CEO ENGAGEMENT AGREEMENT

                                                                    EXHIBIT 10.1
                                                                    ------------



                            CEO ENGAGEMENT AGREEMENT


                  THIS CEO ENGAGEMENT AGREEMENT (this "AGREEMENT") is made and
entered into as of February 1, 2007, by and between Financial Industries
Corporation, a Texas corporation (hereinafter, together with its successors,
referred to as the "COMPANY"), on the one hand, and William Prouty (hereinafter
referred to as the "EXECUTIVE"), on the other hand.

                              W I T N E S S E T H :

                  WHEREAS, the Company desires to engage the Executive to act as
the Chief Executive Officer of the Company, and the Executive desires to accept
such engagement; and

                  WHEREAS, the parties hereto desire to set forth in writing the
terms and conditions of their understandings and agreements.

                  NOW THEREFORE, in consideration of the foregoing, of the
mutual promises contained herein and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

         SECTION 1. DEFINITIONS. In addition to the terms set forth throughout
this Agreement, the following capitalized terms shall have the respective
meanings set forth below:

                  "ACCRUED BENEFITS" means (a) all unpaid salary earned or
accrued through the date the Executive's engagement is terminated, (b)
reimbursement for any and all unreimbursed reasonable and necessary expenses
incurred by the Executive through the date the Executive's engagement is
terminated and (c) all other unpaid payments and benefits to which the Executive
may be entitled under the terms of any applicable compensation arrangement or
benefit plan or program of the Company, in each case through the date the
Executive's engagement is terminated; provided, however, that "Accrued Benefits"
shall not include any benefits (i) payable under any severance or bonus plan or
policy of the Company or (ii) relating to any unvested stock options or other
equity-based compensation or awards.

                  "ACT" shall mean the Securities Exchange Act of 1934, as
amended.

                  "AFFILIATE" shall have the meaning given such term in Rule
12b-2 of the Act.

                  "BOARD" shall mean the board of directors of the Company.

                  "CAUSE" shall mean any of the following: (a) the failure of
the Executive to be present for work for five (5) or more consecutive business
days (except during vacation and periods of illness as set forth herein),
without giving prior written notice to the Board (if it is reasonably

<PAGE>



practicable to do so) and receiving approval of the Board of such absence (which
approval shall not be unreasonably withheld); (b) the Executive's conviction of
or plea of nolo contendere to any felony or any crime involving moral turpitude;
(c) the Executive's material breach of this Agreement; (d) the Executive
willfully disobeys a lawful and reasonable direction of the Board that is
consistent with and reasonably related to his position and responsibilities as
chief executive officer, and fails to cure such disobedience within ten (10)
days following his receipt of written notice thereof describing in reasonable
detail the nature of the alleged disobedience; or (e) the Executive's fraud,
willful misconduct, or theft in connection with his engagement with the Company.
During any cure period, the Executive will be given an opportunity to appear,
with his counsel if he so desires, before the Board to hear and respond to such
allegations of Cause.

                  "CHANGE OF CONTROL TRANSACTION" means any transaction or
series of transactions that result in (i) the acquisition by any person (or
persons who would be deemed a person under Section 13d-3 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder) of 50% or more of the outstanding shares of the Company's common
stock, or (ii) the sale or other transfer or disposition of all or substantially
all of the consolidated assets of the Company; in each case, whether structured
as a tender or exchange offer, share exchange, merger, consolidation, business
combination, recapitalization, reorganization, liquidation, dissolution, or
similar transaction or series of transactions.

                  "COMPENSATION COMMITTEE" shall mean the Compensation Committee
of the Board, as it shall be comprised from time to time or, if no such
committee is comprised, the Board.

                  "CONFIDENTIAL INFORMATION" shall mean trade secrets,
confidential or proprietary information, and all other information, documents or
materials, owned, developed or possessed by the Company or any of its
Affiliates, or their respective predecessors and successors, whether in tangible
or intangible form, that is not generally known to the public. Confidential
Information includes, but is not limited to, (a) financial information, (b)
product and service plans, costs, prices, profits and sales, (c) business ideas,
recommendations and strategies, (d) marketing plans and studies, (e)
projections, forecasts and budgets, (f) computer access codes, computer programs
and data bases (and the documentation and information contained therein), (g)
know-how, technologies, concepts and designs, (h) research and development
efforts and projects, (i) records, (j) existing or prospective client, customer,
vendor and supplier information (including, but not limited to, contracts,
identities, needs, transaction histories, volumes, characteristics, agreements,
prices, spending, preferences and habits), (k) training manuals and similar
materials, (l) skills, responsibilities, compensation and personnel files of the
employees, officers, directors and independent contractors of the Company and
its Affiliates and (m) competitive analyses.

                  "ENGAGEMENT PERIOD" shall mean the period during which the
Company engages the Executive to act as the Chief Executive Officer of the
Company pursuant to this Agreement.



