Document:

Exhibit 10.21

                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION  RIGHTS AGREEMENT,  dated as of November 25,
2002 (this  "Agreement"),  is made by and between  FOCUS  ENHANCEMENTS,  INC., a
Delaware corporation,  with headquarters located at 1370 Dell Avenue,  Campbell,
California  95008 (the  "Company"),  and each entity  named on a signature  page
hereto (each,  an "Investor"),  and vFINANCE  INVESTMENTS,  INC.  ("VFIN") (each
agreement  with an Investor  being deemed a separate and  independent  agreement
between the Company and such  Investor,  except that each Investor  acknowledges
and consents to the rights granted to each other Investor under such agreement).

                              W I T N E S S E T H:

                  WHEREAS,  upon the terms and subject to the  conditions of the
Common Stock  Purchase  Agreement,  dated as of November  25, 2002,  between the
Investor and the Company (the " Purchase Agreement"; terms not otherwise defined
herein shall have the meanings ascribed to them in the Purchase Agreement),  the
Company has agreed to issue and sell to the  Investors  the Common  Stock of the
Company (the "Common Stock"); and

                  WHEREAS,  the Company has agreed to issue the Warrants to VFIN
in  connection  with the issuance of the Common  Stock,  and the Warrants may be
exercised for the purchase of shares of Common Stock (the "Warrant Shares") upon
the terms and conditions of the Warrants; and

                  WHEREAS,  to induce the  Investor  to execute  and deliver the
Securities  Purchase  Agreement,  the  Company  has  agreed to  provide  certain
registration rights under the Securities Act of 1933;

                  NOW,  THEREFORE,  in  consideration  of the  premises  and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and  sufficiency of which are hereby  acknowledged,  the Company and the
Investor hereby agree as follows:

                  1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:

                  (a)  "Effective  Date"  means  the  date  the SEC  declares  a
Registration Statement covering Registrable Securities and otherwise meeting the
conditions contemplated hereby to be effective.

                  (b) "Held Shares Value" means the Purchase Price for shares of
Common Stock acquired by the Investor and not yet sold.

                  (c) "Investor" means the Investor any permitted  transferee or
assignee  who agrees to become  bound by the  provisions  of this  Agreement  in
accordance with Section 9 hereof and who holds Registrable  Securities and VFIN,
as the context may require.

                  (d) "Potential Material Event" means any of the following: (i)
the possession by the Company of material information not ripe for disclosure in
a registration  statement,  which shall be evidenced by a determination  in good
faith  by the  Board  of  Directors  of the  Company  that  disclosure  of  such
information in the  registration  statement would be detrimental to the business
and affairs of the Company or (ii) any  material  engagement  or activity by the
Company which would, in the good faith  determination  of the Board of Directors
of the Company, be adversely affected by disclosure in a registration  statement
at such time; in each case where such  determination  shall be  accompanied by a
good faith  determination  by the Board of  Directors  of the  Company  that the
registration  statement would be materially  misleading  absent the inclusion of
such information.

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                  (e) "Register,"  "Registered," and  "Registration"  refer to a
registration  effected  by  preparing  and filing a  Registration  Statement  or
Statements in compliance  with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering  securities on a
continuous  basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the Commission.

                  (f)  "Registrable  Securities"  means the  Common  Stock,  the
Warrants, and the Warrant Shares.

                  (g) "Registration Statement" means a registration statement of
the Company under the  Securities  Act covering  Registrable  Securities on Form
S-3,  if the  Company is then  eligible  to file  using  such  form,  and if not
eligible, on Form SB-2 or other appropriate form.

                  (h) "Required Effective Date" means June 1, 2003.

                  (i) "Restricted  Sale Date" means the first date, other than a
date  during a Permitted  Suspension  Period (as  defined  below),  on which the
Investor is restricted  from making sales of Registrable  Securities  covered by
any previously effective Registration Statement.

                  Capitalized terms used herein and not otherwise defined herein
shall  have the  respective  meanings  set forth in the  Common  Stock  Purchase
Agreement or in the Rules of the SEC.

                  2. Registration.

                  (a) Mandatory Registration.

                  (i) The Company  shall  prepare and file with the SEC, as soon
as practicable after the Closing Date, an amendment to an existing  Registration
Statement  or a new  Registration  Statement,  in either event  registering  for
resale by the  Investor a  sufficient  number of shares of Common  Stock for the
Investors and VFIN to sell all of the Registrable  Securities.  The Registration
Statement  shall also state that, in accordance with Rules 416 and 457 under the
Securities Act, it also covers such indeterminate number of additional shares of
Common  Stock as may  become  issuable  upon  conversion  of the  Debentures  or
exercise of the Warrants to prevent  dilution  resulting  from stock splits,  or
stock dividends.  The Company will use its reasonable best efforts to cause such
Registration Statement to be declared effective on a date (the "Initial Required
Effective  Date")  which is no later than the earlier of (Y) five (5) days after
oral or written notice by the SEC that it may be declared  effective or (Z) June
1, 2003.

                  (ii)  The  aggregate  number  of  shares  registered  for  the
Investors in each Registration Statement or amendment thereto shall be allocated
among the Investors on a pro rata basis among them  according to their  relative
Registrable Shares included in such Registration Statement.

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                  (b) Payments by the Company.

                  (i) [RESERVED]

                  (ii) If the  Registration  Statement  covering the Registrable
Securities is not declared  effective by the relevant Required Effective Date or
if there is a Restricted  Sale Date within  ninety (90) days after the effective
date of the Registration  Statement,  then the Company will make payments to the
Investor in such  amounts and at such times as shall be  determined  pursuant to
this Section 2(b).

                  (iii) The amount  (the  "Periodic  Amount")  to be paid by the
Company to the Investor  shall be  determined  as of each  Computation  Date (as
defined below) and such amount shall be equal to the Periodic Amount  Percentage
(as defined  below) of the  Purchase  Price for the Common  Stock for the period
from the date following the Required  Effective Date or a Restricted  Sale Date,
as the case may be, to the first  relevant  Computation  Date, and thereafter to
each subsequent  Computation  Date. The "Periodic Amount  Percentage"  means (A)
with respect to the Required  Effective  Date,  two percent (2%) of the Purchase
Price of the Common Stock for the first,  second and third Computation Dates and
three percent (3%) of the Purchase Price of the Common Stock to each Computation
Date  thereafter,  and (b) with  respect  to a  Restricted  Sale  Date,  one and
one-half  (1 1/2%)  percent  of the  Purchase  Price  of the  Common  Stock  not
previously  sold  by the  Investor  after  the  Restricted  Sale  Date  to  each
Computation  Date  thereafter.  Anything  in the  preceding  provisions  of this
paragraph (iii) to the contrary  notwithstanding,  after the relevant  Effective
Date the  Purchase  Price shall be deemed to refer to the sum of the Held Shares
Value.  By way of  illustration  and not in limitation of the foregoing,  if the
Registration  Statement is not declared  effective by July 1, 2003, the Periodic
Amount will aggregate two (2%) percent of the Purchase Price.

                  (iv) Each  Periodic  Amount  will be payable  by the  Company,
except as provided in the other provisions of this subparagraph (iv), in cash or
other  immediately  available  funds to the  Investor  (1) on the day  after the
Required  Effective Date or a Restricted  Sale Date, as the case may be, and (2)
on the earlier of (A) each thirtieth day thereafter,  (B) the third business day
after the date the Registration Statement is filed or is declared effective,  or
(C) the third business day after the Registration Statement has its restrictions
removed after the relevant Effective Date, in each case without requiring demand
therefor by the Investor.  Notwithstanding  the provisions of the first sentence
of this  subparagraph  (iv),  at the mutual  agreement  of the  Company  and the
Investor,  any time before the Periodic  Amount is paid, all or a portion of the
Periodic Amount can be paid by the issuance of additional shares of Common Stock
to the Investor  ("Periodic  Amount  Shares") in an amount equal to the Periodic
Amount  being paid thereby  divided by 90% of the average  Closing Bid Price for
the last five (5) trading days prior to the Computation Date.

                  (v) The  parties  acknowledge  that the  damages  which may be
incurred by the Investor if the  Registration  Statement  has not been  declared
effective  by the  Required  Effective  Date,  including  if the  right  to sell
Registrable  Securities under a previously effective  Registration  Statement is
suspended or the shares of the  Company's  stock are not listed on the Principal
Trading  Market,  may be  difficult  to  ascertain.  The parties  agree that the
Periodic Amounts represent a reasonable  estimate on the part of the parties, as
of the date of this Agreement, of the amount of such damages.

                  (vi) Notwithstanding the foregoing, the amounts payable by the
Company  pursuant to this provision shall not be payable to the extent any delay
in the effectiveness of the Registration  Statement occurs because of an act of,
or a failure to act or to act timely by the Investor or its counsel.

                  (vii)  "Computation  Date"  means  (A) the  date  which is the
earlier of thirty (30) days after the  Required  Effective  Date or a Restricted
Sale  Date,  or when the  shares of Common  Stock  are  listed on the  Principal
Trading Market (with respect to payments due as contemplated by Section 2(b)(ii)
hereof),  as the case may be,  and (B) each  date  which is the  earlier  of (1)
thirty (30) days after the previous  Computation  Date or (2) the date after the
previous  Computation  Date on which  the  Registration  Statement  is  declared
effective  or has its  restrictions  removed or the  shares of Common  Stock are
listed  on the  Principal  Trading  Market  (with  respect  to  payments  due as
contemplated by Section 2(b)(ii) hereof), as the case may be.

