan and the Agreement based, in the case
                         of each Plan, on the actual number of years of
                         credited service actually taken into account under
                         each Plan as of the date of his termination of
                         employment, or, if earlier, the termination of the
                         Pension Plan.  The foregoing lump sum present value
                         amount, shall be computed using the actuarial factors
                         under the Pension Plan in effect on the date of the
                         Executive's termination of employment or, if earlier,
                         the termination of the Pension Plan.

Notwithstanding the foregoing, in the event the Executive does not have two (2)
full years remaining until the Executive's mandatory-retirement date under the
Company's retirement policies, for purposes of this Section 7, the minimum two
(2) year period set forth above shall automatically be reduced to the number of
years and/or partial years (measured by months) remaining until such
Executive's retirement.  For example, if Executive terminated his employment
for Good Reason six months before mandatory retirement, the minimum two (2)
year period set forth above would be reduced from 2 to 1.5.  For purposes of
this Agreement, the mandatory retirement age of an Executive shall be 65.

<PAGE>   6

     8.      Indemnification for Excise Tax.

            (a)    Notwithstanding any other provisions of this Agreement, in
                   the event that any of the payments or benefits received or
                   to be received by the Executive in connection with a
                   "change in control" (as defined in Section 280G of the
                   Code) (whether pursuant to the terms of this Agreement or
                   any other plan, arrangement or agreement with the Company,
                   any Person whose actions result in a change in control or
                   any Person affiliated with the Company or such Person)
                   (such payments or benefits, excluding the Gross-Up Payment,
                   being hereinafter referred to as the "Total Payments") will
                   be subject to the Excise Tax, the Company shall pay to the
                   Executive an additional amount (the "Gross-Up Payment")
                   such that the net amount retained by the Executive, after
                   deduction of any Excise Tax on the Total Payments and any
                   federal, state and local income and employment taxes and
                   Excise Tax upon the Gross-Up Payment, shall be equal to the
                   Total Payments.

            (b)    For purposes of determining whether any of the Total
                   Payments will be subject to the Excise Tax and the amount
                   of such Excise Tax, (i) all of the Total Payments shall be
                   treated as "parachute payments" (within the meaning of
                   section 280G(b)(2) of the Code) unless, in the opinion of
                   tax counsel ("Tax Counsel") reasonably acceptable to the
                   Executive and selected by the accounting firm which was,
                   immediately prior to the change in control, the Company's
                   independent auditor (the "Auditor"), such payments or
                   benefits (in whole or in part) do not constitute parachute
                   payments, including by reason of section 280G(b)(4)(A) of
                   the Code, (ii) all "excess parachute payments" within the
                   meaning of section 280G(b)(1) of the Code shall be treated
                   as subject to the Excise Tax unless, in the opinion of Tax
                   Counsel, such excess parachute payments (in whole or in
                   part) represent reasonable compensation for services
                   actually rendered (within the meaning of section 280G(b)(4)
                   (B) of the Code) in excess of the Base Amount allocable to
                   such reasonable compensation, or are otherwise not subject
                   to the Excise Tax, and (iii) the value of any noncash
                   benefits or any deferred payment or benefit shall be
                   determined by the Auditor in accordance with the principles
                   of sections 280G(d)(3) and (4) of the Code.  For purposes of
                   determining the amount of the Gross-Up Payment, the
                   Executive shall be deemed to pay federal income tax at the
                   highest marginal rate of federal income taxation in the
                   calendar year in which the Gross-Up Payment is to be made
                   and state and local income taxes at the highest marginal
                   rate of taxation in the state and locality of the
                   Executive's residence on the Date of Termination (or if
                   there is no Date of Termination, then the date on which the
                   Gross-Up Payment is calculated for purposes of this Section
                   8), net of the maximum reduction in federal income taxes
                   which could be obtained from deduction of such state and
                   local taxes.