                                       2
<PAGE>



                  "GOOD REASON" means any of the following: (i) any reduction of
the Executive's status, title, position, scope of authority, or responsibilities
(including reporting responsibilities), or the assignment by the Company to the
Executive of any duties or responsibilities that are materially inconsistent
with such status, title, position, authority, or responsibilities; (ii) any
material breach of this Agreement by the Company, including without limitation
any failure by the Company to provide the Executive with the compensation and
benefits called for by this Agreement; (iii) the Company's requiring the
Executive to be relocate his office location more than fifty (50) miles from his
initial office location in Austin, Texas (excluding reasonable business-related
travel); provided, that such relocation shall not constitute "Good Reason" so
long as (x) the Company provides a reasonably comparable apartment and car in
such new location and (y) such new location is within the continental United
States (48 contiguous states and the District of Columbia) and is the Company's
then principal executive office; (iv) the consummation of a Change of Control
Transaction; or (v) any other action, omission, event, or circumstance that
under applicable law constitutes constructive termination by the Company of the
Executive's engagement.

                  "INCAPACITY," with respect to the Executive, shall mean that
the Executive shall become ill or be injured or otherwise incapacitated such
that, in the good faith opinion of the Board, he cannot carry out and perform
fully the essential functions of his duties hereunder, and such incapacity shall
continue for a period of thirty (30) consecutive days or for any thirty (30)
days within a ninety (90) day period.

                  "PERSON" shall mean any individual, corporation, limited
liability company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Act).

                  "UNAUTHORIZED" shall mean: (a) in contravention of the
Company's policies or procedures; (b) otherwise inconsistent with the Company's
measures to protect its interests in any Confidential Information; (c) in
contravention of any lawful instruction or directive, either written or oral, of
the Board; or (d) in contravention of any duty existing under law or contract.

         SECTION 2. TERM OF ENGAGEMENT. Unless earlier terminated in accordance
with the terms of this Agreement, the Executive's Engagement Period shall
commence on February 1, 2007 and shall end at 5:00 p.m. on January 31, 2008.

         SECTION 3. DUTIES. During the Engagement Period, the Executive (a)
shall serve as Chief Executive Officer of the Company, (b) shall report directly
to the Board, (c) shall have such authority and responsibility to perform such
duties consistent with and reasonably related to his position as Chief Executive
Officer as may be assigned to him from time to time by the Board and (d) shall
devote his commercially reasonable best efforts and time, attention, knowledge
and skill to the operation of the business and affairs of the Company. The
Executive will devote his full business time (meaning typically being "on-site"
Monday morning through Friday afternoon, holidays and vacations excluded) to his
responsibilities as Chief Executive Officer of the Company. The Executive
expressly acknowledges that, without the prior written approval the Board, he


                                       3
<PAGE>



shall not serve as an employee of or consultant to, or become engaged in any
business activity of, any Person other than the Company, DLB Capital Fund FNIN,
LLC, or their affiliates (including investment funds managed by affiliates)
during the Engagement Period.

                  The Company and its subsidiaries will give the Executive at
least as much prior notice of the time, place, and subject matter of each
regularly scheduled or special meeting of any board of directors (or committee
thereof) of any of the Company or any of its subsidiaries, or any proposed
action by written consent of any board of directors (or committee thereof) of
any of the Company or any of its subsidiaries, as is given to any other director
or committee member; such notices in all cases to include true and complete
copies of all documents and other materials furnished by or on behalf of any of
the Company or any of its subsidiaries to any director (or committee member) in
connection with such meeting or consent. The Executive will be entitled to
physically attend any such meeting, or if a meeting is held by means of an
audio- or video-conference, to participate in the meeting by such means.

         SECTION 4. COMPENSATION. During the Engagement Period, the Executive
shall be compensated as follows:

         (a)      Salary. The Executive shall receive, at such intervals as are
         consistent with the Company's customary payroll policies as may be in
         effect from time to time, an annual salary (prorated for any partial
         year) equal to $400,000 (the "SALARY").

         (b)      Stock Options. Concurrently with the execution of this
         Agreement, the Company and the Executive shall execute the stock option
         agreement attached hereto as Exhibit A (the "STOCK OPTION AGREEMENT"),
         pursuant to which the Executive shall be granted an option to 150,000
         shares of common stock of the Company pursuant to the terms and
         conditions set forth in such Stock Option Agreement.

         (c)      Apartment and Car. The Executive shall be provided with an
         apartment and car in Austin, Texas, in each case selected by the
         Company.

         (d)      Expenses. The Executive shall be reimbursed, at such intervals
         and in accordance with such Company policies as may be in effect from
         time to time, for any and all reasonable and necessary business
         expenses incurred by him for the benefit of the Company.