                  3.  Obligations  of  the  Company.   In  connection  with  the
registration  of the  Registrable  Securities,  the Company shall do each of the
following:

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                  (a) Prepare and file,  with the SEC a  Registration  Statement
with respect to not less than the number of Registrable  Securities  provided in
Section 2(a) above, and thereafter use its reasonable best efforts to cause such
Registration Statement relating to Registrable Securities to become effective by
the Required Effective Date and keep the Registration Statement effective at all
times during the period (the "Registration Period") continuing until the earlier
of (i) the date when the Investors  may sell all  Registrable  Securities  under
Rule 144(k) without volume or other  restrictions  or limits,  (ii) the date the
Investors no longer own any of the Registrable  Securities,  which  Registration
Statement  (including  any amendments or  supplements  thereto and  prospectuses
contained  therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements  therein,  in light of the circumstances in which they were made,
not  misleading,  or  (iii)  one  (1)  year  after  the  Effective  Date  of the
Registration Statement;

                  (b) Prepare and file with the SEC such  amendments  (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus  used  in  connection  with  the  Registration  Statement  as  may be
necessary to keep the Registration  Statement  effective at all times during the
Registration  Period,  and,  during the  Registration  Period,  comply  with the
provisions  of  the  Securities  Act  with  respect  to the  disposition  of all
Registrable  Securities  of the Company  covered by the  Registration  Statement
until such time as all of such  Registrable  Securities have been disposed of in
accordance  with the intended  methods of  disposition  by the seller or sellers
thereof as set forth in the Registration Statement;

                  (c)  Permit  a  single  firm  of  counsel  designated  by  the
Investors (which,  until further notice,  shall be deemed to be Krieger & Prager
LLP,  Attn:  Samuel  Krieger,  Esq.,  which firm has  requested  to receive such
notification;   each,  an  "Investor's  Counsel")  to  review  the  Registration
Statement and all amendments and supplements  thereto for a reasonable period of
time (but not less than three (3) business  days) prior to their filing with the
SEC,  and not  file any  document  in a form to which  such  counsel  reasonably
objects;

                  (d)   Notify  the   Investor's   Counsel   and  any   managing
underwriters  immediately (and, in the case of (i)(A) below, not less than three
(3) business  days prior to such  filing) and (if  requested by any such person)
confirm such notice in writing no later than one (1) business day  following the
day (i)(A) when a Prospectus  or any  Prospectus  supplement  or  post-effective
amendment to the  Registration  Statement is proposed to be filed;  (B) whenever
the  SEC  notifies  the  Company  whether  there  will  be a  "review"  of  such
Registration  Statement;  (C) whenever the Company receives (or a representative
of the Company receives on its behalf) any oral or written comments from the SEC
in respect of a Registration Statement (copies or, in the case of oral comments,
summaries of such  comments (as such comments  relate to the Investor)  shall be
promptly furnished by the Company to the Investors); and (D) with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective;  (ii)  of any  request  by the  SEC or any  other  Federal  or  state
governmental  authority  for  amendments  or  supplements  to  the  Registration
Statement or Prospectus or for additional information;  (iii) of the issuance by
the SEC of any stop  order  suspending  the  effectiveness  of the  Registration
Statement covering any or all of the Registrable Securities or the initiation of
any proceedings for that purpose; (iv) if at any time any of the representations
or  warranties  of  the  Company  contained  in  any  agreement  (including  any
underwriting agreement) contemplated hereby ceases to be true and correct in all
material  respects;  (v) of the receipt by the Company of any notification  with
respect to the suspension of the  qualification or exemption from  qualification
of any of the  Registrable  Securities  for  sale  in any  jurisdiction,  or the
initiation or threatening  of any  proceeding for such purpose;  and (vi) of the
occurrence  of any event that to the best  knowledge  of the  Company  makes any
statement  made in the  Registration  Statement  or  Prospectus  or any document
incorporated  or deemed to be  incorporated  therein by reference  untrue in any
material respect or that requires any revisions to the  Registration  Statement,
Prospectus or other documents so that, in the case of the Registration Statement
or the Prospectus,  as the case may be, it will not contain any untrue statement
of a material  fact or omit to state any  material  fact  required  to be stated
therein  or  necessary  to  make  the  statements   therein,  in  light  of  the
circumstances  under which they were made,  not  misleading.  In  addition,  the
Company shall furnish the Investor's Counsel with copies of all intended written
responses to the comments  contemplated  in clause (C) of this Section 3(d) that
relate to Investors not later than one (1) business day in advance of the filing
of such responses with the SEC so that the Investors  shall have the opportunity
to comment thereon;

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                  (e) Furnish to Investor's  Counsel (i) promptly after the same
is prepared  and  publicly  distributed,  filed with the SEC, or received by the
Company, one (1) copy of the Registration Statement, each preliminary prospectus
and prospectus, and each amendment or supplement thereto, all correspondence to,
with, or from the SEC, and (ii) such number of copies of a  prospectus,  and all
amendments and supplements  thereto (as  contemplated in Section 3(d) above) and
such  other  documents,  as such  Investor  may  reasonably  request in order to
facilitate the disposition of the Registrable Securities owned by such Investor;

                  (f) As promptly as  practicable  after becoming aware thereof,
notify  each  Investor  of the  happening  of any event of which the Company has
knowledge,  as a result of which the  prospectus  included  in the  Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material  fact  required to be stated  therein or  necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading,  and use its best efforts promptly to prepare a supplement
or amendment to the Registration  Statement or other appropriate filing with the
SEC to correct such untrue statement or omission, and deliver a number of copies
of such supplement or amendment to each Investor as such Investor may reasonably
request;

                  (g) As promptly as  practicable  after becoming aware thereof,
notify each  Investor who holds  Registrable  Securities  being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the SEC of a Notice of  Effectiveness or any notice of effectiveness or any stop
order or other suspension of the effectiveness of the Registration  Statement at
the earliest possible time;

                  (h) Notwithstanding the foregoing, if at any time or from time
to time  after the date of  effectiveness  of the  Registration  Statement,  the
Company  notifies  the  Investors  in writing of the  existence  of a  Potential
Material  Event,   the  Investors  shall  not  offer  or  sell  any  Registrable
Securities,  or engage in any other  transaction  involving  or  relating to the
Registrable Securities,  from the time of the giving of notice with respect to a
Potential  Material Event until such Investor  receives  written notice from the
Company that such  Potential  Material  Event  either has been  disclosed to the
public or no longer constitutes a Potential Material Event;  provided,  however,
that the  Company may not so suspend  the right to such  holders of  Registrable
Securities  during the periods the  Registration  Statement is required to be in
effect  other than during a  Permitted  Suspension  Period  (and the  applicable
provisions of Section 2(b) shall apply with respect to any such suspension other
than  during a Permitted  Suspension  Period) . The term  "Permitted  Suspension
Period" means up to two such suspension periods, each of which suspension period
shall not either (i) be for more than fifteen (15)  business  days or (ii) begin
less than ten (10) business days after the last day of the preceding  suspension
(whether  or not  such  last day was  during  or  after a  Permitted  Suspension
Period);  provided  further that the Company shall,  if lawful to do so, provide
the Investor with at least two (2) business  days' notice of the existence  (but
not the  substance  of) a Potential  Material  Event.  Investor  shall treat any
information  with  respect to  Potential  Material  Event as  confidential.  The
Investor shall indemnify and hold harmless the Company, its employees, officers,
directors,  agents,  and partners,  and their  respective  Affiliates,  from and
against all claims,  losses,  damages, costs (including the costs of preparation
and attorney's fees) and expenses suffered regarding any trades by the Investor,
its  affiliates or any person(s)  acquiring  information  from the Investor as a
tippee or otherwise.

                  (i) Use its  reasonable  efforts  to secure and  maintain  the
designation  and  listing  of all  the  Registrable  Securities  covered  by the
Registration  Statement on the  Principal  Trading  Market within the meaning of
Rule  11Aa2-1  of the SEC  under  the  Exchange  Act and  the  quotation  of the
Registrable Securities on the Principal Trading Market;

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                  (j)  Provide a transfer  agent and  registrar,  which may be a
single  entity,  for the  Registrable  Securities  not  later  than the  initial
Effective Date;

                  (k)  Cooperate   with  the  Investors  who  hold   Registrable
Securities  being offered to facilitate the timely  preparation  and delivery of
certificates  for the  Registrable  Securities  to be  offered  pursuant  to the
Registration   Statement  and  enable  such  certificates  for  the  Registrable
Securities  to be in such  denominations  or  amounts as the case may be, as the
Investors may  reasonably  request,  and,  within five (5) business days after a
Registration   Statement  which  includes  Registrable   Securities  is  ordered
effective by the SEC, the Company shall  deliver,  and shall cause legal counsel
selected by the Company to deliver,  to the transfer  agent for the  Registrable
Securities  (with  copies to the  Investors  whose  Registrable  Securities  are
included in such Registration  Statement) an appropriate instruction and opinion
of such counsel,  which shall  include,  without  limitation,  directions to the
transfer  agent  to  issue  certificates  of  Registrable   Securities(including
certificates  for  Registrable  Securities to be issued after the Effective Date
and replacement  certificates  for  Registrable  Securities  previously  issued)
without legends or other restrictions;

                  (l) Take all other  reasonable  actions  necessary to expedite
and  facilitate  disposition  by  the  Investor  of the  Registrable  Securities
pursuant to the Registration Statement; and

                  (m) Comply with all  applicable  rules and  regulations of the
Commission  and  make  generally  available  to  its  security  holders  earning
statements  satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 not later than 45 days after the end of any 12-month period (or 90 days
after  the end of any  12-month  period  if such  period  is a fiscal  year) (i)
commencing at the end of any fiscal quarter in which Registrable  Securities are
sold to underwriters in a firm commitment or best efforts underwritten  offering
and (ii) if not sold to  underwriters  in such an  offering,  commencing  on the
first day of the first fiscal quarter of the Company after the effective date of
the Registration Statement, which statement shall cover said 12-month period, or
end shorter periods as is consistent with the requirements of Rule 158.

