##### 



FIRST AMENDED AND RESTATED
 LOAN AGREEMENT
 dated as of December 2, 2005
 among
 CITIZENS, INC.
 and
 REGIONS BANK,
as Administrative Agent
 and
 THE OTHER BANKS PARTY HERETO




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##### 



PageARTICLE I
    
    DEFINITIONS AND USE OF TERMS
    
    
    1Section 1.1
    
    Defined Terms
    
    
    1Section 1.2
    
    Heading
    
    
    16Section 1.3
    
    Number and Gender of Words
    
    
    16Section 1.4
    
    Money
    
    
    16Section 1.5
    
    Accounting Terms
    
    
    16Section 1.6
    
    Articles, Sections, and Exhibits
    
    
    17Section 1.7
    
    Construction
    
    
    17ARTICLE II
    
    REVOLVING LOAN
    
    
    17Section 2.1
    
    Revolving Advances
    
    
    17Section 2.2
    
    Procedures for Requesting Revolving Advances
    
    
    17Section 2.3
    
    Voluntary Prepayments
    
    
    20Section 2.4
    
    Mandatory Prepayments
    
    
    20Section 2.5
    
    Repayment of the Revolving Loan
    
    
    20Section 2.6
    
    Interest
    
    
    21Section 2.7
    
    Computation of Interest
    
    
    21Section 2.8
    
    Payments Generally
    
    
    21Section 2.9
    
    Termination of Revolving Commitment
    
    
    22ARTICLE III
    
    COLLATERAL
    
    
    22Section 3.1
    
    Collateral
    
    
    22ARTICLE IV
    
    REPRESENTATIONS AND WARRANTIES
    
    
    23Section 4.1
    
    Existence and Authority
    
    
    23Section 4.2
    
    Corporate Authorization
    
    
    23Section 4.3
    
    Compliance with Laws and Documents
    
    
    23Section 4.4
    
    Litigation
    
    
    24Section 4.5
    
    Taxes
    
    
    24Section 4.6
    
    Financial Statements
    
    
    24Section 4.7
    
    Purpose of Loan
    
    
    24Section 4.8
    
    Investment Company Act
    
    
    24Section 4.9
    
    Properties
    
    
    24Section 4.10
    
    Subsidiaries
    
    
    24Section 4.11
    
    Compliance with Law
    
    
    25Section 4.12
    
    Capital Stock
    
    
    25Section 4.13
    
    Existing Indebtedness
    
    
    25Section 4.14
    
    Material Agreements
    
    
    25Section 4.15
    
    Insiders
    
    
    25
 i




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##### 



PageSection 4.16
    
    ERISA
    
    
    25Section 4.17
    
    Full Disclosure
    
    
    26Section 4.18
    
    No Default
    
    
    26Section 4.19
    
    Principal Office
    
    
    26Section 4.20
    
    Licenses, Patents and Trademarks
    
    
    26Section 4.21
    
    Insurance Licenses
    
    
    26Section 4.22
    
    No Assumed Names
    
    
    27Section 4.23
    
    Sufficiency of Capital
    
    
    27ARTICLE V
    
    CONDITIONS PRECEDENT
    
    
    27Section 5.1
    
    Conditions Precedent to Revolving Advances on the Closing Date
    
    
    27Section 5.2
    
    Conditions Precedent to All Revolving Advances
    
    
    29Section 5.3
    
    Conditions Precedent to All Acquisition Advances
    
    
    29Section 5.4
    
    Conditions Precedent to All Revolving Advances in Excess of $5,000,000
    
    
    30Section 5.5
    
    Conditions Precedent to Revolving Advances Resulting in the Aggregate Amountof Revolving Advances Exceeding $30,000,000
    