            (c)    In the event that the Excise Tax is finally determined to
                   be less than the amount taken into account hereunder in
                   calculating the Gross-Up Payment, the Executive shall repay
                   to the Company, within five (5) business days following the
                   time that the amount of such reduction in the Excise Tax is
                   finally determined, the portion of the Gross-Up Payment
                   attributable to such reduction (plus that portion of the
                   Gross-Up Payment attributable to the Excise Tax and
                   federal, state and local income and employment taxes
                   imposed on the Gross-Up Payment being repaid by the
                   Executive, to the extent that such repayment results in a
                   reduction in the Excise Tax and a dollar-for-dollar
                   reduction in the Executive's taxable income and wages for
                   purposes of federal, state and local income and employment

<PAGE>   7

                   taxes, plus interest on the amount of such repayment at
                   120% of the rate provided in section 1274(b)(2)(B) of the
                   Code.  In the event that the Excise Tax is determined to
                   exceed the amount taken into account hereunder in
                   calculating the Gross-Up Payment (including by reason of
                   any payment the existence or amount of which cannot be
                   determined at the time of the Gross-Up Payment), the
                   Company shall make an additional Gross-Up Payment in
                   respect of such excess (plus any interest, penalties or
                   additions payable by the Executive with respect to such
                   excess) within five (5) business days following the time
                   that the amount of such excess is finally determined.  The
                   Executive and the Company shall each reasonably cooperate
                   with the other in connection with any administrative or
                   judicial proceedings concerning the existence or amount of
                   liability for Excise Tax with respect to the Total Payments.

            (d)    Preparation of Tax Return.  The Company, at its expense,
                   agrees to supply the Executive with advice from competent
                   tax counsel as to whether said Executive must reflect and
                   pay an excise tax under Sections 280G and 4999 of the Code
                   on the filing of any federal income tax return of said
                   Executive relating to the period or periods in which said
                   Executive received payments or benefits under this
                   Agreement which may result in the imposition of such an
                   excise tax.  If such tax counsel advises that such excise
                   tax must be reflected and paid on such tax return, said
                   Executive agrees to so reflect and pay such tax at which
                   time the Company will reimburse said Executive in
                   accordance with this Section 8.  If such tax counsel
                   advises that such excise tax need not be reflected and paid
                   on such tax return, said Executive agrees to prepare and
                   file his tax return in accordance with such advice.  In
                   either case the Company shall indemnify said Executive in
                   accordance with Section 8(a) of this Agreement for any
                   subsequent assessment of excise taxes made by the Internal
                   Revenue Service under Section 4999 of the Code in
                   accordance with the provisions of this Section 8.

            (e)    Duty to Cooperate.  The Executive agrees promptly to notify
                   the Company in the event of any audit by the Internal
                   Revenue Service ("IRS") in which the IRS asserts that any
                   excise tax should be assessed against said Executive and to
                   cooperate with the Company in contesting (at the Company's
                   expense) any such proposed assessment.  Said Executive
                   agrees not to settle or compromise any such assessment
                   without the Company's consent.  If said Executive's failure
                   to settle a proposed assessment with respect to such excise
                   tax ("Proposed Assessment") at the direction of the Company
                   is the reason his overall audit cannot be finally resolved,
                   then said Executive may demand that the Company consent to
                   settle the Proposed Assessment.  If the Company does not
                   settle the Proposed Assessment, or consent to allow said
                   Executive to settle, within sixty (60) days, the Company
                   shall indemnify and hold harmless said Executive from any
                   additional interest or penalties resulting from the delay
                   in finally resolving the audit.

     9.     Effect of Agreement on Other Contractual Rights.  The provisions
            of this Agreement, and any payment provided for hereunder, shall
            not reduce any amounts otherwise payable, or in any way diminish
            the Executive's existing rights, or rights which would accrue
            solely as a result of the passage of time, under any Benefit Plan
            or other contract, plan or arrangement.