                  4.  Obligations  of the  Investors.  In  connection  with  the
registration  of the  Registrable  Securities,  the  Investors  shall  have  the
following obligations:

                  (a)  Each  Investor,  by  such  Investor's  acceptance  of the
Registrable  Securities,  agrees to  cooperate  with the  Company as  reasonably
requested by the Company in connection  with the  preparation  and filing of the
Registration Statement hereunder,  unless such Investor has notified the Company
in  writing  of such  Investor's  election  to  exclude  all of such  Investor's
Registrable Securities from the Registration Statement; and

                  (b) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind  described in Section 3(f)
or 3(g),  above,  such  Investor will  immediately  discontinue  disposition  of
Registrable  Securities  pursuant to the  Registration  Statement  covering such
Registrable  Securities  until  such  Investor's  receipt  of the  copies of the
supplemented or amended prospectus  contemplated by Section 3(f) or 3(g) and, if
so directed by the Company,  such Investor  shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate  of
destruction)  all  copies  in  such  Investor's  possession,  of the  prospectus
covering  such  Registrable  Securities  current  at the time of receipt of such
notice.

                  5. Expenses of  Registration.  All reasonable  expenses (other
than  underwriting  discounts  and  commissions  of the  Investor)  incurred  in
connection with registrations,  filings or qualifications pursuant to Section 3,
but including, without limitation, all registration, listing, and qualifications
fees,  printers and accounting  fees, the fees and  disbursements of counsel for
the Company shall be borne by the Company.

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                  6.  Indemnification.  In the event any Registrable  Securities
are included in a Registration Statement under this Agreement:

                  (a) To the extent permitted by law, the Company will indemnify
and hold  harmless  each  Investor who holds such  Registrable  Securities,  the
directors,  if any, of such  Investor,  the officers,  if any, of such Investor,
each  person,  if any,  who  controls  any  Investor  within the  meaning of the
Securities  Act  or  the  Exchange  Act  (each,  an   "Indemnified   Person"  or
"Indemnified  Party"),  against  any losses,  claims,  damages,  liabilities  or
expenses (joint or several)  incurred  (collectively,  "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar  as such  Claims  (or  actions  or  proceedings,  whether  commenced  or
threatened,  in  respect  thereof)  arise  out of or are  based  upon any of the
following statements,  omissions or violations in the Registration Statement, or
any post-effective  amendment thereof, or any prospectus  included therein:  (i)
any untrue statement or alleged untrue statement of a material fact contained in
the  Registration  Statement  or any  post-effective  amendment  thereof  or the
omission or alleged  omission to state  therein a material  fact  required to be
stated therein or necessary to make the statements therein not misleading,  (ii)
any untrue statement or alleged untrue statement of a material fact contained in
the final  prospectus  (as amended or  supplemented,  if the  Company  files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state  therein any material  fact  necessary to make the  statements
made therein,  in light of the circumstances  under which the statements therein
were made,  not  misleading or (iii) any  violation or alleged  violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or  regulation  under the  Securities  Act,  the  Exchange Act or any state
securities  law (the matters in the  foregoing  clauses (i) through (iii) being,
collectively,  "Violations").  Subject  to  clause  (b) of this  Section  6, the
Company shall  reimburse the  Investors,  promptly as such expenses are incurred
and  are due and  payable,  for any  legal  fees or  other  reasonable  expenses
incurred by them in connection with  investigating  or defending any such Claim.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement  contained in this Section 6(a) shall not (I) apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with  information  furnished  in writing  to the  Company by or on behalf of any
Indemnified  Person  expressly for use in connection with the preparation of the
Registration  Statement or any such  amendment  thereof or  supplement  thereto,
after such prospectus was made available by the Company pursuant to Section 3(c)
hereof;  (II) be available to the extent such Claim is based on a failure of the
Investor to deliver or cause to be delivered the  prospectus  made  available by
the  Company or the  amendment  or  supplement  thereto  made  available  by the
Company; (III) be available to the extent such Claim is based on the delivery of
a  prospectus  by the Investor  after  receiving  notice from the Company  under
Section 3(f), (g) or (h) hereof (other than a notice regarding the effectiveness
of the Registration  Statement or any amendment or supplement thereto),  or (IV)
apply to amounts paid in settlement of any Claim if such  settlement is effected
without the prior  written  consent of the Company,  which  consent shall not be
unreasonably  withheld or delayed.  Each Investor will indemnify the Company and
its  officers,   directors  and  agents  (each,  an   "Indemnified   Person"  or
"Indemnified Party") against any claims arising out of or based upon a Violation
which occurs in reliance upon and in conformity  with  information  furnished in
writing to the Company,  by or on behalf of such Investor,  expressly for use in
connection with the preparation of the  Registration  Statement or the amendment
or  supplement  thereto,  subject  to such  limitations  and  conditions  as are
applicable  to the  indemnification  provided by the Company to this  Section 6.
Such  indemnity  shall  remain  in  full  force  and  effect  regardless  of any
investigation  made by or on behalf of the Indemnified  Person and shall survive
the transfer of the Registrable  Securities by the Investors pursuant to Section
9.

                  (b)  Promptly  after  receipt  by  an  Indemnified  Person  or
Indemnified  Party  under this  Section 6 of notice of the  commencement  of any
action  (including  any  governmental   action),   such  Indemnified  Person  or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying  party under this  Section 6, deliver to the  indemnifying  party a
written notice of the commencement thereof and the indemnifying party shall have
the right to  participate  in,  and,  to the  extent the

                                       7
<PAGE>

indemnifying  party so  desires,  jointly  with  any  other  indemnifying  party
similarly  noticed,  to assume  control  of the  defense  thereof  with  counsel
mutually  satisfactory to the indemnifying  party and the Indemnified  Person or
the  Indemnified  Party,  as the case may be. In case any such action is brought
against  any  Indemnified  Person or  Indemnified  Party,  and it  notifies  the
indemnifying party of the commencement  thereof,  the indemnifying party will be
entitled to  participate  in, and, to the extent that it may wish,  jointly with
any other  indemnifying  party similarly  notified,  assume the defense thereof,
subject to the provisions  herein stated and after notice from the  indemnifying
party to such  Indemnified  Person or  Indemnified  Party of its  election so to
assume the defense thereof,  the  indemnifying  party will not be liable to such
Indemnified  Person or  Indemnified  Party under this Section 6 for any legal or
other  reasonable   out-of-pocket   expenses   subsequently   incurred  by  such
Indemnified  Person or Indemnified  Party in connection with the defense thereof
other than reasonable  costs of  investigation,  unless the  indemnifying  party
shall not pursue the action to its final conclusion.  The Indemnified  Person or
Indemnified  Party shall have the right to employ  separate  counsel in any such
action and to  participate in the defense  thereof,  but the fees and reasonable
out-of-pocket  expenses  of such  counsel  shall  not be at the  expense  of the
indemnifying  party if the  indemnifying  party has  assumed  the defense of the
action  with  counsel  reasonably  satisfactory  to the  Indemnified  Person  or
Indemnified  Party  provided  such  counsel is of the opinion  that all defenses
available to the  Indemnified  Party can be maintained  without  prejudicing the
rights of the  indemnifying  party. The failure to deliver written notice to the
indemnifying  party within a  reasonable  time of the  commencement  of any such
action  shall  not  relieve  such  indemnifying  party of any  liability  to the
Indemnified  Person or  Indemnified  Party  under this  Section 6, except to the
extent that the  indemnifying  party is prejudiced in its ability to defend such
action. The indemnification required by this Section 6 shall be made by periodic
payments  of the  amount  thereof  during  the  course of the  investigation  or
defense,  as such expense,  loss, damage or liability is incurred and is due and
payable.

                  7.  Contribution.  To the  extent  any  indemnification  by an
indemnifying  party is  prohibited  or limited by law,  the  indemnifying  party
agrees to make the maximum contribution with respect to any amounts for which it
would  otherwise be liable under  Section 6 to the fullest  extent  permitted by
law;  provided,   however,   that  (a)  no  contribution  shall  be  made  under
circumstances  where the maker  would not have been  liable for  indemnification
under the fault  standards set forth in Section 6; (b) no seller of  Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to  contribution  from any seller
of   Registrable   Securities   who  was   not   guilty   of   such   fraudulent
misrepresentation;  and (c) except where the seller has  committed  fraud (other
than a  fraud  by  reason  of the  information  included  or  omitted  from  the
Registration  Statement  as to  which  the  Company  has  not  given  notice  as
contemplated under Section 3 hereof) or intentional misconduct,  contribution by
any  seller of  Registrable  Securities  shall be  limited  in amount to the net
amount of proceeds  received  by such  seller from the sale of such  Registrable
Securities.

                  8. Reports under  Securities Act and Exchange Act. With a view
to making  available to Investor the benefits of Rule 144 promulgated  under the
Securities  Act or any other  similar rule or  regulation of the SEC that may at
any time permit Investor to sell securities of the Company to the public without
Registration ("Rule 144"), the Company agrees to:

                  (a) make and keep public information available, as those terms
are understood and defined in Rule 144;

                  (b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and

                  (c) furnish to Investor so long as Investor  owns  Registrable
Securities,  promptly upon request,  (i) a written statement by the Company that
it has complied with the reporting  requirements  of the  Securities Act and the
Exchange Act,  (ii) a copy of the most recent annual or quarterly  report of the

                                       8
<PAGE>

Company and such other  reports and  documents so filed by the Company and (iii)
such other information as may be reasonably requested to permit Investor to sell
such securities pursuant to Rule 144 without Registration.

                  (d)  The  Company  will,  at  the  request  of any  Holder  of
Registrable  Securities,   upon  receipt  from  such  Holder  of  a  certificate
certifying  (i) that such  Holder  has held such  Registrable  Securities  for a
period  of not less than one (1) year,  (ii)  that such  Holder  has not been an
affiliate  (as defined in Rule 144) of the company for more than the ninety (90)
preceding  days,  and (iii) as to such other  matters as may be  appropriate  in
accordance with such Rule, remove from the stock  certificate  representing such
Registrable  Securities that portion of any restrictive  legend which relates to
the registration  provisions of the Securities Act, provided,  however, that, at
the  Company's   cost  and  expense,   counsel  to  Investor  may  provide  such
instructions  and opinion to the  transfer  agent  regarding  the removal of the
restrictive legend.