    
    30ARTICLE VI
    
    AFFIRMATIVE COVENANTS
    
    
    30Section 6.1
    
    Proceeds
    
    
    30Section 6.2
    
    Reporting Requirements
    
    
    30Section 6.3
    
    Insurance Matters
    
    
    32Section 6.4
    
    Notice of Litigation or Changes in Fact
    
    
    32Section 6.5
    
    Taxes
    
    
    32Section 6.6
    
    Payment of Debts
    
    
    32Section 6.7
    
    Insurance
    
    
    32Section 6.8
    
    Maintenance of Existence
    
    
    33Section 6.9
    
    Maintenance of Assets
    
    
    33Section 6.10
    
    Expenses of Administrative Agent and Banks
    
    
    33Section 6.11
    
    Compliance with Material Agreements
    
    
    33Section 6.12
    
    Books and Records: Access
    
    
    33Section 6.13
    
    Compliance with Law
    
    
    33Section 6.14
    
    Authorization and Approvals
    
    
    33Section 6.15
    
    Information and Other Documents
    
    
    34Section 6.16
    
    Environmental Law Compliance
    
    
    34Section 6.17
    
    Acquisitions and Subsidiaries
    
    
    34Section 6.18
    
    Preferred Stock
    
    
    34Section 6.19
    
    Subordination Agreement
    
    
    34
 ii




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##### 



PageARTICLE VII
    
    NEGATIVE COVENANTS
    
    
    34Section 7.1
    
    Indebtedness
    
    
    34Section 7.2
    
    Negative Pledge
    
    
    35Section 7.3
    
    Restrictions on Dividends
    
    
    35Section 7.4
    
    Limitation on Liquidation, Merger, Consolidation, and Disposition of Assets
    
    
    35Section 7.5
    
    No Assignment
    
    
    35Section 7.6
    
    Prepayments
    
    
    35Section 7.7
    
    Loans, Advances and Investments
    
    
    36Section 7.8
    
    Surplus Debenture
    
    
    36Section 7.9
    
    Leverage Ratio
    
    
    36Section 7.10
    
    Fixed Charge Coverage Ratio
    
    
    36Section 7.11
    
    Funded Debt to Tangible Net Worth Ratio
    
    
    36Section 7.12
    
    Debenture Coverage Ratio
    
    
    36Section 7.13
    
    Reinsurance
    
    
    36Section 7.14
    
    Transactions With Affiliates
    
    
    36Section 7.15
    
    Business
    
    
    36Section 7.16
    
    Limitation on Issuance of Capital Stock
    
    
    36Section 7.17
    
    Limitation on Leases
    
    
    37Section 7.18
    
    Capital Expenditures
    
    
    37Section 7.19
    
    Employee Plans
    
    
    37Section 7.20
    
    Subsidiaries
    
    
    37Section 7.21
    
    Use of Proceeds
    
    
    38Section 7.22
    
    Composition of Corporate Group
    
    
    38Section 7.23
    
    Preferred Stock
    
    
    38ARTICLE VIII
    
    DEFAULT
    
    
    38Section 8.1
    
    Payment of Obligations
    
    
    38Section 8.2
    
    Certain Covenants
    
    
    38Section 8.3
    
    Default under Loan Documents
    
    
    38Section 8.4
    
    Other Covenants
    
    
    38Section 8.5
    
    Voluntary Debtor Relief
    
    
    39Section 8.6
    
    Involuntary Proceedings
    
    
    39Section 8.7
    
    Judgments
    
    
    39Section 8.8
    
    Attachment
    
    
    39Section 8.9
    
    Material Agreements
    
    
    39Section 8.10
    
    Other Indebtedness
    
    
    39Section 8.11
    
    Misrepresentation
    
    
    39Section 8.12
    
    Surplus Debenture Payments
    
    
    40Section 8.13
    
    Action by Governmental Authority
    
    
    40Section 8.14
    
    Full Force and Effect
    
    
    40
 iii




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##### 



PageSection 8.15
    
    Stock Ownership
    
    
    40Section 8.16
    
    Change of Control
    
    
    40Section 8.17
    
    Liquidation or Dissolution
    
    
    40Section 8.18
    
    Preferred Stock
    
    
    40ARTICLE IX
    
    RIGHTS OF ADMINISTRATIVE AGENT AND BANKS
    
    
    40Section 9.1
    
    Remedies Upon Default
    
    
    40Section 9.2
    
    Cumulative Rights
    
    
    41Section 9.3
    
    Reimbursement of Expenses
    
    
    41Section 9.4
    
    Performance by Administrative Agent
    
    
    41Section 9.5
    
    Administrative Agent and Banks Not in Control
    
    
    42Section 9.6
    
    Waivers
    
    
    42Section 9.7
    
    Application of Proceeds
    
    
    42ARTICLE X
    
    ADMINISTRATIVE AGENT
    
    
    42Section 10.1
    
    Appointment and Authorization of Administrative Agent
    
    
    42Section 10.2
    
    Delegation of Duties
    
    
    43Section 10.3
    
    Liability of Administrative Agent
    
    
    43Section 10.4
    
    Reliance by Administrative Agent
    
    
    43Section 10.5
    
    Notice of Default
    
    
    44Section 10.6
    
    Credit Decision; Disclosure of Information by Administrative Agent
    
    
    44Section 10.7
    
    INDEMNIFICATION OF ADMINISTRATIVE AGENT
    
    
    45Section 10.8
    
    Administrative Agent in its Individual Capacity
    
    
    45Section 10.9
    
    Successor Administrative Agent
    
    
    45ARTICLE XI
    
    MISCELLANEOUS
    
    
    46Section 11.1
    
    Notices
    
    
    46Section 11.2
    
    GOVERNING LAW
    
    
    47Section 11.3
    
    Choice of Forum: Service of Process and Jurisdiction
    
    
    47Section 11.4
    
    Expenses; Indemnification
    
    
    48Section 11.5
    
    Right of Set-off
    
    
    49Section 11.6
    
    Severability
    
    
    49Section 11.7
    
    Survival
    
    
    49Section 11.8
    
    Further Assurances
    
    
    50Section 11.9
    
    Counterparts
    
    
    50Section 11.10
    
    Parties Bound
    
    
    50Section 11.11
    
    Amendments, Etc
    
    
    52Section 11.12
    
    Form of Documents
    
    
    52Section 11.13
    
    Confidentiality
    
    
    53Section 11.14
    
    Exception to Covenants
    
    
    53
 iv




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##### 



PageSection 11.15
    
    No Usury Intended; Usury Savings Clause
    
    
    53Section 11.16
    
    Restatement of Existing Loan Agreements/No Novation
    
    
    53Section 11.17
    
    WAIVER OF JURY TRIAL
    
    
    54Section 11.18
    
    ENTIRE AGREEMENT
    
    
    54
 v




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##### 



Schedules
 2.1
    
    Revolving Commitments and Pro Rata Shares4.4
    
    Litigation4.9
    
    Permitted Liens4.10
    
    Subsidiaries4.12
    
    Corporate Structure and Stock Ownership4.13
    
    Existing Indebtedness4.14
    
    Material Agreements4.19
    
    Principal Office, Chief Executive Office, Principal Place of Business4.21
    
    Insurance Licenses4.22
    
    Assumed Names7.7
    
    Permitted Investments
 Exhibits
 A
    
    NoteB
    
    Assignment and AcceptanceC
    
    Compliance Certificate
 vi




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##### 



FIRST AMENDED AND RESTATED LOAN AGREEMENT
 Agreement Borrower Banks Bank Administrative Agent
 R E
C I T A L S:
 Existing Loan Agreement
     DEFINITIONS AND USE OF TERMS
 Defined Terms
 Acquisition
 Acquisition Advance
 Acquisition Consideration
 Loan Agreement




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##### 



Administrative Agent
 Administrative Agents Principal Office
 Affiliate
 Agent-Related Person
 Aggregate Permitted Exceptions Sections 7.1(f) 7.1(g) 7.17 7.18 clause
(l)
 Aggregate Permitted Exceptions Amount
 Annual Statement
 Applicable Environmental Laws
 Loan Agreement




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##### 



Assignment and Acceptance Section 11.10 Exhibit B
 Audited Financial Statements
 Authorized Representative
 Business Day
 Capital Leases
 Change of Control
 option right
  Loan Agreement