<PAGE>   8

     10.    Restrictive Covenants.

            (a)    During the term of this Agreement, Executive shall not,
                   directly or indirectly, without the prior written consent
                   of the Company, provide consultative service to (with or
                   without pay), own, manage, operate, join, control,
                   participate in, or be connected with (as a stockholder,
                   partner, officer, director, employee or otherwise) any
                   business, individual, partner, firm, corporation, or other
                   entity that directly or indirectly competes with the
                   Company (a "Competitor of the Company"); provided that, the
                   "beneficial ownership" by Executive, either individually or
                   as a member of a "group," as such terms are used in Rule
                   13d of the General Rules and Regulations Exchange Act, of
                   not more than five percent (5%) of the voting stock of any
                   publicly held corporation shall not be a violation of this
                   Agreement.

            (b)    Confidential Information.  Executive acknowledges that in
                   his employment hereunder he occupies a position of trust
                   and confidence.  During the term of the Agreement and for
                   all periods thereafter, Executive shall not, except as may
                   be required to perform his duties hereunder or as required
                   by applicable law, and except for information which is or
                   becomes publicly available other than as a result of a
                   breach by the Executive of the provisions hereof, disclose
                   to others or use, whether directly or indirectly, any
                   Confidential Information.  Executive acknowledges that such
                   Confidential Information is specialized, unique in nature
                   and of great value to the Company, and that such
                   information gives the Company a competitive advantage.  The
                   Executive agrees to deliver or return to the Company, at
                   the Company's request at any time or upon termination or
                   expiration of his employment or as soon thereafter as
                   possible, all documents, computer tapes and disks, records,
                   lists, data, drawings, prints, notes and written
                   information (and all copies thereof) furnished by the
                   Company or prepared by the Executive during the term of his
                   employment by the Company.

            (c)    Business Diversion.  During the term of this Agreement and
                   any Severance Period thereafter, Executive shall not,
                   directly or indirectly, influence or attempt to influence
                   customers or suppliers of the Company to divert their
                   business to any Competitor of the Company.

            (d)    Nonsolicitation.  Executive recognizes that he will possess
                   confidential information about other employees of the
                   Company, relating to, among other things, their education,
                   experience, skills, abilities, compensation and benefits,
                   and inter-personal relationships with suppliers and
                   customers of the Company.  Executive recognizes that the
                   information he will possess about these other employees is
                   not generally known, is of substantial value to the
                   Company and will be acquired by him because of his business
                   position with the Company.  Executive agrees that, during
                   the term of this Agreement and for one (1) year thereafter,
                   he will not, directly or indirectly, solicit or recruit any
                   employee of the Company for the purpose of being employed by
                   him or by any other person on whose behalf he is acting as
                   an agent, representative or employee and that he will not
                   convey any such confidential information or trade secrets
                   about other employees of the Company.

<PAGE>   9

     11.    Successors; Binding Agreement.

            (a)    In connection with any agreement to which it is a party, the
                   Company will require any successor (whether direct or
                   indirect, by purchase, merger, consolidation or otherwise)
                   to all or substantially all of the business and/or assets of
                   the Company, by agreement in form and substance satisfactory
                   to the Executive, to expressly assume and agree to perform
                   this Agreement in the same manner and to the same extent
                   that the Company would be required to perform it if no such
                   succession had taken place.  Failure of the Company to
                   obtain such assumption and agreement prior to the
                   effectiveness of any such succession shall be a breach of
                   this Agreement and shall entitle the Executive to
                   compensation from the Company in the same amount and on the
                   same terms as he would be entitled to hereunder if he
                   terminated his employment for Good Reason, except that for
                   purposes of implementing the foregoing, the date on which
                   any such succession becomes effective shall be deemed the
                   Date of Termination.  As used in this Agreement, "Company"
                   shall mean the Company as herein before defined and any
                   successor to its business and/or assets as aforesaid which
                   executes and delivers the agreement provided for in this
                   Section 11 or which otherwise becomes bound by all the terms
                   and provisions of this Agreement by operation of law.