                  9. Assignment of the Registration  Rights.  The rights to have
the Company register Registrable  Securities pursuant to this Agreement shall be
automatically  assigned by the Investors to any  transferee  of the  Registrable
Securities  only if the Company is, within a reasonable time after such transfer
or assignment, furnished with written notice of (a) the name and address of such
transferee  or  assignee  and (b) the  securities  with  respect  to which  such
registration rights are being transferred or assigned.

                  10.  Amendment of Registration  Rights.  Any provision of this
Agreement  may be  amended  and the  observance  thereof  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  only with the written  consent of the Company and Investors who
hold a fifty (50%) percent interest of the Shares as of such date. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.

                  11. Miscellaneous.

                           (a) A person  or  entity  is deemed to be a holder of
Registrable  Securities  whenever  such  person  or entity  owns of record  such
Registrable  9Securities.  If the  Company  receives  conflicting  instructions,
notices or elections  from two or more  persons or entities  with respect to the
same  Registrable   Securities,   the  Company  shall  act  upon  the  basis  of
instructions,  notice or election  received  from the  registered  owner of such
Registrable Securities.

                           (b)  Notices   required  or  permitted  to  be  given
hereunder shall be given in the manner  contemplated by the Purchase  Agreement,
(i)  if  to  the  Company  or to  the  Investor,  to  their  respective  address
contemplated by the Purchase  Agreement,  and (ii) if to any other Investor,  at
such address as such Investor shall have provided in writing to the Company,  or
at such other address as each such party furnishes by notice given in accordance
with this Section 11(b).

                           (c)  Failure  of any party to  exercise  any right or
remedy under this Agreement or otherwise, or delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.

                                       9
<PAGE>

                           (d) This  Agreement  shall be deemed to be a contract
made  under  the laws of the  State  of  Delaware  for  contracts  to be  wholly
performed  in such state and without  giving  effect to the  principles  thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the  federal  courts  whose  districts  encompass  any  part of the  State of
California, Santa Clara County in connection with any dispute arising under this
Agreement  and hereby  waives,  to the  maximum  extent  permitted  by law,  any
objection,  including  any  objection  based on  forum  non  conveniens,  to the
bringing of any such proceeding in such jurisdictions.

                           (e) The Company, the Investor and VFIN hereby waive a
trial by jury in any action, proceeding or counterclaim brought by either of the
parties  hereto  against the other in respect of any matter arising out of or in
connection with this Agreement or any of the other Transaction Agreements.

                           (f) If any  provision  of  this  Agreement  shall  be
invalid   or   unenforceable   in   any   jurisdiction,   such   invalidity   or
unenforceability  shall  not  affect  the  validity  or  enforceability  of  the
remainder of this Agreement or the validity or  enforceability of this Agreement
in any other jurisdiction.

                           (g) Subject to the  requirements of Section 9 hereof,
this Agreement  shall inure to the benefit of and be binding upon the successors
and assigns of each of the parties hereto.

                           (h) All pronouns and any variations  thereof refer to
the  masculine,  feminine  or neuter,  singular  or plural,  as the  context may
require.

                           (i)  The   headings   in  this   Agreement   are  for
convenience  of  reference  only and  shall not limit or  otherwise  affect  the
meaning thereof.

                           (j) This  Agreement  may be  executed  in one or more
counterparts,  each of which shall be deemed an original  but all of which shall
constitute one and the same agreement. This Agreement, once executed by a party,
may be  delivered  to  the  other  party  hereto  by  telephone  line  facsimile
transmission  of a copy of this Agreement  bearing the signature of the party so
delivering this Agreement.

                           (k) The Company  acknowledges that any failure by the
Company to perform its  obligations  under Section 3(a) hereof,  or any delay in
such performance  could result in loss to the Investors,  and the Company agrees
that, in addition to any other  liability the Company may have by reason of such
failure or delay,  the Company shall be liable for all direct  damages caused by
any such  failure  or delay,  unless  the same is the  result of force  majeure.
Neither party shall be liable for consequential damages.

                           (l) This Agreement  constitutes the entire  agreement
among the parties hereto with respect to the subject matter hereof. There are no
restrictions,  promises, warranties or undertakings,  other than those set forth
or  referred to herein.  This  Agreement  supersedes  all prior  agreements  and
understandings  among the  parties  hereto with  respect to the  subject  matter
hereof. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.

                           [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       10
<PAGE>

         IN WITNESS  WHEREOF,  the parties have caused this Agreement to be duly
executed by their  respective  officers  thereunto duly authorized as of the day
and year first above written.

                            COMPANY:

                            FOCUS ENHANCEMENTS, INC.

                            By: /s/ Brett Moyer
                               ---------------------------------

                            Name:Brett Moyer
                            Title:President & CEO

                            VFINANCE INVESTMENTS, INC.

                            By: /s/ Richard Rosenblum
                               ---------------------------------
                            Name Richard Rosenblum
                                 -------------------------------
                            Title Managing Director
                                  ------------------------------

                            Alpha Capital A.G.

                            By: /s/ Konrad Ackerman
                                --------------------------------
                            Name Konrad Ackerman
                                 -------------------------------
                            Title Director
                                  ------------------------------

                            /s/ Shimshon Visnstein
                            ------------------------------------
                            Shimshon Visnstein

                                       11EXHIBIT 10(B)(26)

                               MARKETING AGREEMENT

THIS  MARKETING  AGREEMENT  ("Agreement")  is entered into and effective on this
15th day of November,  2002, by and between American National Insurance Company,
hereinafter  referred to as "American  National," an insurance company organized
under the laws of the state of Texas, and Legacy  Marketing  Group,  hereinafter
referred to as "LMG," a California corporation,  with reference to the following
facts:

WHEREAS,  LMG and  American  National  will enter into a certain  Administrative
Services  Agreement,  hereinafter  referred to as the  "Administrative  Services
Agreement,"  pursuant to which certain insurance  business is to be administered
by LMG.

WHEREAS,  the objective of this  Agreement is to provide an  arrangement to sell
certain policies ("Policies") of American National as specified in APPENDIX A of
this Agreement. The term "Policies," as used throughout this Agreement, shall be
deemed to encompass all policies,  certificates  and contracts  issued by LMG on
behalf of  American  National.  Furthermore,  the term  "Policyholder,"  as used
throughout  this  Agreement,  shall be deemed to encompass all contract  owners,
including policyholders and certificateholders.

WHEREAS, American National desires that LMG to recruit, provide product training
and appoint  Wholesalers and Producers in the sale of certain Policies issued by
American  National as specified in APPENDIX A.  Wholesalers  and  Producers  are
those  duly  licensed  insurance  agents  contracted  with LMG to sell  American
National products.

NOW,  THEREFORE,  in consideration of the foregoing recitals and mutual promises
hereinafter  contained  and  other  good  and  valuable  consideration,  LMG and
American National hereto do agree as follows:

1. APPOINTMENT OF LMG AND SCOPE OF AUTHORITY

1.1  American  National  hereby  authorizes  LMG to recruit and provide  product
training to Wholesalers,  (who in turn recruit and provide  product  training to
Producers  in their  downline)  and appoint  Wholesalers  and  Producers  in the
solicitation of the Policies in the geographic territory specified in APPENDIX A
(the "Territory").

1.2 It is  understood  and  agreed  that LMG is an  independent  contractor  and
nothing  herein  shall be construed  to create the  relationship  of employer or
employee between American  National and LMG or between American National and any
officer,  employee, agent or other associated person of LMG. Neither LMG nor any
Wholesaler  or Producer has  authority to incur any liability on behalf of or to
bind American  National in any way or change its rights,  duties or obligations,
except as may be set forth in this Agreement or in the  Administrative  Services
Agreement between American National and LMG.

                                  Page 1 of 28

<PAGE>

1.3 All  Wholesalers  and Producers who have been recruited and are appointed to
sell the  Policies  referenced  in  APPENDIX  A by LMG  shall be  identified  by
American  National as Wholesalers and Producers of LMG as to such Policies.  Any
and all  contracts  entered into by and between such  Wholesalers  and Producers
with respect to the Policies shall be coded through LMG and deemed agents of LMG
for  such  policies.   American  National  may  terminate  American   National's
appointment of any  Wholesalers  and Producers with prior written notice to LMG,
but may not otherwise  terminate,  recode, or otherwise disturb the relationship
between LMG and Wholesalers  and Producers  without the prior written consent of
LMG.

1.4 Any General  Agents and Agents for  American  National  who want to sell LMG
products will need to be contracted  with LMG to sell such  products.  Contracts
will include the American  National  hierarchy.  This will apply to the American
National  Agency  Divisions  and to any producer  relationships  gained  through
future American National  acquisitions.  On any sale of LMG products by American
National General Agents and Agents,  LMG will pay American  National the highest
agent hierarchy level commission.

1.5 LMG and American  National both agree not to solicit business not subject to
this  Agreement  through the other  party's  agency force  without prior written
approval of the other party.

1.6 Standard Life and Accident  ("Standard")  Producers who desire to sell ANICO
products  which are  proprietary  of LMG and LMG  Producers  who  desire to sell
Standard products shall adhere to the following procedures:

     (a)  Standard  Producers can market the ANICO  annuities and life insurance
          products that are proprietary to LMG.

     (b)  LMG Producers can market the Standard product line.

     (c)  If a Producer is contracted with LMG, he or she may also contract with
          Standard directly.

     (d)  If an American  National  shelf product is sold,  the structure  which
          first  appointed  the agent with  American  National  will receive the
          commission on the case.

     (e)  Standard  Producers  may  contract  with  LMG,  through  one of  LMG's
          Wholesalers,  to market LMG's proprietary  products through LMG's life
          insurance carrier relationships including, but not limited to American
          National.