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##### 



CICA
 CICA Security Agreement
 Citizens Equity Agreements
 Closing Date Section
5.1
 Code
 Collateral Section 3.1
 Compensation Period Section 2.2(c)(ii)(B)
 Compliance Certificate Exhibit C
 Controlled Group Section 7.18(a)
 Corporate Advances
 Current Financials
 Current Date
 Loan Agreement




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##### 



Debenture Coverage Ratio
 Debtor Relief Laws
 Default Article VIII
 Default Rate
 Dividends
 (a)
    
    cash distributions or any other distributions on, or in respect of, any class
of capital stock of such corporation, except for distributions made solely in shares of
stock of the same class or for the Preferred Stock, distributions made solely in shares
of stock of the same class or common stock; and(b)
    
    any and all funds, cash or other payments made in respect of the redemption,
repurchase or acquisition of such stock by the issuer thereof, unless such stock is
redeemed or acquired through the exchange of such stock with stock of the same class.
 Dollar $
 EBITDA plus minus
 Employee Plan
 Equity
 Loan Agreement




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##### 



ERISA
 ERISA Affiliate
 ERISA Event
 Federal Funds Rate provided
 Financial Statements
 Fixed Charge Coverage Ratio plus
 Funded Debt
 (a)
    
    all obligations for borrowed money and all obligations evidenced by bonds,
debentures, notes, loan agreements or other similar instruments;
 Loan Agreement




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##### 



(b)
    
    any direct or contingent obligations arising under letters of credit, bankers
acceptances, bank guaranties, surety bonds and similar instruments;(c)
    
    accrued obligations in respect of earnout or similar payments payable in cash
or which may be payable in cash at the sellers or obligees option;(d)
    
    obligations in respect of Capital Leases;(e)
    
    obligations to pay the deferred purchase price of property or services
(excluding trade accounts payable that are not more than 30 days past due); and(f)
    
    all Guaranty Obligations with respect to obligations of any other Person of the
type described in clauses (a) through (e) above.
  Funded Debt to Tangible Net Worth Ratio
 GAAP
 Governmental Authority
 Guaranty Obligations primary
obligor
 Loan Agreement




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##### 



provided however Guaranty Obligation
 Highest Lawful Rate weekly ceiling annualized ceiling
 Indebtedness
 Loan Agreement




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##### 



Indemnified Party Section 11.14(b)
 Insurance Regulatory Authority
 Insurance Subsidiary
 Intangible Assets
 Interest Expense
 Interest Payment Date
 Internal Control Event
 Investment
 Junior Liabilities
 Law Laws
 Leverage Ratio
 Loan Agreement




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##### 



LIBOR Rate
 (a)
    
    the rate per annum equal to the rate determined by Administrative Agent to be
the offered rate that appears on Page 3750 of the Telerate screen (or any successor
thereto) that displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars with a term equivalent to an interest period of 30 days,
determined as of approximately 11:00 a.m. (London time) on the first day of such 30-day
period, or(b)
    
    if the rate referenced in the preceding subsection (a) does not appear on such
page or service or such page or service shall cease to be available, the rate per annum
equal to the rate determined by Administrative Agent to be the offered rate on such
other page or such other service that displays an average British Bankers Association
Interest Settlement Rate for deposits in Dollars with a term equivalent of 30 days,
determined as of approximately 11:00 a.m. (London time) on the first day of such 30-day
period, provided such offered rate on such other page or such other service is
substantially comparable to the rate if determined by subsection (a) above.
 License Section 4.21
 Lien
 Litigation
 Loan Documents
 Margin Stock
 Material Adverse Effect
 Material Agreements Section 4.14
 Loan Agreement




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##### 



Material Subsidiary Section 6.2
 Maturity Date Section 2.9 9.1
 NAIC
 Net Income
 Note Exhibit A
 Obligations
 Outstanding Amount
 PBGC
 Pension Plan
 Loan Agreement




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##### 



Permitted Investments Moodys S&P Schedule 7.7 clauses (a) (k)
 Permitted Liens
 (a)
    
    Liens in existence as of the date hereof as set forth on Schedule 4.9;(b)
    
    Liens created in the ordinary course of business resulting from (i) pledges or
deposits under workmens compensation laws, unemployment insurance laws or similar
legislation, (ii) good faith deposits in connection with bids, tenders, contracts
(other than for the purpose of borrowing money or obtaining credit) or leases to which
Borrower or any Subsidiary is a party, including security deposits, (iii) deposits of
any Subsidiary required to be maintained with Insurance Regulatory Authorities in the
ordinary course of business, (iv) deposits of any Subsidiary required by reinsurance
agreements permitted by the terms hereof entered into in the ordinary course of
business, and (v) deposits to secure public
 Loan Agreement




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##### 



or statutory obligations of Borrower or any Subsidiary, or surety, custom or appeal
bonds to which Borrower or any Subsidiary is a party, or the payment of contested
Taxes or import duties of Borrower or any Subsidiary;(c)
    
    any Lien (i) which is imposed by law, such as those of carriers, warehousemen
and mechanics, if payment of the obligation secured thereby is not yet due, or the
validity or amount of which is being contested by appropriate legal proceedings and
with respect to which adequate reserves have been set up, (ii) which arises out of a
judgment or award against Borrower or any Subsidiary with respect to which Borrower or
such Subsidiary at the time shall currently be prosecuting an appeal or proceedings for
review and with respect to which it shall have secured a stay of execution pending such
appeal or proceedings for review, and with respect to which adequate reserves have been
set up, and (iii) for taxes, assessments or other governmental charges or levies not
yet subject to penalties for nonpayment or the validity or amount of which is being
contested by appropriate legal proceedings and with respect to which adequate reserves
have been established;(d)
    
    minor survey exceptions, minor encumbrances, easements or reservations of, or
rights of others for, rights of way, sewers, electric lines, telegraph lines and other
similar purposes, or zoning or other restrictions as to the use of real property,
provided, that all of the foregoing, in the aggregate, do not at any time materially
detract from the value of said properties or materially impair their use in the
operation of the businesses of Borrower or any Subsidiary;(e)
    
    the Security Interests; and(f)
    