            (b)    This Agreement shall inure to the benefit of and be
                   enforceable by the Executive's personal and legal
                   representatives, executors, administrators, successors,
                   heirs, distributees, devises and legatees.  If the
                   Executive should die while any amounts are still payable to
                   him hereunder, all such amounts, unless otherwise provided
                   herein, shall be paid in accordance with the terms of this
                   Agreement to the Executive's devisee, legatee, or other
                   designee or, if there be no such designee, to the
                   Executive's estate.

     12.    Notice/Notice of Termination.  For purposes of this Agreement,
            notices and all other communications provided for in the Agreement
            shall be in writing and shall be deemed to have been duly given
            when delivered or mailed by United States registered mail, return
            receipt requested, postage prepaid, as follows:  if to the
            Company - Farmers Group, Inc., 4680 Wilshire Boulevard, Los
            Angeles, California 90010, Attention:  Secretary; and if to the
            Executive at the address specified at the end of this Agreement.
            Notice may also be given at such other address as either party may
            have furnished to the other in writing in accordance herewith,
            except that notices of change of address shall be effective only
            upon receipt.  Any purported termination of the Executive's
            employment by the Company or the Executive hereunder shall be
            communicated by a Notice of Termination to the other party as set
            forth herein.  For purposes of this Agreement, a "Notice of
            Termination" shall mean a written notice which shall indicate
            those specific termination provisions in this Agreement relied
            upon and which sets forth in reasonable detail the facts and
            circumstances claimed to provide a basis for termination of the
            Executive's employment under the provision of Sections 6(b),
            (c) and (d) hereof.

     13.    Definitions.  Terms not otherwise defined in this Agreement shall
            have the meanings set forth in this Section 13.

            (a)    Beneficial Owner.  "Beneficial Owner" shall have the meaning
                   of such term as defined in Rule 13d-3 of the Exchange Act.

<PAGE>   10

            (b)    Cash Compensation.  "Cash Compensation" shall mean the sum
                   of (x) the average of the final three (3) year's base salary
                   of the Executive, and (y) an amount equal to the sum of (i)
                   the average of the final three (3) year's cash bonus paid to
                   the Executive under the EIP or any other bonus plan of the
                   Company, for any of the fiscal years ended during the term
                   of this Agreement, and (ii) the average of the amounts
                   allocated to the Executive under the Employee's Profit
                   Sharing and Savings Trust for such years.

            (c)    Cause.  "Cause" shall mean:  (i) the commission of a felony
                   (other than driving while intoxicated or while under the
                   influence of alcohol or drugs), (ii) the engaging by
                   Executive in misconduct involving dishonesty which is
                   injurious to the Company, monetarily or otherwise or which
                   is inimical to the effective performance of the Executive's
                   duties, (iii) a willful dereliction of duty or intentional
                   and malicious conduct contrary to the best interests of the
                   Company or its business if such dereliction of duty or
                   misconduct is not corrected within thirty (30) days after
                   written notice hereof from the Company, (iv) a refusal to
                   perform reasonable services customarily performed by the
                   Executive (other than by reason of a Disability); unless
                   such refusal, if capable of being corrected, is corrected
                   within thirty (30) days after written notice thereof from
                   the Company, or (v) the Executive's engaging in conduct that
                   violates the Restrictive Covenants set forth in Section 10
                   hereof.