1.7 Producers who are  contracted  with American  National  prior to contracting
with LMG shall adhere to the following procedures:

     (a)  If the Producer is a career/ordinary/multiple lines marketing Producer
          with  American  National,  then  this  Producer  is  considered  to be
          "captive."  If these  Producers  wish to sell any  products  available
          through LMG, they need to work back through their Regional Director at
          American National. It is up to the

                                  Page 2 of 28

<PAGE>

          Regional Director as to whether or not they will allow the Producer to
          work directly with an LMG  Wholesaler.  In the event that the Producer
          wishes to sell a product  of LMG's  from time to time they may want to
          consider using a Single Case Agreement for these infrequent sales.

     (b)  If the Producer is contracted  through the * they are free to contract
          directly with LMG through one of LMG's  Wholesalers.  These  Producers
          can sell LMG products without a release from the *.

     (c)  If the agent is contracted  through * the agent must receive a release
          from * in order to work directly with an LMG Wholesaler. Producers who
          are contracted  through * can sell LMG products.  These Producers must
          follow the same transfer  policy that LMG asks its own Wholesalers and
          Producers to abide by.

2. RIGHTS, RESPONSIBILITIES AND OBLIGATIONS OF AMERICAN NATIONAL

2.1 American National agrees to compensate LMG as follows:

     (a)  The amount of policy  commission  shall be as  specified in APPENDIX B
          and shown as Premium Commission and Fund Commission(s) One and Two.

     (b)  Premium  Commission  will be paid to LMG by American  National  within
          five (5) business days of the application of the premium.  The Premium
          Commission will be part of the weekly  commission  process and will be
          paid by American  National to LMG, by authorizing LMG to write a check
          to itself against the American National  Disbursement  account for the
          total weekly commission amount.

     (c)  Fund Commission One is based on month end Cash Value and shall be paid
          to LMG by American  National  within five (5) business days of receipt
          of LMG's report via wire transfer to an LMG bank account.

     (d)  Fund Commission Two will be paid to LMG by American  National  monthly
          on the  date on which  the  premium  was  effective  beginning  in the
          thirteenth month  thereafter.  Fund Commission Two will be part of the
          weekly  commission  process and will be paid by  American  National to
          LMG,  by  authorizing  LMG to  write a check  to  itself  against  the
          American National Disbursement account for the total weekly commission
          amount.

     (e)  The  marketing  allowance  of * of  commission  on first year  annuity
          premium,  single  premium whole life premium and first year  scheduled
          life premium  will be paid within five (5)  business  days of the date
          that a premium was applied to a policy by American  National  via wire
          transfer to an LMG bank account.

                                  Page 3 of 28

<PAGE>

2.2 American National reserves the right to withdraw its Policies from any state
or other  jurisdiction,  with 90 days written notice to LMG,  unless mandated by
any law,  regulation,  regulatory  agency or court of law to do so  immediately.
Furthermore,  such  notice  will not be  required  in the  event  that  American
National provides LMG with written  documentation  that failure to withdraw such
Policy will cause significant adverse financial impact to American National. LMG
and  American  National  may  mutually  agree in writing to withdraw  any Policy
without the required notice.

2.3 LMG agrees that the  compensation  payable  pursuant to Section 2.1 shall be
accepted by it as full  compensation  from  American  National for its marketing
services hereunder.

2.4  Section  2.1 of  this  Agreement  and  APPENDIX  B  will  provide  for  the
compensation  payable to LMG from American National.  APPENDIX B will be amended
by written  agreement  of LMG and  American  National  to conform  with each new
product specification as they are developed and finalized.

2.5 The commissions specified in APPENDIX B shall be modified whenever necessary
to conform to the legal requirements of any state.

2.6 American National shall be responsible for ensuring that its products listed
in APPENDIX A in its present  form,  or as amended,  comply with all  applicable
state, federal and local laws and regulations.

2.7 American  National  shall have sole  responsibility  for filing  advertising
materials and policy forms  pertaining to the business  underwritten by American
National, in those states that so require,  prior to approving their use by LMG.
*

2.8 American National shall immediately,  within five (5) business days, provide
LMG with written  notice of any change of authority  of persons  authorized  and
enumerated in APPENDIX E to provide LMG with instructions or directions relating
to services to be performed by LMG under this Agreement.

2.9 *

2.10 In the  event of  termination  under  Section  3.2(b) or  3.2(c),  American
National guarantees the commission payment due to Wholesalers and Producers (via
payment to LMG) to which they may become  entitled  after the effective  date of
termination  to the extent that American  National has not  previously  remitted
such commissions to LMG.

                                  Page 4 of 28

<PAGE>

2.11  Subject to American  National's  approval in writing in advance,  American
National shall be responsible for researching,  obtaining,  and the registration
of any service marks issued by the U.S. Patent and Trademark Office for use with
the products  developed by LMG and American  National,  and any costs associated
therewith.  American National grants to LMG a gratuitous  license for the use of
such marks on LMG and American National  proprietary  products.  Notwithstanding
the  foregoing,  LMG may  register  and own its own  marks  that  may be used on
products  underwritten  by American  National.  Further,  LMG grants to American
National  a  gratuitous  license  for the use of its  marks on LMG and  American
National proprietary products.

3. TERM, TERMINATION AND MODIFICATION OR AMENDMENT OF THIS AGREEMENT

3.1 Subject to termination as hereinafter provided,  this Agreement shall remain
in force and effect for a period of five (5) years,  the term of this Agreement.
This  Agreement  shall be renewed  for  successive  terms of one (1) year unless
terminated by either party as provided herein.

3.2 The termination of this Agreement is governed by the following provisions:

     (a)  American  National or LMG may terminate  this Agreement or any renewal
          thereof,  without cause,  upon twelve (12) months prior written notice
          to the other signed by authorized  personnel,  as provided in APPENDIX
          E.

     (b)  This  Agreement  may  be  terminated  by  mutual  agreement  of LMG or
          American  National at any time.  Such  termination  shall be signed by
          authorized personnel of both parties, as shown in APPENDIX E.

     (c)  If either  American  National  or LMG  shall  materially  breach  this
          Agreement or be materially in default in the performance of any of its
          duties and  obligations  hereunder (the defaulting  party),  the other
          party  shall give  written  notice  thereof,  as signed by  authorized
          personnel, as provided in APPENDIX E, to the defaulting party. If such
          default  or breach is not cured  within  ninety  (90) days  after such
          written notice is given, then the party giving such written notice may
          terminate  this  Agreement  with  thirty  (30)  days  notice  of  such
          termination to the defaulting party.

     (d)  Notwithstanding anything herein to the contrary,  American National or
          LMG may terminate this Agreement or any renewal  thereof,  with cause,
          immediately by written notice, as signed by authorized  personnel,  as
          provided in APPENDIX E, to the other.  Cause is defined as fraudulent,
          criminal,  unethical  activity or blatant  disregard for the terms and
          conditions of this Agreement.

     (e)  Termination  of this  Agreement  as a result of  default  or breach by
          American  National  shall not constitute a waiver of any rights of LMG
          in  reference  to  services   performed  prior  to  such  termination.
          Termination of this Agreement as a

                                  Page 5 of 28

<PAGE>

          result of  default or breach by LMG shall not  constitute  a waiver by
          American National of any rights under this Agreement.

     (f)  Termination  of  this  Agreement  does  not  affect  in  any  way  the
          Administrative Services Agreement.

3.3 This Agreement may be modified or amended at any time by mutual agreement of
the parties,  provided  such  modification  is in writing,  signed by authorized
personnel as provided in APPENDIX E of this Agreement.

3.4 Neither  party may assign or delegate  all or any part of its rights  and/or
duties  under this  Agreement  without  the  written  consent of the other party
signed by authorized personnel as shown in APPENDIX E.

4. RIGHTS, RESPONSIBILITIES AND OBLIGATIONS OF LMG

4.1 At all  times  during  the  term of  this  Agreement,  LMG (or the  licensed
individual  who is acting on behalf of LMG in such states that do not permit the
licensing of  corporations)  and all Wholesalers and Producers shall be properly
licensed  with each state or other  jurisdiction  and  properly  appointed  with
American  National  in each state or other  jurisdiction  within  the  Territory
before  engaging  in any  activity  which  under the laws of such state or other
jurisdiction makes such licensing necessary.  Without limiting the generality of
the foregoing,  all such  Wholesalers  and Producers shall at all times bear the
cost of maintaining all required licenses by any such state.

4.2 LMG will itself and will  communicate to each Wholesaler and Producer to use
only forms, applications,  advertising (as such term is generally defined by the
regulation of the state or other  jurisdiction  in which Policies  referenced in
APPENDIX  A are  solicited),  office  procedures,  guides  and rules  furnished,
authorized  or  promulgated  by  American  National  and in each  state or other
jurisdiction  where any Wholesalers and Producers solicit  Policies.  No written
advertising or sales  materials of any kind or recruiting  material  referencing
the Policies of American  National shall be authorized by LMG until after it has
been approved in writing by American  National.  LMG will provide such materials
with  sufficient  lead-time to allow  appropriate  review by American  National.
American  National will then use  commercially  reasonable  efforts to provide a
timely response within five (5) business days. No oral  presentation of any kind
shall be  authorized  by LMG which does not conform to  applicable  statutes and
regulations or which does not accurately reflect the terms and conditions of the
Policies being sold. All recruiting  practices of LMG's Wholesalers shall comply
with  all  applicable  laws,  ordinances,  and  regulations  of the  appropriate
authorities.  American  National shall be responsible for the maintenance of the
advertising  files and logs,  as  mandated  by  applicable  state  statutes  and
regulations.

4.3 LMG  shall  report  and  remit to  American  National  or to its  designated
servicing organization, all first-year or other premiums collected by LMG or its
Wholesalers or Producers, as specified in the Administrative Services Agreement.

                                  Page 6 of 28

<PAGE>

4.4 LMG is responsible for the payment to American  National of all monies which
LMG, or its  Wholesalers and Producers  collect on behalf of American  National.
However,  until American  National  receives all monies due, the same shall be a
debt  payable by LMG upon demand for which  American  National may at its option
offset with  commissions  otherwise due until such  liability is satisfied.  Any
indebtedness to American  National or its affiliates or subsidiaries  shall be a
first lien against monies otherwise due under this Agreement.