    Liens related to Indebtedness permitted pursuant to Section 7.1(g) and
(h).
 Person
 Plan Asset Regulation
 Preferred Stock
 Pro Rata Share Schedule 2.1
 Rate plus
 Loan Agreement




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##### 



Register Section 11.11(c)
 Registered Public Accounting Firm
 Reportable Event
 Request
 Required Banks
 Revolving Advances Section 2.1
 Revolving Loan Section 2.1
 Revolving Commitment Section 2.1 Schedule 2.1 Aggregate Revolving Commitment
 Rights
 Risk Based Capital
 SAP
 SEC
 Securities Laws
 Loan Agreement




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##### 



Security Agreement
 Security Interests Section 4.1
 Shemano/Stonegate Warrants
 Subordination Agreement
 Subsidiary
 Surplus Debentures
 Swap Contract
 Loan Agreement




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##### 



Synthetic Lease Obligation
 Tangible Net Worth
 Taxes
 Total Adjusted Capital
 Voting Percentage provided however Required Banks
 Heading
 Number and Gender of Words
 Money
 Accounting Terms
 Loan Agreement




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##### 



Articles, Sections, and Exhibits
 Construction
  REVOLVING LOAN
 Revolving Advances Revolving Advances Revolving Loan Section 2.1 Section 2.3
 Procedures for Requesting Revolving Advances
 Loan Agreement




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##### 



Time for Requests . Article V
 Disbursement Article V
 Funding and Payments Generally
 first second third
  Loan Agreement




---



##### 



Compensation Period
  Article
II Article V
   Loan Agreement




---



##### 



provided however Section 11.10
 Voluntary Prepayments provided
 Mandatory Prepayments
 Repayment of the Revolving Loan
 Loan Agreement




---



##### 



Interest
     Computation of Interest Section 11.15
 Payments Generally
   Loan Agreement




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##### 



Termination of Revolving Commitment
  Section
2.9 Section 2.4
  COLLATERAL
 Collateral Security Interests
 (a)
    
    any and all shares of capital stock of any Subsidiary hereafter acquired or
formed by Borrower or CICA using all or a portion of proceeds from any Revolving
Advance, which shall be not less than 100% of issued and outstanding capital stock or
other equity interests of such entity;(b)
    
    proceeds of assignment of proceeds of the Surplus Debentures; and(c)
    
    any and all interest, dividends and distributions with respect to, and any and
all proceeds arising from or by virtue of the sale or other disposition of, or from the
collection of, the Collateral described in paragraphs (a) through (b) above.
 Loan Agreement




---



##### 



REPRESENTATIONS AND WARRANTIES
  Existence and Authority
 Corporate Authorization
 Compliance with Laws and Documents
 Loan Agreement




---



##### 



Litigation Schedule 4.4
 Taxes
 Financial Statements
 Purpose of Loan
 Investment Company Act
 Properties
 Subsidiaries Schedule 4.10 Schedule 4.12
 Loan Agreement




---



##### 



Compliance with Law
 Capital Stock Schedule 4.12
 Existing Indebtedness Schedule 4.13
 Material Agreements Schedule 4.14 Material Agreements
 Insiders
 ERISA
   Loan Agreement




---



##### 



Full Disclosure Section 4.6
 No Default
 Principal Office Schedule 4.19
 Licenses, Patents and Trademarks
 Insurance Licenses Schedule 4.21 Licenses Schedule 4.21
 Loan Agreement  Page 26




---



##### 



Schedule
4.21
 No Assumed Names Schedule 4.22
 Sufficiency of Capital Section 4.23
  CONDITIONS PRECEDENT
 Conditions Precedent to Revolving Advances on the Closing Date
 (a)
    
    Articles of Incorporation. A copy of the articles of incorporation or
organization, and all amendments thereto, of each of Borrower and its Material
Subsidiaries, accompanied by certificates that such copy is correct and complete issued
by (i) the appropriate governmental official of the state of its organization bearing a
 Loan Agreement  Page 27




---



##### 



Current Date and (ii) the secretary of each such corporation or organization dated
as of the Closing Date.(b)
    
    Bylaws. A copy of the bylaws, and all amendments thereto, of each of
Borrower and its Material Subsidiaries, accompanied by a certificate that each such
copy is correct and complete, dated the Closing Date, executed by the secretary of such
corporation.(c)
    
    Good Standing and Authority. Certificates of the appropriate
governmental officials of such jurisdictions as Administrative Agent may request, each
bearing a Current Date, to the effect that Borrower and its Material Subsidiaries are
in good standing with respect to payment of franchise and similar Taxes and are duly
qualified to transact business therein, accompanied by the certificate of the secretary
of each such corporation, dated the Closing Date, that such certificates are true and
correct.(d)
    
    Incumbency. A certificate of incumbency of all officers of Borrower
and its Material Subsidiaries who will be authorized to execute or attest any of the
Loan Documents to which Borrower or such Subsidiary is a party on behalf of such
companies, dated the Closing Date, executed by their respective presidents and
secretaries.(e)
    
    Resolutions. A copy of resolutions approving the Loan Documents and
authorizing the transactions contemplated in this Agreement, duly adopted by the boards
of directors of Borrower, accompanied by a certificate of the secretary of each such
company dated the Closing Date, that such copy is a true and correct copy of
resolutions duly adopted at a meeting of, or by unanimous written consent of, the board
of directors of such company and that such resolutions have not been amended, modified,
or revoked in any respect, and are in full force and effect as of the Closing Date.(f)
    
    Assumed Name Certificate. If Borrower or any Material Subsidiary is
engaged in business using an assumed name, a certified copy of the certificate of
assumed name, with evidence that such certificate was properly filed in the appropriate
public office of the applicable jurisdiction in which Borrower or such Material
Subsidiary is engaged in business using the assumed name.(g)
    
    Opinion of Counsel. The opinion of counsel to Borrower and its
Material Subsidiaries satisfactory in form and substance to Administrative Agent.(h)
    