         (e)      Change of Control Payment. If (i) there occurs a Change of
         Control Transaction that either (A) is approved by the Board (other
         than a transaction described in clause (B) below) or (B) pursuant to
         which, the Company and/or the Company's shareholders receive
         consideration equivalent to at least $7.50 per share of the Company's
         common stock outstanding at the time of such transaction (after taking
         into account the Change of Control payment provided for in this clause
         (e); such $7.50 per share to be proportionately adjusted to reflect any


                                       4
<PAGE>



         stock dividend, stock split, reverse stock split, or other subdivision
         or combination of the outstanding shares of the Company's common
         stock); and (ii) such Change of Control Transaction is consummated on
         or before October 31, 2008, then the Company will pay the Executive
         $600,000 cash concurrently with the consummation of such Change of
         Control Transaction; provided, however, that the Company shall not be
         obligated to make such $600,000 payment if a written letter of intent
         or binding transaction agreement with respect to the Change of Control
         Transaction was executed by the Company and the other party to such
         transaction on or before February 15, 2007. For the avoidance of doubt,
         the sale by Investors Life Insurance Company of North America
         ("INVESTORS LIFE") of shares of the Company held by Investors Life
         shall not trigger any anti-dilution or other adjustment to the number
         of shares of the Company for purposes of this Agreement.

         (f)      Stock Grant. The Company will issue and deliver to the
         Executive 27,397 shares of Common Stock (such number of shares to be
         proportionately adjusted to reflect any stock dividend, stock split,
         reverse stock split, or other subdivision or combination of the
         outstanding shares of the Company's common stock, the "MILESTONE
         SHARES") upon the occurrence of the following event (the "MILESTONE
         EVENT"): the Company's being current in all material respects in its
         financial reporting obligations under the Securities Exchange Act of
         1934, and the rules and regulations of the Securities and Exchange
         Commission promulgated thereunder, on or before May 15, 2007. For the
         avoidance of doubt, the sale by Investors Life Insurance Company of
         North America ("INVESTORS LIFE") of shares of the Company held by
         Investors Life shall not trigger any anti-dilution or other adjustment
         to the number of shares of the Company for purposes of this Agreement.

                  (1)      In addition, if as of the consummation of a Change of
Control Transaction, the Company has not previously issued the Milestone Shares
to the Executive, then immediately before the consummation of the Change of
Control Transaction the Company will issue the Milestone Shares to the Executive
(regardless of whether the Milestone Event has yet occurred, except that if the
Milestone Event has not occurred by May 15, 2007, and the Change of Control
Transaction is consummated after that date, the Milestone Shares shall not be
required to be issued).

                  (2)      The Company shall use its commercially reasonable
efforts to register the Milestone Shares and the shares of common stock to be
issued pursuant to the Stock Option Agreement pursuant to a Form S-3 or S-8, to
the extent applicable, and subject to the Company's eligibility to register
shares on such form.

         SECTION 5. TERMINATION OF ENGAGEMENT. The Company and the Executive
shall have the right to terminate the engagement of the Executive as set forth
in this Section 5.

                  (a)      Incapacity of the Executive. If the Executive shall
         have an Incapacity, the Board may, by giving the Executive written
         notice, terminate the Executive's engagement under this Agreement. A


                                       5
<PAGE>



         termination of the Executive's engagement under this Section 5(a) shall
         be effective as of the date provided in such notice. In the event of
         termination under this Section 5(a), the Executive shall be entitled to
         his Accrued Benefits as of the date of termination and no other
         payments or benefits except pursuant to Section 10 of this Agreement
         and Section 7(a) of the Stock Option Agreement.

                  (b)      Death of the Executive. The engagement of the
         Executive shall automatically terminate upon the death of the
         Executive. Upon such termination, the Executive's estate or, if
         applicable, his heirs shall be entitled only to the Accrued Benefits of
         the Executive as of the date of termination and thereafter no other
         payments or benefits shall be owed by the Company to the Executive
         except pursuant to Section 10 of this Agreement and Section 7(a) of the
         Stock Option Agreement.

                  (c)      Termination by the Company for Cause. The Board may
         immediately terminate the Executive's engagement for Cause by giving
         the Executive written or oral notice of such termination. Upon
         termination for Cause, the Executive shall receive only the Accrued
         Benefits as of the date of termination and thereafter no other payments
         or benefits shall be owed by the Company to the Executive.

                  (d)      Termination by the Company without Cause. The Board
         may terminate the Executive's engagement under this Agreement
         immediately without any Cause (a "WITHOUT CAUSE TERMINATION") or notice
         whatsoever (the date of such termination, the "WITHOUT CAUSE
         TERMINATION DATE"). Upon a Without Cause Termination, so long as the
         Executive is not in violation of any of the provisions of Section 6 of
         this Agreement, (i) the Company shall pay the Executive, in equal
         installments as set forth in Section 4(a), the applicable pro rata
         portion of the Executive's Salary until the earlier of (A) January 31,
         2008 or (B) Change of Control Transaction if the Executive has or will
         receive the change of control payment pursuant to Section 4(e) (such
         earlier date, the "SEVERANCE PAYMENT PERIOD") and (ii) if the Without
         Cause Termination Date is prior to May 15,