4.5 LMG, in performance of its marketing obligations and duties, will not itself
and will use its best efforts to prevent  Wholesalers  and Producers,  appointed
hereunder,  in the performance of their obligations and duties  hereunder,  from
doing any of the following:

     (a)  Enter into any agreement or incur any obligation on behalf of American
          National, except with its written permission:

          1.   bind American  National in its dealings with any  Wholesaler  and
               Producer or LMG employee, or

          2.   commit American National to

               (i)  pay any money to any such Wholesaler,  Producer or employee,
                    or

               (ii) a date that a payment will be made.

     (b)  Assign any compensation, other than commissions payable to Wholesalers
          or Producers,  payable  under it without the prior written  consent of
          American National.

     (c)  Solicit applications for American National in any manner prohibited by
          or inconsistent with the provisions of this Agreement or the rules and
          regulations as mutually  agreed by LMG and American  National,  now or
          hereafter in force.

     (d)  With respect to any Policy,

          1.   make any alterations,  modifications or endorsements or otherwise
               alter American National's obligations as stated in the Policy;

          2.   charge special rates or extend the time for paying premiums;

          3.   waive forfeitures;

          4.   deliver or allow the delivery of any policy or contract unless:

                    (i)  the  health  of the  person  or  persons  proposed  for
                         insurance is in  accordance  with  American  National's
                         requirements, and

                                  Page 7 of 28

<PAGE>

                    (ii) the first policy premium or payment amount  required by
                         American National rules and practices is paid in full;

          5.   approve  evidence  of  insurability  or bind or  commit  American
               National on any risk in any manner;

          6.   collect or receive any life insurance  premiums after the initial
               premium, except as may be required in the Administrative Services
               Agreement;

          7.   adjust or settle any claim;

          8.   retain any issued American  National policy not delivered  within
               thirty (30) days of issue.

     (e)  Initiate any civil or criminal  action or  proceeding,  whether or not
          brought in the name of American National, which may in any way involve
          or  affect  American   National,   its  affiliates,   their  business,
          operations,  or any Policy issued by American National,  as referenced
          in APPENDIX A. Nothing  herein shall be construed to limit LMG's right
          to initiate  any action or  proceeding  against  American  National to
          enforce any right of LMG.

     (f)  Use or authorize the use of any written, oral or visual communication,
          circular, advertisement or other publication:

               1.   bearing American  National's name, as advertising  matter or
                    otherwise,   except  with  the  prior  written  approval  of
                    American National; or

               2.   referring to any insurance  company tending to bring it into
                    disrepute.

     (g)  Knowingly or willfully  violate the insurance laws or the  regulations
          of the Insurance  Department of any State or any other jurisdiction in
          which LMG represents American National.

     (h)  Knowingly  or  willfully  misapply  funds of American  National or any
          other person or entity.

     (i)  Perpetrate any fraud against American  National or any other person or
          entity or embezzle funds of American National.

4.6 LMG shall provide  American  National ninety (90) days prior written request
if LMG desires to increase its fees or charges to American National or to change
the  manner of  payment  or to change  any other  provision  of this  Agreement.
American National must respond in writing to such request within sixty (60) days
of receipt. If LMG and American National do not agree to

                                  Page 8 of 28

<PAGE>

such changed fees, then no such change shall take place. In such an event, LMG's
only  remedy is to  withdraw  this  increase  and/or  terminate  this  Agreement
pursuant to 3.2(a).

4.7 LMG may rely on instructions of any person indicated on American  National's
"Schedule of Authorized  Personnel," attached hereto as APPENDIX E. Each of such
persons is  authorized to give  instructions  under this section with respect to
any matter arising in connection with this Agreement.

4.8 LMG shall cause each new Wholesaler and Producer to enter into Wholesaler or
Producer  Agreements in the form shown in APPENDIX C. LMG will provide  American
National  with copies of the  Wholesaler  or Producer  Agreement  whenever it is
changed.  Subject to American National's approval of the appointment process and
agent contracting criteria,  for those Wholesalers and Producers who satisfy the
agent contracting  criteria as mutually agreed to by LMG and American  National,
LMG shall file appointments of such Wholesalers and Producers in the appropriate
states'  insurance   departments  and  other  jurisdictions.   However,  if  any
appointment process or contracting  criteria is determined to be contrary to any
pertinent  statute or regulation,  American  National may modify the contracting
process or criteria to be in  compliance  with such statute or  regulation.  LMG
will report monthly to American National a list of current appointments,  adding
new appointments and terminations  from the list each month.  Consideration  for
such  appointments  and  terminations  is  provided  for in  the  Administrative
Services Agreement.

4.9 LMG shall produce sales of combined life and annuity  annualized  premium in
excess of *. In the event that the  aforementioned  production  requirements are
not attained by LMG,  American National may terminate this Agreement with twelve
(12) months written notice to LMG, signed by authorized  personnel,  as provided
in APPENDIX E.

4.10 In the event that any state insurance department withdraws or cancels LMG's
insurance  license (or the license of the  individual who is acting on behalf of
LMG in such states that do not permit the licensing of  corporations),  or right
to sell or conduct its business,  LMG will stop  marketing  activity  under this
Agreement  in that state and notify  American  National.  American  National may
terminate  the  authority  of LMG with regard to such  affected  Policies  which
termination   of  authority   shall  be  effective  on  the  same  date  as  the
effectiveness of the action of such state insurance department.

4.11 LMG will possess and maintain at all times errors and omissions coverage or
other appropriate  liability insurance in the states in which LMG does business.
Such  coverage  shall be in a minimum  amount * per  occurrence * aggregate in a
form acceptable to American National and underwritten by a company rated by A.M.
Best as A- or better. In addition,  each Wholesaler and Producer that is covered
by LMG's group plan who is appointed or renewed after April 1, 2003,  shall also
possess and maintain at all times errors and  omissions  coverage with a minimum
liability * per  occurrence * aggregate.  Commencing  on April 1, 2003,  current
Producers or Wholesalers who have errors and omission  coverage outside of LMG's
group plan will be required to have a minimum liability of *

                                  Page 9 of 28

<PAGE>

per  occurrence  *  aggregate  upon policy  renewal,  and in no event later than
January  1,  2004.  Such  coverage  shall be in a form  acceptable  to  American
National and underwritten by a company rated by A.M. Best as A- or better.

                                  Page 10 of 28

<PAGE>

RIGHTS, RESPONSIBILITIES AND OBLIGATIONS OF BOTH PARTIES

5.1 It is  acknowledged  by both  American  National  and LMG  that  certain  of
American National's  obligations  hereunder are to be performed by LMG, pursuant
to the Administrative Services Agreement between American National and LMG. This
does not relieve American  National of any of its duties and obligations  unless
the specific service is provided for in the Administrative  Services  Agreement,
including any subsequent amendments, whereby LMG has explicitly acknowledged the
responsibility of such service.

5.2 Each party  agrees  that it will not  knowingly  or  willingly,  directly or
indirectly,  at any time  during  the term of this  Agreement  or within two (2)
years  thereafter,  induce or attempt to induce  any policy  holder or  contract
holder of the other party to terminate,  reduce coverage, or replace any policy,
as referenced in APPENDIX A or otherwise  disturb the  relationship  between the
other party and any of its policy holders.

5.3 Each  party  agrees  that it will use  commercially  reasonable  efforts  to
prevent any Wholesaler and Producer,  directly or indirectly, at any time during
the term of this Agreement or within two (2) years thereafter,  from inducing or
attempting  to induce any  insurance  client of the other party to  terminate or
reduce coverage or replace any policy of insurance placed through the efforts of
the other party or otherwise  disturb the  relationship  between the other party
and any of its insurance clients.

5.4 LMG and  American  National  agree to inform the other of any changes to its
legal  structure,  and of any changes in its  officers or  partners.  Changes in
officers or partners may be satisfied  by making such  information  available on
the parties' website. LMG and American National agree to inform the other of any
material  changes or transfers of its stock or partnership  interests.  Material
changes shall be defined as a 20% or greater change in ownership.

5.5  Commission  debit balances on American  National  products sold through LMG
will be handled according to the following guidelines:

          (a)  *

          (b)  *

          (c)  *

          (d)  *

                                  Page 11 of 28

<PAGE>

          (e)  *

          (f)  *

          (g)  *

          (h)  *

6. PROPRIETARY, CONFIDENTIAL INFORMATION AND PRIVACY OF INFORMATION

6.1  Proprietary  and  Confidentiality.  Each party  acknowledges  that  certain
information  received  from the other  may be  proprietary  and/or  confidential
(referred  to  herein  as  "Confidential   Information")  in  nature.  All  such
Confidential  Information  shall be used by each party  solely for  purposes  of
soliciting insurance pursuant to this Agreement. Except as required by law or to
inform the  appropriate  party or its officers,  directors,  employees,  agents,
affiliates or contractors (collectively referred to herein as "Affiliates"), for
the purpose of  compliance  with or  negotiation  of or  performance  under this
Agreement,  neither party shall disclose the contents of this Agreement to third
parties (other than  Affiliates)  without the other's  written  approval,  which
shall not be unreasonably withheld or delayed.

6.2 Privacy. To protect Confidential  Information each party shall: (i) keep all
Confidential  Information  in strict  confidence;  (ii)  prevent  disclosure  of
Confidential  Information  to  third  parties  (except  for  Affiliates  with  a
need-to-know);  (iii) promptly notify the other of any loss or unauthorized  use
or disclosure of or access to Confidential Information; and (iv) promptly notify
the other  upon  receipt  of a request  or demand  pursuant  to law to  disclose
Confidential  Information,  so that the appropriate  party may seek a protective
order  or  similar  remedy.  For  the  purpose  of  this  Agreement,   the  term
"Confidential  Information"  shall not  include  information  that is: (a) in or
becomes  part of the  public  domain  other  than  pursuant  to a breach of this
Agreement;  (b) independently  developed;  (c) rightfully  obtained from a third
party without an obligation of confidentiality;  (d) known prior to date of this
Agreement without obligation of confidentiality; or (e) required to be disclosed
by legal or regulatory authority.