    Notes. The Notes in the amount of each Banks Revolving Commitment,
duly executed by Borrower, properly completed, dated the Closing Date.(i)
    
    Security Agreement. The Security Agreement, properly executed by
Borrower, and related UCC financing statements.
 Loan Agreement  Page 28




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##### 



(j)
    
    CICA Security Agreement. The CICA Security Agreement, properly
executed by CICA, and related financing statements.(k)
    
    UCC Searches. Searches of the Uniform Commercial Code, tax lien and
other records as Administrative Agent may require.(l)
    
    Financing Statements. Evidence that Uniform Commercial Code financing
statements in proper form executed by all proper parties have been filed in all
necessary filing offices.(m)
    
    Priority. Evidence that the Security Interests are of first priority.(n)
    
    Regulatory Approvals. Evidence that all consents, licenses and
approvals of Governmental Authorities required in connection with the execution,
delivery, performance, validity and enforceability of this Agreement and, each of the
other Loan Documents have been obtained, including, without limitation, any necessary
approvals for the issuance of the Surplus Debenture.(o)
    
    Other Documents. Such other documents, opinions, certificates,
agreements, instruments, and evidences as Administrative Agent or Bank may reasonably
request.(p)
    
    Origination Fee. Administrative Agent shall have received for the pro
rata account of each Bank, an origination fee equal to 0.375% of each Banks Revolving
Commitment.
 Conditions Precedent to All Revolving Advances Section 5.1
 (a)
    
    the representations and warranties contained in Article IV are correct
on and as of the date of such Revolving Advance as though made on and as of such date,
except to the extent that such representations and warranties relate solely to an
earlier date; and(b)
    
    no event has occurred and is continuing, or would result from such Revolving
Advance which constitutes a Default or which, with the lapse of time or notice or both,
could become a Default.
 Conditions Precedent to All Acquisition Advances Sections 5.1 5.2
 Loan Agreement  Page 29




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##### 



Conditions Precedent to All Revolving Advances in Excess of $5,000,000 Sections 5.1 5.2 5.3
    Conditions Precedent to Revolving Advances Resulting in the Aggregate Amount
of Revolving Advances Exceeding $30,000,000 Sections 5.1 5.2 5.3 5.4
  AFFIRMATIVE COVENANTS
  Proceeds
 Reporting Requirements
 (a)
    
    as soon as available, but in any event within 120 days after the end of each
fiscal year of Borrower, a consolidated and consolidating balance sheet of Borrower and
its Subsidiaries as at the end of such fiscal year, and the related consolidated and
consolidating statements of profit and loss, and reconciliation of surplus, and cash
flows for such fiscal year, audited and accompanied by a report and opinion of a
Registered Public Accounting Firm of nationally recognized standing reasonably
acceptable to Banks, which report and opinion shall be prepared in accordance with GAAP
and Securities Laws and shall not be subject to any qualifications or exceptions, and
accompanied by (i) an attestation report of such Registered Public Accounting Firm as
to Borrowers internal controls pursuant to Section 404 of
 Loan Agreement  Page 30




---



##### 



Sarbanes-Oxley and (ii) a certificate of such accountants that, in the course of
their examination necessary for their certification of the foregoing (other than
with respect to consolidating statements), they have not obtained knowledge of any
Default or unmatured Default, or, if in the opinion of such accountants any Default
or unmatured Default shall exist, stating the nature and status thereof; and(b)
    
    as soon as available, but in any event within 60 days after the end of each
fiscal quarter (other than the fourth fiscal quarter) of each fiscal year of Borrower,
a consolidated and consolidating balance sheet of Borrower and its Subsidiaries as at
the end of each such fiscal quarter and the related consolidated and consolidating
statements of profit and loss, and reconciliation of surplus, and cash flows for each
such fiscal quarter and for the portion of Borrowers fiscal year then ended, all in
reasonable detail and certified by the chief financial officer or chief accounting
officer of Borrower as fairly presenting the financial condition, results of operations
and cash flows of Borrower and its Subsidiaries in accordance with GAAP, subject only
to normal year-end audit adjustments and the absence of footnotes;(c)
    
    as soon as available, but in any event on or before April 1 following the end
of each fiscal year of each Material Subsidiary that is an Insurance Subsidiary, copies
of each Annual Statement that such companies have filed with or submitted to their
respective domiciliary Insurance Regulatory Authorities, all such statements to be
prepared in accordance with SAP consistently applied throughout the periods reflected
therein, and accompanied by a certificate of a responsible financial official of the
appropriate company to the effect that such Annual Statements present fairly the
financial condition and results of operations of each such company;(d)
    
    as soon as available, but in any event on or before June 1 following the end of
each fiscal year of each of Borrower and its Material Subsidiaries that are Insurance
Subsidiaries, copies of reports certified by an independent certified public accountant
reasonably acceptable to Banks on a SAP basis of any certifications required by any
Governmental Authority;(e)
    
    promptly after the same are available, copies of each annual report, proxy or
financial statement or other report or communication sent to the stockholders of
Borrower or any of its Material Subsidiaries, and copies of all annual, regular,
periodic and special reports and registration statements which Borrower or any of its
Material Subsidiaries may file or be required to file with the Securities and Exchange
Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not
otherwise required to be delivered to Banks pursuant hereto;(f)
    
    promptly, notice of any material change in accounting policies or financial
reporting practices by Borrower or any Material Subsidiary;(g)
    
    promptly, notice of the occurrence of any ERISA Event;
 Loan Agreement  Page 31




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##### 



(h)
    
    as soon as available, and in any event within 60 days after the end of each
fiscal year of Borrower, updated Schedule 4.14 and 4.21;(i)
    
    promptly upon any Acquisition or formation of a new Subsidiary of Borrower,
updated Schedules 4.10, 4.12, 4.14;(j)
    
    promptly, such additional information regarding the business, financial or
corporate affairs of Borrower or any Subsidiary as Administrative Agent or any Bank may
from time to time request;(k)
    
    concurrently with the delivery of the financial statements referred to in
Sections 6.2(a) and (b), a duly completed Compliance Certificate signed
by the chief financial officer or chief accounting officer of Borrower; and(l)
    
    promptly, notice of the incurrence of any Internal Control Event.
 Insurance Matters
 Notice of Litigation or Changes in Fact
 Taxes
 Payment of Debts
 Insurance
 Loan Agreement  Page 32