            (d)    Change in Control.  A "Change in Control" of the Company
                   shall be deemed to have occurred if the event set forth in
                   any one of the following paragraphs shall have occurred:

                   (i)   any Person is or becomes the Beneficial Owner,
                         directly or indirectly, of securities of the Company
                         (other than Parent) representing 30% or more of the
                         combined voting power of the then outstanding
                         securities of the Company, excluding any Person who
                         becomes such a Beneficial Owner in connection with a
                         transaction described in clause (x) of paragraph (iv)
                         below; or

                   (ii)  members of the public become the Beneficial Owners,
                         directly or indirectly, of securities of the Company
                         (other than Parent) representing 60% or more of the
                         combined voting power of the then outstanding
                         securities of the Company; or

                   (iii) the following individuals cease for any reason to
                         constitute a majority of the number of directors of
                         the Board then serving: individuals who, on the date
                         hereof, constitute such board and any new director
                         (other than a director whose initial assumption of
                         office is in connection with an actual or threatened
                         election contest, including but not limited to a
                         consent solicitation, relating to the election of
                         directors of the Company) whose appointment or
                         election by such board or nomination for election by
                         stockholders was approved or recommended by a vote of
                         at least two-thirds (2/3) of the directors then still
                         in office who either were directors on the date hereof
                         or whose appointment, election or nomination for
                         election was previously so approved or recommended; or

<PAGE>   11

                   (iv)  there is consummated a merger or consolidation of the
                         Company, Parent or any direct or indirect subsidiary
                         of the Company with any other corporation, other than
                         (x) a merger or consolidation which would result in
                         the voting securities of the Company outstanding
                         immediately prior to such merger or consolidation
                         continuing to represent (either by remaining
                         outstanding or by being converted into voting
                         securities of the surviving entity or any parent
                         thereof), in combination with the ownership of any
                         trustee or other fiduciary holding securities under
                         an employee benefit plan of Parent, the Company or
                         any subsidiary of the Company, at least 60% of the
                         combined voting power of the securities of the Company
                         or such surviving entity or any parent thereof
                         outstanding immediately after such merger or
                         consolidation, or (y) a merger or consolidation
                         effected to implement a recapitalization of Parent or
                         the Company (or similar transaction) in which no
                         Person is or becomes the Beneficial Owner, directly or
                         indirectly, of securities of the Company (not
                         including in the securities Beneficially Owned by such
                         Person, any securities acquired directly from the
                         Company, other than in connection with the acquisition
                         by the Company or its affiliates of a business)
                         representing 30% or more of the combined voting power
                         of the Company's then outstanding securities; or

                   (v)   the stockholders of the Company approve a plan of
                         complete liquidation or dissolution of the Company or
                         there is consummated an agreement for the sale or
                         disposition by the Company of all or substantially all
                         of the assets of the Company, other than a sale or
                         disposition by the Company of all or substantially all
                         of the assets of the Company, to an entity, at least
                         60% of the combined voting power of the voting
                         securities of which are owned by stockholders of the
                         Company in substantially the same proportions as their
                         ownership of the Company immediately prior to such
                         sale.

            (e)    Confidential Information.  "Confidential Information" shall
                   mean information about the Company and its respective
                   suppliers, clients and customers that is not disclosed by
                   the Company for financial reporting purposes and that was
                   learned by Executive in the course of his employment
                   hereunder, including (without limitation) proprietary
                   knowledge, trade secrets, market research, data, formulae,
                   information and supplier, client and customer lists and all
                   papers, resumes, and records (including computer records) of
                   the documents containing such Confidential Information.

            (f)    Date of Termination.  "Date of Termination" shall mean (i)
                   if the Executive's employment is terminated by his death,
                   the date of his death, (ii) if the Executive's employment
                   is terminated pursuant to subsection (b) above, thirty (30)
                   days after Notice of Termination is given (provided that the
                   Executive shall not have returned to the performance of his
                   duties on a full-time basis during such thirty (30) day
                   period), (iii) if the Executive's employment is terminated
                   pursuant to subsection (c) above, the date specified in the
                   Notice of Termination, and (iv) if the Executive's
                   employment is terminated for any other reason, the date on
                   which a Notice of Termination is given; provided that, if
                   within thirty (30) days after any Notice of Termination is
                   given the party receiving such Notice of Termination
                   notifies the other party that a dispute exists concerning
                   the termination, the Date of

<PAGE>  12

                   Termination shall be the date on which the dispute is
                   finally determined, either by mutual written agreement of
                   the parties or by a final judgment, order or decree of a
                   court of competent jurisdiction (the time for appeal there
                   from having expired and no appeal having been perfected).