6.3 Non-Public Personal Information.  All capitalized terms used in this Section
6 and not otherwise  defined shall have the meanings  throughout  this Agreement
set forth in the Federal "Privacy of Consumer Financial Information"  Regulation
(12 CFR Part 40), as amended from

                                  Page 12 of 28

<PAGE>

time to time (the "Privacy  Regulation"),  issued pursuant to Section 504 of the
Gramm-Leach-Bliley  Act (15 U.S.C.  6801 et seq.). The parties  acknowledge that
the Privacy  Regulation governs  disclosures of Nonpublic  Personal  Information
about  Consumers and  Customers,  and that  Nonpublic  Personal  Information  is
included in the definition of "Confidential Information" in this Agreement. Each
party  hereby  agrees  that as the  party  receiving  or  maintaining  Nonpublic
Personal Information (the "Receiving Party") it shall:

     (a)  comply  with the  terms  and  provisions  of the  Privacy  Regulation,
          including,  without limitation,  the provisions regarding the sharing,
          collection,  access and use of  Nonpublic  Personal  Information,  the
          provisions  regarding  notice  and  opt-out   requirements,   and  the
          provisions  regarding the limitations on the sharing of account number
          information for marketing purposes;

     (b)  not disclose or use any Nonpublic Personal Information that it obtains
          from the other party (the "Disclosing  Party") except to carry out the
          purposes  for which  the  Disclosing  Party  provided  such  Nonpublic
          Personal Information;

     (c)  not make any changes to its security  measures that would increase the
          risk of unauthorized  access,  use or disclosure of Nonpublic Personal
          Information;

     (d)  not  disclose  any  Nonpublic  Personal  Information  provided  by the
          Disclosing  Party to any  other  entity,  without  the  prior  written
          consent of the Disclosing Party;

     (e)  at any  time,  upon the  Disclosing  Party's  request,  return  to the
          Disclosing  Party all of the  Disclosing  Party's  Nonpublic  Personal
          Information.  Neither party shall be under any  obligation to take any
          action,   which,  within  such  party's  reasonable  judgment,   would
          constitute  a violation  of the  Privacy  Regulation  or its  internal
          privacy policies;

     (f)  safeguard Nonpublic Personal  Information by maintaining  security and
          procedural standards that comply with state and federal regulations to
          protect against  unauthorized access, use or disclosure (or threatened
          access,  use  or  disclosure)  of  the  Disclosing  Party's  Nonpublic
          Personal Information.

6.4 Service Provider Agreements.  Each party agrees that when Nonpublic Personal
Information is provided to a  nonaffiliated  third party ("a Service  Provider")
who  performs  services  for or  functions  on  behalf of the  party,  including
marketing  of the party's own  products or  services,  or marketing of financial
products or services  pursuant to Joint  Agreements  between the party and other
Financial  Institutions,  such party  shall  disclose  to its  Consumers  and/or
Customers that (a) it will be providing such Nonpublic  Personal  Information to
the Service  Provider and (b) it has entered a  contractual  agreement  with the
Service   Provider   that   requires  the  Service   Provider  to  maintain  the
confidentiality of such Nonpublic Personal  Information  pursuant to the Privacy
Regulation.

                                  Page 13 of 28

<PAGE>

6.5 Other  Privacy  Regulations.  Each party  agrees  that  compliance  with the
Privacy  Regulation  does not  relieve  either  party of any of its  duties  and
obligations to comply with other applicable privacy laws,  statutes,  ordinances
or regulations of the appropriate authorities.

6.6 Remedies.  The Receiving Party agrees that (a) any unauthorized  access, use
or disclosure  (or  threatened  unauthorized  access,  use or disclosure) of the
Disclosing  Party's  Nonpublic   Personal   Information  or  other  Confidential
Information,  (b) other violation of the Privacy Regulation, or (c) violation of
other applicable privacy  regulations,  may cause immediate and irreparable harm
to the  Disclosing  Party for which money damages may not constitute an adequate
remedy. In that event, each party agrees that injunctive relief may be warranted
in addition to any other  remedies the  Disclosing  Party may have. In addition,
the Receiving Party agrees promptly to advise the Disclosing Party in writing of
any  unauthorized   misappropriation,   disclosure  or  use  by  any  person  of
Confidential  Information  (including,  without  limitation,  Nonpublic Personal
Information)  which may come to its  attention  and to take all steps at its own
expense reasonably requested by the Disclosing Party to limit, stop or otherwise
remedy such misappropriation, disclosure or use.

7. VESTING OF RENEWAL COMMISSIONS

7.1 LMG, its successors,  executors,  assigns, or administrators is vested as to
the first year and  renewal  commissions  and,  as provided in APPENDIX B, shall
continue to receive  renewal  commissions  on  premiums on Policies  received by
American National.

8. BONUS ARRANGEMENT

8.1 As long as this Agreement remains in effect,  an annuity bonus  arrangement,
calculated  as specified in APPENDIX D, will be payable by American  National to
LMG, if earned.

8.2 As long as this  Agreement  remains  in effect,  a life  bonus  arrangement,
calculated  as specified in APPENDIX D, will be payable by American  National to
LMG, if earned.

9. NON-COMPETE PROVISION

9.1 *

9.2 *

9.3 LMG and American  National  will  jointly  develop  proprietary  products as
mutually agreed upon.  Neither LMG nor American National are obligated to pursue
the development of such products.

                                  Page 14 of 28

<PAGE>

10. GENERAL PROVISIONS

10.1 The parties  agree that this  Agreement  is an honorable  undertaking,  and
agree to cooperate each with the other in carrying out its provisions.

10.2 Each party will cause its employees and  Wholesalers and Producers to, upon
receipt of any summons or other notice of suit or regulatory  authority  inquiry
wherein  the  other  party  is  named in any  manner,  forward  any and all such
documents  within  twenty-four (24) hours to the attention of the other party by
facsimile, overnight mail, or overnight courier.

10.3 The  waiver of any  breach  of any  term,  covenant  or  condition  of this
Agreement  shall not be deemed a waiver of any subsequent  breach of the same or
any other term, covenant,  or condition.  No term, covenant or condition of this
Agreement  shall be deemed to have been waived  unless such waiver is in writing
signed by the party charged therewith.

10.4 For any  notice  under  this  Agreement,  notice  shall be  sufficient  and
effective  five (5)  business  days  after  deposit  in the U.S.  Mail,  postage
prepaid,  registered or certified,  return receipt requested, or upon receipt if
delivered  personally  or by a nationally  recognized  overnight  carrier.  Such
notice shall be directed as follows:

To LMG:                    Legacy Marketing Group
                           Lynda Regan, Chief Executive Officer
                           Preston Pitts, President
                           2090 Marina Avenue
                           Petaluma, California 94954

With copy to:              Stokes Lazarus Carmichael LLP
                           80 Peachtree Park Drive, N.E.
                           Atlanta, Georgia 30309

To American National:      American National Insurance Company
                           Richard Ferdinandtsen, President and Chief
                           Operating Officer
                           Kelly Wainscott, Vice President,
                           Independent Marketing
                           David Behrens, Executive Vice President,
                           Independent Marketing
                           One Moody Plaza
                           Galveston, Texas 77550-7999

With copy to:              Frederick E. Black, Greer, Herz and Adams LLP
                           One Moody Plaza, 18th Floor
                           Galveston, Texas 77550-7999

10.5 If any clause,  paragraph,  term or  provision of this  Agreement  shall be
found to be void or unenforceable by any court of competent  jurisdiction,  such
finding  shall  have no  effect  upon any  other  clause,  paragraph,  term,  or
provision of this Agreement, and same shall be given full force and effect.

                                  Page 15 of 28

<PAGE>

10.6 Each party  expressly  represents and warrants that it has the authority to
enter  into  this  Agreement  and that it is not or will not be,  by  virtue  of
entering into this Agreement or otherwise, in breach of any other agreement with
any other insurance  company,  association,  firm,  person or corporation.  Each
party  warrants  that  the  other  party  will  be  free  from  interference  or
disturbance in its use of all products,  advertising,  marketing  techniques and
all information provided by the originating party.

10.7 This Agreement shall be binding upon the successors and assigns of American
National as well as upon LMG's successors and permissive assigns.

10.8 The persons  signing this Agreement on behalf of American  National and LMG
warrant,  covenant  and  represent  that they are  authorized  to  execute  this
Agreement  on  behalf  of  such  corporations  pursuant  to  their  bylaws  or a
resolution of their board of directors.

10.9 This  Agreement,  including  APPENDICES A, B, C, D and E and the provisions
hereof,  and the  Administrative  Services  Agreement into constitute the entire
agreement of the parties.  No modification hereof shall be binding upon American
National  or LMG unless such  amendment  is in writing and signed by officers of
American  National and LMG. The  Agreement  shall be governed by the laws of the
State of Texas. Any similar  agreement signed prior to the execution dates below
is null and void and abrogated hereby.  No change,  waiver or discharge shall be
valid unless in writing, and signed by an authorized representative of the party
against whom such change, waiver or discharge is sought to be enforced. No delay
or omission by either  party to  exercise  any right or power shall  impair such
right or power or be construed as a waiver. A waiver by either of the parties of
any of the  covenants  to be  performed  by the other or any breach shall not be
construed to be a waiver of any succeeding breach or any other covenant.

10.10 *

10.11 In no event and under no  circumstances  shall  either  party  under  this
Agreement be liable to the other party under any provision of this Agreement for
lost profits or for exemplary,  speculative,  special, punitive or consequential
damages.

10.12 Each party shall be excused from performance for any reasonable period and
to the extent that the party is prevented from performing any services, in whole
or in  part,  as a  result  of  delays  caused  by an act  of  God,  war,  civil
disturbance,  court  order,  labor  dispute,  or other cause beyond that party's
reasonable  control,  including  failures or fluctuations  in electrical  power,
heat,  light,  air  conditioning  or   telecommunications   equipment  and  such
non-performance shall not be a default or a ground for termination.