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##### 



Maintenance of Existence
 Maintenance of Assets
 Expenses of Administrative Agent and Banks
 Compliance with Material Agreements
 Books and Records: Access
 Compliance with Law
 Authorization and Approvals
 Loan Agreement  Page 33




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##### 



Information and Other Documents
 Environmental Law Compliance
 Acquisitions and Subsidiaries
 Preferred Stock
 Subordination Agreement
  NEGATIVE COVENANTS
  Indebtedness Schedule 4.13
 Loan Agreement  Page 34




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##### 



Negative Pledge
 Restrictions on Dividends
 Limitation on Liquidation, Merger, Consolidation, and Disposition of
Assets provided provided
 No Assignment
 Prepayments
 Loan Agreement  Page 35




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##### 



Loans, Advances and Investments
 Surplus Debenture
 Leverage Ratio
 Fixed Charge Coverage Ratio
 Funded Debt to Tangible Net Worth Ratio
 Debenture Coverage Ratio
 Reinsurance
 Transactions With Affiliates
 Business
 Limitation on Issuance of Capital Stock
 Loan Agreement  Page 36




---



##### 



Limitation on Leases
 Capital Expenditures
 Employee Plans
    Subsidiaries
 Loan Agreement  Page 37




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##### 



Use of Proceeds
 Composition of Corporate Group
 Preferred Stock
  DEFAULT
 Default
 Payment of Obligations
 Certain Covenants Sections 6.1 6.8 6.12 Article
VII
 Default under Loan Documents
 Other Covenants
 Loan Agreement  Page 38




---



##### 



Section 8.2
 Voluntary Debtor Relief
 Involuntary Proceedings
 Judgments
 Attachment
 Material Agreements
 Other Indebtedness
 Misrepresentation
 Loan Agreement  Page 39




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##### 



Surplus Debenture Payments
 Action by Governmental Authority
 Full Force and Effect
 Stock Ownership
 Change of Control
 Liquidation or Dissolution
 Preferred Stock
  RIGHTS OF ADMINISTRATIVE AGENT AND BANKS
 Remedies Upon Default
 Loan Agreement  Page 40




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##### 



(a)
    
    Acceleration. Terminate the Aggregate Revolving Commitment and/or
declare the entire unpaid balance of the Obligations and all other Indebtedness of
Borrower to Banks, or any part thereof, immediately due and payable, whereupon it shall
be due and payable without any action by Administrative Agent or any Bank, and without
diligence, presentment, demand, protest, notice of default, notice of intention to
accelerate, notice of acceleration or other notice of any kind, all of which Borrower
hereby expressly waives, anything contained herein or in any other Loan Document to the
contrary notwithstanding; provided, however, that upon the occurrence of a Default
specified in Sections 8.5 or 8.6 hereof, such Obligations shall become
due and payable without declaration, notice, demand or any other action by
Administrative Agent or any Bank and the Aggregate Revolving Commitment shall
automatically terminate.(b)
    
    Judgment. Reduce any claim to judgment.(c)
    
    Foreclosure. Take such steps legally permissible as Administrative
Agent may deem appropriate to foreclose or otherwise enforce the Security Interests and
all Liens granted to Administrative Agent to secure payment and performance of the
Obligations.(d)
    
    Rights. Exercise any and all Rights afforded by the Laws of the State
of Texas or any other jurisdiction as Administrative Agent shall deem appropriate,
including, but not limited to, the Uniform Commercial Code of Texas or of such other
jurisdiction, or by any of the Loan Documents, or by Law or equity, or otherwise.
 Cumulative Rights
 Reimbursement of Expenses
 Performance by Administrative Agent
 Loan Agreement  Page 41




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##### 



Administrative Agent and Banks Not in Control
 Waivers
 Application of Proceeds
 ADMINISTRATIVE AGENT
 Appointment and Authorization of Administrative Agent
 Loan Agreement  Page 42




---



##### 



Delegation of Duties
 Liability of Administrative Agent
 Reliance by Administrative Agent .
 Loan Agreement  Page 43




---



##### 



Article V Section 5.4(a)
 Notice of Default Article
IX provided however
 Credit Decision; Disclosure of Information by Administrative Agent
 Loan Agreement  Page 44




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##### 



INDEMNIFICATION OF ADMINISTRATIVE AGENT (WHETHER OR NOT ARISING OUT OF THE NEGLIGENCE OF SUCH
AGENT-RELATED PERSON) PROVIDED HOWEVER PROVIDED HOWEVER THE FOREGOING INDEMNITY SHALL APPLY TO THE
NEGLIGENCE OF THE AGENT-RELATED PERSON (BUT NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
AGENT-RELATED PERSON).
 Administrative Agent in its Individual Capacity
 Successor Administrative Agent
 Loan Agreement  Page 45




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##### 



Article X Section
11.4
  MISCELLANEOUS
 Notices
 ADMINISTRATIVE AGENT:
    
    REGIONS BANK4134 West Braker Lane, Suite 100Austin, Texas 78759ABA # 062005690Syndicate ServicesAcct. # 02606082119231Attn: Robin IngariTelecopy: (512) 373-2301Ref: Citizens, Inc.
 Loan Agreement  Page 46




---



##### 



with a copy to:Winstead Sechrest & Minick P.C.1201 Elm Street, Suite 5400Dallas, Texas 75202Attn: James R. LittlejohnTelecopy: (214) 745-5390BANKS:
    
    REGIONS BANK4314 West Braker Lane, Suite 100Austin, Texas 78759Attn: Robin IngariTelecopy: (512) 373-2301GUARANTY BANK301 Congress Avenue, Suite 300Austin, Texas 78701Attn: Dan LeonardTelecopy: (512) 320-1041BORROWER:
    