            (g)    Exchange Act.  "Exchange Act" shall mean the Securities
                   Exchange Act of 1934 as amended from time to time and as now
                   or hereafter construed, interpreted and applied by
                   regulations, rulings and cases.

            (h)    Good Reason.  The Executive's termination of employment with
                   the Company shall be deemed for "Good Reason" if it occurs
                   within twelve (12) months of any of the following without
                   the Executive's express written consent:

                   (i)   the assignment to the Executive by the Company of
                         duties inconsistent with, or a substantial adverse
                         alteration in the nature or status of, Executive's
                         responsibilities as of the date hereof;

                   (ii)  a reduction by the Company in the Executive's annual
                         Cash Compensation as in effect on the date hereof or
                         as in effect from time to time if such amounts are
                         increased during the term of this Agreement;

                   (iii) any failure by the Company to continue in effect
                         without substantial change any Benefit Plan, or the
                         taking of any action by the Company which would
                         adversely affect the Executive's participation in or
                         materially reduce the Executive's benefits under any
                         such Benefit Plan (including a more than 10% reduction
                         from the highest percentage of available EIP award
                         paid in the three (3) immediately preceding calendar
                         years to the Executive) or deprive the Executive of
                         any material fringe benefit currently enjoyed by the
                         Executive unless an equitable substitute arrangement
                         (embodied in an ongoing substitute or alternative
                         Benefit Plan) has been made for the benefit of the
                         Executive with respect to the Benefit Plan in
                         question;

                   (iv)  any material breach by the Company of any provision of
                         this Agreement which, if capable of being rectified by
                         the Company, is not rectified within thirty (30) days
                         of notice (which notice specifies the nature of such
                         breach);

                   (v)   any failure by the Company to obtain the assumption of
                         this Agreement by any successor or assign of the
                         Company; or

                   (vi)  any purported termination of the Executive's
                         employment by the Company which is not effected
                         pursuant to a Notice of Termination satisfying the
                         requirements of Section 12 below, and for purposes of
                         this Agreement, no such purported termination shall be
                         effective.

            (i)    Parent.   "Parent" shall mean the ultimate controlling
                   parent of the Company.

<PAGE>   13

            (j)    Person.   "Person" shall have the meaning of such term as
                   used in Section (3)(a)(9) of the Exchange Act.

            (k)    Potential Change in Control.  A "Potential Change in
                   Control" shall be deemed to have occurred if the event set
                   forth in any one of the following paragraphs shall have
                   occurred:

                   (i)   the Company, Parent or any Person publicly announces
                         an intention to take or to consider taking actions
                         which, if consummated, would constitute a Change in
                         Control;

                   (ii)  in connection with the purchase of the voting
                         securities of the Company, any person, or group of
                         persons, file or are required to file, an application
                         seeking approval of insurance regulatory authorities
                         relative to the acquisition of control of a domestic
                         insurer or reciprocal exchanges;

                   (iii)  the Company or Parent enters into an agreement, the
                          consummation of which would result in the occurrence
                          of a Change in Control;

                   (iv)  any Person becomes the Beneficial Owner, directly or
                         indirectly, of securities of the Company (other than
                         Parent) representing 15% or more of either the then
                         outstanding shares of common stock of the Company or
                         the combined voting power of the then outstanding
                         securities of the Company (not including in the
                         securities beneficially owned by such Person or any
                         securities acquired directly from the Company).