                                  Page 16 of 28

<PAGE>

10.13 Any claim or dispute arising out of or relating to this Agreement,  or any
breach  thereof,  shall be finally  determined  and settled  pursuant to binding
arbitration  in  Houston,  Texas,  by one  arbitrator,  to be agreed upon by the
parties.  The  arbitrator  shall be an attorney  licensed to practice law in the
state of Texas.  Should the  parties  fail to agree on an  arbitrator  then each
party  shall  appoint  one  arbitrator  who shall  then agree to appoint a third
arbitrator.  In such an event, the first two arbitrators will not be required to
participate  and the final  arbitrator  may  conduct the  arbitration  as a sole
arbitrator.   Should  one  party  fail  to  appoint  an   arbitrator  as  herein
contemplated then the choice of the other party shall be the sole arbitrator. If
the two  arbitrators  appointed  by or on behalf of the parties as  contemplated
herein fail to appoint a third arbitrator within ten (10) days after the date of
the  appointment of the last  arbitrator,  then any person sitting as a District
Judge in Houston,  Texas,  upon  application  of either party,  shall appoint an
arbitrator  to fill such  position with the same force and effect as though such
arbitrator had been appointed or herein contemplated.

The  arbitration  proceeding  shall  apply the laws of the state of Texas and be
conducted in accordance  with the Commercial  Arbitration  Rules of the American
Arbitration  Association.  The cost of  arbitration  (exclusive of attending the
arbitration,  and of the fees and expenses of legal counsel to such party, to be
borne by each party) shall be shared equally by American National and LMG unless
such arbitrator  deems it just to allow one party to recover such costs from the
other.  The  arbitration  award shall be final and  conclusive and shall receive
recognition  and  judgment  upon such award may be entered  and  enforced in any
court of competent jurisdiction.

10.14 LMG hereby indemnifies and holds harmless American National, its officers,
directors,  employees  and  representatives  from any and all  claims,  damages,
expenses,  liabilities,  losses,  causes of action,  costs and  obligations,  of
whatever kind or nature, whether joint and several or otherwise (including,  but
not limited to,  attorneys'  fees and expenses and amounts paid in settlement of
any claims or liabilities) to any third party,  arising out of LMG's  fraudulent
or negligent  act(s) or  omission(s);  LMG's failure to comply with the terms of
this Agreement;  LMG's failure to comply with any law or regulation with respect
to its duties  hereunder  except that LMG shall not be required to  indemnify or
hold  harmless  American  National  for any act or  omission  of LMG  which  was
directed  orally or in writing by  American  National,  or  required by American
National under the Agreement.

American  National  hereby  indemnifies  and holds  harmless  LMG, its officers,
directors,  employees  and  representatives  from any and all  claims,  damages,
expenses,  liabilities,  losses,  causes of action,  costs and  obligations,  of
whatever kind or nature, whether joint and several or otherwise (including,  but
not limited to,  attorneys'  fees and expenses and amounts paid in settlement of
any  claims  or  liabilities)  to any  third  party,  arising  out  of  American
National's  fraudulent or negligent act(s) or omission(s);  American  National's
failure to comply with the terms of this Agreement;  American National's failure
to comply with any law or regulation with respect to its duties  hereunder;  and
any  actions or  omissions  of LMG which were  directed  orally or in writing by
American National, or required by American National under the Agreement.

Without in any way limiting the above reciprocal  indemnifications,  the parties
hereto expressly agree that neither party shall be prohibited under this section
from seeking such indemnification on the

                                  Page 17 of 28

<PAGE>

basis that such party seeking  indemnification  is itself  negligent.  Provided,
however, that no party shall be liable for that portion of the claims,  damages,
liabilities,  losses or causes of action  resulting  from the  negligence of the
other party, or resulting from the negligence of any third party, whether or not
such third party is named in the lawsuit.

In lawsuits  brought  against both parties by a third party,  the parties  agree
that each shall work  together in a good faith effort to defend  against  and/or
settle such lawsuits  brought by a third party. In lawsuits  brought against one
but not both  parties,  to the extent  practicable,  all efforts will be made to
defend or settle the claim  with such third  party  without  bringing  the other
party into the initial lawsuit. In any case, each party shall assert and protect
all  mutual  privileges  of  one  another,  including  but  not  limited  to the
attorney-client  privilege,  the joint defense privilege,  and the attorney work
product privilege.  Notwithstanding the foregoing,  nothing herein shall prevent
LMG or American National from seeking  indemnification from the other party in a
separate  arbitration or other  proceeding  without the constraints of the joint
defense privilege or joint attorney work product privilege.

The parties hereto  expressly agree that, prior to the institution of any action
or the filing of any claim against one another  under this section,  the parties
will  confer  directly  in good  faith to resolve  any  disputes.  For  American
National,  such  discussions  shall  involve  * or *,  or  their  successors  or
designees.  For LMG, such discussions shall involve Lynda Regan, Chief Executive
Officer, or Preston Pitts, President, or their successors or designees.

10.15 SURVIVAL:  Sections 4.4, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 7, 10.12, 10.13 and
10.14 shall survive the termination of this Agreement.

               {Remainder of this page intentionally left blank.}

                                  Page 18 of 28

<PAGE>

Any similar agreement signed prior to the execution dates below is null and void
and abrogated hereby.

IN WITNESS HEREOF, the parties hereto have executed this Agreement.

         LEGACY MARKETING GROUP

         By: /s/ R. Preston Pitts

         Title: President

         Witness: /s/ Lynn Laub

         Date: November 15, 2002

         AMERICAN NATIONAL INSURANCE COMPANY

         By: /s Kelly M. Wainscott

         Title: Vice President

         Witness: /s/ Jynx Yucra

         Date: November 15, 2002

                                  Page 19 of 28

<PAGE>

                                   APPENDIX A

GEOGRAPHIC TERRITORY:
The District of Columbia and all states other than New York and Alabama.

Products

*

1.       *
2.       *
3.       *
4.       *
5.       *
6.       *
7.       *

*

1.       *
2.       *
3.       *
4.       *
5.       *
6.       *
7.       *
8.       *
9.       *

*

1.       *
2.       *

Riders

1.       *
         1.       *
         2.       *
         3.       *
         4.       *
         5.       *
         6.       *
         7.       *

                                  Page 20 of 28

<PAGE>

         8.       *

2.       *
         1.       *
         2.       *
         3.       *

                                  Page 21 of 28

<PAGE>

                                   APPENDIX B

Legacy Marketing Group's Base Compensation Schedule
* Product Line

Compensation to LMG shall equal * of the following tables:

I.       *

1. Premium and Trailer Commission

Premium Band #1:  Premium *

                       *            *            *            *         *
*
     *                    *            *            *            *         *
     *                    *            *            *            *         *
     *                    *            *            *            *         *

*
     *                    *            *            *            *         *
     *                    *            *            *            *         *
     *                    *            *            *            *         *

*
     *                    *            *            *            *         *
     *                    *            *            *            *         *
     *                    *            *            *            *         *

--------------------
1*
2*
3*

                                  Page 22 of 28

<PAGE>

Premium Band #2:  Premium *

                       *            *            *            *         *
*
     *                    *            *            *            *         *
     *                    *            *            *            *         *
     *                    *            *            *            *         *

*
     *                    *            *            *            *         *
     *                    *            *            *            *         *
     *                    *            *            *            *         *

*
     *                    *            *            *            *         *
     *                    *            *            *            *         *
     *                    *            *            *            *         *

Premium Band #3:  Premium *

                       *            *            *            *         *
*
     *                    *            *            *            *         *
     *                    *            *            *            *         *
     *                    *            *            *            *         *

*
     *                    *            *            *            *         *
     *                    *            *            *            *         *
     *                    *            *            *            *         *

*
     *                    *            *            *            *         *
     *                    *            *            *            *         *
     *                    *            *            *            *         *

2.   * is a * annual  trailer  on the  inforce  cash  value  and is due  monthly
     starting  at the end of the first  month  after the  certificate  effective
     date.

                                  Page 23 of 28

<PAGE>

<TABLE>
<CAPTION>
<S>            <C>                <C>              <C>                <C>              <C>
-------------- ------------------ ---------------- ------------------ ---------------- -----------------
                 *                                   *                                   *
                                   *                                   *
-------------- ------------------ ---------------- ------------------ ---------------- -----------------
*                         *                  *                *                  *              *
-------------- ------------------ ---------------- ------------------ ---------------- -----------------
*                         *                  *                *                  *              *
-------------- ------------------ ---------------- ------------------ ---------------- -----------------
*
                          *                  *                *                  *              *
-------------- ------------------ ---------------- ------------------ ---------------- -----------------
*                         *                  *                *                  *              *
-------------- ------------------ ---------------- ------------------ ---------------- -----------------
</TABLE>

--------------------------
1*
2*
3*
4*

                                  Page 24 of 28

<PAGE>

                                   APPENDIX C

Legacy Marketing Group: Wholesaler and Producer Agreement(s) (To be inserted)

                                  Page 25 of 28

<PAGE>

                                   APPENDIX D

BONUS AGREEMENT

*

                                  Page 26 of 28

<PAGE>

*

                                  Page 27 of 28

<PAGE>

                                   APPENDIX E

                              AUTHORIZED PERSONNEL

REPRESENTING AMERICAN NATIONAL

Name                                  Title                           Function

*                                   *                                  *
*                                   *                                  *

*                                   *                                  *

*                                   *                                  *

*                                   *                                  *

*                                   *                                  *

REPRESENTING LMG

Name                        Title                                Function

Preston Pitts               President                            Overall

Steve Taylor                Chief Financial Officer              Finance

Lynda Regan                 Chief Executive Officer              Overall

Don Dady                    Vice President of                    Marketing
Marketing

                                  Page 28 of 28

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