    Citizens, Inc.400 East Anderson LaneAustin, Texas 78752Attn: Mark A. Oliver, PresidentTelecopy: (512) 836-9334with a copy to:Jones & Keller, P.C.1625 Broadway, 16th FloorDenver, Colorado 80202Attn: Reid A. GodboltTelecopy: (303) 573-8133
 GOVERNING LAW
 Choice of Forum: Service of Process and Jurisdiction
 Loan Agreement  Page 47




---



##### 



Expenses; Indemnification
  INDEMNIFIED PARTY SECTION 11.4
 Loan Agreement  Page 48




---



##### 



Section 11.4
 Right of Set-off Sections 7.9 7.10 7.11 7.12 8.1 provided however Section 11.5
 Severability
 Survival
 Loan Agreement  Page 49




---



##### 



Further Assurances
 Counterparts
 Parties Bound
 Sections 11.4
 Loan Agreement  Page 50




---



##### 



Register
 Participant Section 11.5
   Eligible Assignee
 Loan Agreement  Page 51




---



##### 



Amendments, Etc provided however
 Section 9.1
 Section 8.1
      provided further
 Form of Documents
 Loan Agreement  Page 52




---



##### 



Confidentiality provided
 Exception to Covenants
 No Usury Intended; Usury Savings Clause
 Restatement of Existing Loan Agreements/No Novation Section 5.1 Obligations canceled and replaced
 Loan Agreement  Page 53




---



##### 



WAIVER OF JURY TRIAL . THE PARTIES TO THIS AGREEMENT HEREBY WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES HERETO AGAINST THE
OTHER TO ENFORCE THIS AGREEMENT, TO COLLECT DAMAGES FOR THE BREACH OF THIS AGREEMENT, OR WHICH IN
ANY OTHER WAY ARISE OUT OF, ARE CONNECTED TO OR ARE RELATED TO THIS AGREEMENT OR THE SUBJECT MATTER
OF THIS AGREEMENT. ANY SUCH ACTION SHALL BE TRIED BY THE JUDGE WITHOUT A JURY.
 ENTIRE AGREEMENT . THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
  
 Loan Agreement  Page 54




---



##### 



BORROWER:CITIZENS, INC.By:

/s/ Mark
A. OliverMark A. OliverPresident Loan Agreement  Page 55




---



##### 



ADMINISTRATIVE AGENT:REGIONS BANKBy:
    
    /s/ Robin IngariRobin Ingari
Senior Vice PresidentBANKS:REGIONS BANKBy:
    
    /s/ Robin IngariRobin Ingari
Senior Vice PresidentGUARANTY BANKBy:
    
    /s/ Joseph N. PeketName:
    
    Joseph N. PeketTitle
    
    Senior Vice President, Corporate Banking
Group
 Loan Agreement  Page 56




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##### 



Lender
    
    Revolving Commitment
    
    
    Pro Rata ShareRegions Bank
    
    $
    55,000,000
    
    
    
    73.333333333
    %Guaranty Bank
    
    $
    20,000,000
    
    
    
    26.666666667
    %TOTAL:
    
    $
    75,000,000
    
    
    
    100.000000000
    %




---



##### 



EXHIBIT A
 FORM OF NOTE
 $
    
    December 2, 2005
 Maker     Bank
  Loan Agreement
    THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.




---



##### 



THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
  CITIZENS, INC.By:Mark A. OliverPresident




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##### 



EXHIBIT B
 ASSIGNMENT AND ACCEPTANCE
 Assignment and Acceptance [Insert name of Assignor] Assignor [Insert name of Assignee] Assignee Loan Agreement
 Assigned
Interest
 1.
    
    Assignor:2.
    
    Assignee:[and is an Affiliate/Approved Fund of [identify Bank]1]3.
    
    Borrower:
    
    Citizens, Inc.4.
    
    Administrative Agent:
    
    Regions Bank, as Administrative Agent under the Loan Agreement5.
    
    Loan Agreement:
    
    The First Amended and Restated Loan Agreement dated as of
December 2, 2005 among Citizens Inc., the Banks party thereto,
and Regions Bank, as Administrative Agent
 
 1
    
    Select as applicable. 1




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##### 



6.
    
    Assigned Interest:
 Aggregate Amount of Revolving
    
    Amount of Revolving
    
    Percentage Assigned ofCommitment/Revolving Loan
    
    Commitment/Revolving
    
    Revolvingfor all Banks*
    
    Loan Assigned*
    
    Commitment/Revolving Loan2$
    
    $
    
    
    
    %$
    
    $
    
    
    
    %$
    
    $
    
    
    
    %
 3
 
  ASSIGNOR[NAME OF ASSIGNOR]By:Name:Title:ASSIGNEE[NAME OF ASSIGNEE]By:Name:Title:
 
 *
    
    Amount to be adjusted by the counterparties to
take into account any payments or prepayments made between the Trade Date and
the Effective Date.2
    
    Set forth, to at least 9 decimals, as a
percentage of the Revolving Commitment/Revolving Loan of all Banks thereunder.3
    
    To be completed if the Assignor and the
Assignee intend that the minimum assignment amount is to be determined as of
the Trade Date. 2




---



##### 



4
 
 By:Title:[Consented to:]5CITIZENS, INC.By:Title:
 
 4
    
    To be added only if the consent of the
Administrative Agent is required by the terms of the Loan Agreement.5
    
    To be added only if the consent of the
Borrower is required by the terms of the Loan Agreement. 3




---



##### 



Representations and Warranties
 Assignor
 Assignee
 Payments
 General Provisions




---



##### 








---



##### 



EXHIBIT C
 COMPLIANCE CERTIFICATE
 
   Agreement
 [chief accounting officer]
 [Use following for fiscal year-end financial statements required by Section 6.2(a ]
 Section 6.2(a)
 [Use following for the fiscal quarter-end financial statements required by Section
6.2(b) ]
 Section
6.2(b)
  [select one:]
 [to the best knowledge of the undersigned during such fiscal period, no Default or unmatured
Default exists.]
 or




---



##### 



[the following covenants or conditions have not been performed or observed and the following
is a list of each such Default or unmatured Default (and, to the best knowledge of the undersigned,
are the only Defaults and unmatured Default that exist) and its nature and status:]
 Schedule 1
 2




---



##### 



IN WITNESS WHEREOF,
 CITIZENS, INC.By:Name:Title:
 3




---



##### 



Reporting Date
 
 I.
    