                   For purposes of this Agreement, a Potential Change in
                   Control shall be deemed to have been abandoned if, prior to
                   a Change in Control (and provided that no Change in Control
                   occurs within 180 days thereafter), (A) in connection with
                   a Potential Change in Control described in (k)(i) above, an
                   announcement is made recanting such intention, (B) in
                   connection with a Potential Change in control described in
                   (k)(ii) above such approval is formally rejected, (C) in
                   connection with a Potential Change in Control described in
                   (k)(iii) above, such agreement is abandoned prior to
                   consummation, (D) in connection with a Potential Change in
                   Control described in (k)(iv) above, such Person ceases to
                   be a Beneficial Owner, directly or indirectly, of
                   securities of the Company representing 15% or more of such
                   securities; or (E) the Board adopts a resolution to the
                   effect that, for purposes of this Agreement, such Potential
                   Change in Control has been abandoned.

     14.  Miscellaneous.  No provisions of this Agreement may be modified,
          waived or discharged unless such waiver, modification or discharge
          is agreed to in writing signed by the Executive and the Company.  No
          waiver by either party hereto at any time of any breach by the other
          party hereto of, or compliance with, any condition or provision of
          this Agreement to be performed by such other party shall be deemed a
          waiver of similar or dissimilar provisions or conditions at the same
          or at any prior or subsequent time.  No agreements or
          representations, oral or otherwise, express or implied, with respect
          to the subject matter hereof have been made by either party which
          are not set forth expressly in this agreement.

<PAGE>   14

     15.  Validity.  The invalidity or unenforceability of any provision or
          provisions of this Agreement shall not affect the validity or
          enforceability of any other provision of this Agreement, which
          shall remain in full force and effect.

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

     17.  Mediation.  Before any party commences an action for damages or
          other relief (except injunctive relief that is sought by the Company
          for an alleged violation of Section 10 of this Agreement), Executive
          and the Company agree to submit any dispute, claim or controversy
          arising out of or relating to this Agreement, including the breach,
          termination or validity thereof (a "Dispute") to non-binding
          mediation.  The mediation provided for in this Section shall occur
          before a retired judge who shall be selected by the parties from
          JAMS/Endispute.  If the parties are unable to agree upon a mediator,
          a mediator will be selected from JAMS/Endispute pursuant to its
          applicable rules then in existence.  The mediation shall occur
          within 45 days following the appointment of the mediator.  In
          connection with the mediation, each party shall bear his or its own
          attorneys' fees and costs and the mediator's fee shall be paid in
          equal shares by the parties to the mediation.  Notwithstanding the
          foregoing, the Company shall be entitled to seek a restraining order
          or injunction in any court of competent jurisdiction to prevent any
          continuation of any violation of the provisions of Section 10 of the
          Agreement and the Executive hereby consents that such restraining
          order or injunction may be granted without the necessity of the
          Company's posting any bond and, provided further that, the Executive
          shall be entitled to seek specific performance of his right to be
          paid until the Date of Termination during the pendency of any
          dispute or controversy arising under or in connection with this
          Agreement.

     18.  Controlling Law.  This Agreement and the rights of the parties
          hereunder shall be governed by and construed and enforced in
          accordance with laws of the State of California (excluding its
          conflict of laws, principles, statutes or other similar laws)
          including all matters of construction, validity, performance and
          enforcement.

     19.  Entire Agreement.  This Agreement sets forth the entire agreement of
          the parties hereto in respect of the subject matter contained herein
          and supersedes all prior agreements, promises, covenants,
          arrangements, communications, representations or warranties, whether
          oral or written, by any officer, employee or representative of any
          party hereto; and any prior agreement of the parties hereto in
          respect of the subject matter contained herein is hereby terminated
          and cancelled.

<PAGE>   15

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

FARMERS GROUP, INC., a Nevada corporation



By:   /s/    Jason L. Katz
   -------------------------------
Name:        Jason L. Katz
Title:       Senior Vice President and
             General Counsel


John H. Lynch


/s/     John H. Lynch
------------------------------
         (Signature)

       John H. Lynch
------------------------------
           (Name)