    Section 7.1(g)  Purchase Money Debt.1.   Purchase money debt for fiscal year through Reporting Date
    
    
    $2.   Maximum permitted purchase money debt for fiscal year  lesser ofa.    $3,000,000b.    $5,000,000 minus Aggregate Permitted Exceptions through Reporting Datec.    (lesser of 2.a. and 2.b.)
    
    
    $II.
    
    Section 7.1(h)  Capital Lease Debt.1.   Capital Lease debt for fiscal year through Reporting Date
    
    
    $2.   Maximum permitted Capital Lease debt for fiscal year  lesser ofa.    $3,000,000b.    $5,000,000 minus Aggregate Permitted Exceptions through Reporting Datec.    (lesser of 2.a. and 2.b.)
    
    
    $III.
    
    Section 7.9  Leverage Ratio.A.   Funded Debt for Borrower and its Subsidiaries on Reporting Date (without duplication):1.    All obligations for borrowed money and all obligations evidenced by
bonds, debentures, notes, loan agreements and other similar
instruments
    
    
    $2.    All direct or contingent obligations arising under letters of credit,
bankers acceptances, bank guaranties, surety bonds and similar
instruments
    
    
    $3.    All accrued obligations in respect of earnout or similar payments
payable in cash or which may be payable in cash at the sellers or
obligees option
    
    
    $




---



##### 



4.    All obligations in respect of Capital Leases
    
    
    $5.    All obligations to pay the deferred purchase price of property or
services (excluding trade accounts payable not more than 30 days past
due)
    
    
    $6.    All Guaranty Obligations with respect to obligations of other Persons
of the type described in 1. through 5. above
    
    
    $7.    Funded Debt (Lines III.A.1. + 2. + 3. + 4. + 5. + 6.)
    
    
    $B.   EBITDA for Borrower and its Subsidiaries for four fiscal quarters ending on Reporting Date:1.    Net Income for such period
    
    
    $2.    To the extent deducted in determining Net Income for such period
(without duplication):(a)   Interest Expenses
    
    
    $(b)   Federal, state, local and foreign
income and franchise taxes
    
    
    $(c)   Depreciation and amortization expenses
    
    
    $(d)   Extraordinary losses
    
    
    $(e)    Lines 2.(a) + (b) + (c) + (d)
    
    
    $3.    To the extent included in determining Net Income for such period,
extraordinary gains
    
    
    $4.    EBITDA (Lines III.B.1. + 2.(e)  3.)
    
    
    $C.   Leverage Ratio (Line III.A.7. ÷ Line III.B.4.)
    
    _____ to 1.00D.   Maximum Leverage Ratio
    
    3.00 to 1.00IV.
    
    Section 7.10  Fixed Charge Coverage Ratio.A.   EBITDA (Line III.B.4.)
    
    
    $B.   Interest Expense for four consecutive fiscal quarters ending on the Reporting Date
    
    
    $C.   Scheduled payments on obligations in respect of any Funded Debt for four consecutive fiscal
quarters ending on the Reporting Date
    
    
    $D.   (Lines IV. B. + C.)
    
    
    $2




---



##### 



E.   Fixed Charge Coverage Ratio (Line IV. A. ÷ IV.D.)
    
    _____ to 1.00F.   Minimum Fixed Charge Coverage Ratio
    
    1.50 to 1.00V.
    
    Section 7.11  Funded Debt to Tangible Net Worth Ratio.A.   Funded Debt (Line III.A.7.)
    
    
    $B.   Equity
    
    
    $C.   Intangible Assets
    
    
    $D.   Funded Debt to Tangible Net Worth Ratio (Line V.A. ÷ (V.B.  V.C.)
    
    
    $E.   Maximum Funded Debt to Tangible Net Worth Ratio
    
    0.75 to 1.00VI.
    
    Section 7.12  Debenture Coverage RatioA.   Pro-forma Total Adjusted Capital of CICA on Reporting Date
    
    
    $B.   Outstanding principal amount of Surplus Debentures on Reporting Date
    
    
    $C.   Product of (i) three and (ii) Risk Based Capital of CICA on Reporting Date
    
    
    $D.   Lines VI.A. + B. + C.
    
    
    $E.   Funded Debt on Reporting Date
(Line III.A.7.)
    
    
    $F.   Debenture Coverage Ratio
(Line IV.D.  ̧ Line IV.E.)
    
    _____ to 1.00G   Minimum Debenture Coverage Ratio
    
    1.50 to 1.00VII.
    
    Section 7.17  Leases.1.   Real and personal property operating leases and agreements for fiscal year through Reporting Date
    
    
    $2.   Maximum permitted real and personal property leases and agreements for fiscal year  lesser ofa.    $3,000,000b.    $5,000,000 minus Aggregate Permitted Exceptions through Reporting Date3




---



##### 



c.    (Lesser of 2.a. and 2.b.)
    
    
    $VIII.
    
    Section 7.18  Capital Expenditures.1.   Capital Expenditures for fiscal year through Reporting Date
    
    
    $2.   Maximum permitted Capital Expenditures for fiscal year  lesser ofa.    $3,000,000b.    $5,000,000 minus Aggregate Permitted Exceptions through Reporting Datec.    (Lesser of 2.a. and 2.b.)
    
    
    $IX.
    
    Other Investments  clause (l) of Permitted Investments.1.   Other Investments under clause (l) of Permitted Investments for fiscal year through Reporting Date
    
    
    $2.   Maximum permitted other Investments for fiscal year  lesser ofa.    $3,000,000b.    $5,000,000 minus Aggregate Permitted Exceptions through Reporting Datec.    (Lesser of 2.a. and 2.b.)
    
    
    $
 
 CITIZENS, INC.By:Name:Title: