Document:

Unassociated Document

Exhibit 10.1

 

 

AMENDMENT NO. 1 TO CREDIT AGREEMENT

 

 

This Amendment No. 1 (this “Amendment”) is entered into as of March 19, 2004 by and among Ralcorp Holdings, Inc., a Missouri corporation (the “Borrower”), Bank One, NA, a national banking association having its principal office in Chicago, Illinois, individually and as Administrative Agent (“Administrative Agent”), and the other financial institutions signatory hereto.

RECITALS

A.   The Borrower, the Administrative Agent and the Lenders are party to that certain credit agreement dated as of October 16, 2001 (as amended, the “Credit Agreement”). Unless otherwise specified herein, capitalized terms used in this Amendment shall have the meanings ascribed to them by the Credit Agreement.

 

B.   The Borrower, the Administrative Agent and the undersigned Lenders wish to amend the Credit Agreement on the terms and conditions set forth below.

 

Now, therefore, in consideration of the mutual execution hereof and other good and valuable consideration, the parties hereto agree as follows:

 

1.   Amendments to Credit Agreement. Upon the “Effective Date” (as defined below), the Credit Agreement shall be amended as follows:

 

(a)   The definition of “Applicable Commitment Fee Percentage” set forth in Article I of the Credit Agreement is amended by (i) deleting the reference to ".25%" contained in the first proviso in such definition and replacing such reference with a reference to ".275%" and (ii) deleting the grid contained in such definition and replacing such deleted grid with the following new grid:

                                   Applicable Commitment

                                   Leverage Ratio                                  Fee Percentage

            Greater than         But less than or Equal to

	
3.0:1.0
	
--------
	
.275%

	
2.5:1.0 
	
3.0:1.0
	
.25%

	
2.0:1.0
	
2.5:1.0
	
.225%

	
1.5:1.0
	
2.0:1.0
	
.20%

	
1.0:1.0 
	
1.5:1.0
	
.175%

	
--
	
1.0:1.0
	
.15%

 

	 
	 	 	 
	

	 

 

(b)   The definition of “Applicable Eurodollar Margin” set forth in Article I of the Credit Agreement is amended by (i) deleting the reference to "1.25%" contained in the first proviso in such definition and replacing such reference with a reference to "1.375%" and (ii) deleting the grid contained in such definition and replacing such deleted grid with the following new grid:

 

                                   Leverage Ratio                           Applicable Eurodollar Margin

                   

             Greater than      But less than or Equal to

	
3.0:1.0
	
--------
	
1.375%

	
2.5:1.0
	
3.0:1.0
	
1.25%

	
2.0:1.0
	
2.5:1.0 
	
1.00%

	
1.5:1.0
	
2.0:1.0
	
0.875%

	
1.0:1.0
	
1.5:1.0
	
0.75% 

	
--
	
1.0:1.0
	
0.625%

(c)   Section 6.15(m) of the Credit Agreement is amended by deleting each reference in such Section to the ratio “2.75:1” and replacing such deleted reference with a reference to the ratio “3.25:1.” 

 

(d)   Section 6.24.2 of the Credit Agreement is amended by deleting the ratio “3.00:1.00” contained therein and replacing such deleted ratio with the new ratio “3.50:1.00.”

2.   Representations and Warranties of the Borrower. The Borrower represents and warrants that:

(a)   The execution, delivery and performance by the Borrower of this Amendment have been duly authorized by all necessary corporate action and that this Amendment is a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as the enforcement thereof may be subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally;

 

(b)   Each of the representations and warranties contained in the Credit Agreement is true and correct in all material respects on and as of the date hereof as if made on the date hereof;

 

(c)   After giving effect to this Amendment, no Default or Unmatured Default has occurred and is continuing.

 

	 
	 	 	 
	

	 

 

3.   Effective Date. This Amendment shall become effective upon (a) the execution and delivery hereof by the Borrower and the Required Lenders and (b) the execution and delivery of the Reaffirmation of Guaranty in the form attached hereto as Exhibit A by each of the Guarantors (“Effective Date”).

 

4.   Reference to and Effect Upon the Credit Agreement.

 

(a)   Except as specifically amended, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

 

(b)   The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under the Credit Agreement or any Loan Document, nor constitute a waiver of any provision of the Credit Agreement or any Loan Document, except as specifically set forth herein. Upon the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby.

 

5.   Costs and Expenses. The Borrower hereby affirms its obligation under Section 9.7 of the Credit Agreement to reimburse the Administrative Agent for all reasonable costs, internal charges and out-of-pocket expenses paid or incurred by the Administrative Agent in connection with the preparation, negotiation, execution and delivery of this Amendment, including but not limited to the attorneys’ fees and time charges of attorneys for the Administrative Agent with respect thereto.

 

6.   GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

 

7.   Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purposes.

 

8.   Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all such counterparts shall constitute one and the same instrument.

 

(signature pages to follow)

	

	 	 	 
	

	

    IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first above written.

	
RALCORP HOLDINGS, INC.

	
By:    /s/ S. Monette                                           

	
Its:    Vice President and Treasurer           

	
	 
	
BANK ONE, NA,

	
individually and as Administrative Agent

	
By:    /s/ Maria L. Weiss                                     

	
Its:    Associate Director                                 

	
	 
	
WACHOVIA BANK, N.A.,

	
Individually and as Syndication Agent

	
By:    /s/ Beth Rue                                                 

	
Its:    Associate                                                      

	
	 
	
PNC BANK, N.A.,

	
Individually and as Documentation Agent

	
By:    /s/ Jeffrey L. Stein                                    

	
Its:    Vice President                                           

	
	 
	
SUNTRUST BANK,

	
Individually and as Documentation Agent

	
By:    /s/ Douglas O’Bryan                              

	
Its:    Vice President                                          

	
	 
	
U.S. BANK N.A. (f/k/a FIRSTAR BANK, N.A.),

	
Individually and as Documentation Agent

	
By:   /s/ Joseph L. Sooter, Jr.                       

	
Its:    Vice President                                          

	
	 
	
COBANK, ACB,

	
Individually and as Lender

	
By:    /s/ S. Richard Dill                                    

	
Its:     Vice President                                         

	
	 
	
COMMERCE BANK, N.A.,

	
Individually and as Lender

	
By:    /s/ Mary Ann Lemonds                        

	
Its:    Vice President                                          

	
	 
	
HARRIS TRUST AND SAVINGS BANK,

	
Individually and as Lender

	
By:    /s/ Karen L. Knudsen                           

	
Its:    Managing Director                                 

	

	
 [Signature page to Reaffirmation of Guaranty]

	 	 	 
	

	 

EXHIBIT A

REAFFIRMATION OF GUARANTY

The undersigned acknowledge receipt of a copy of Amendment No. 1 to Credit Agreement (the “Amendment”) dated as of March 19, 2004, consent to such Amendment and each of the transactions referenced therein and hereby reaffirm their respective obligations under the Guaranty made as of October 16, 2001 in favor of Bank One, NA, as Administrative Agent, and the Lenders (as defined in the Amendment).

Dated as of March 19, 2004

	
BREMNER, INC.

	
By:      /s/ Scott Monette                                

	
Title:   Treasurer                                                    

	
	 
	
FLAVOR HOUSE PRODUCTS, INC.

	
By:      /s/ Scott Monette                      

	
Title:   Treasurer                            

	
	 
	
NUTCRACKER BRANDS, INC.

	
By:      /s/ Scott Monette               

	
Title:   Treasurer                          

	
	 
	
RH FINANCIAL CORPORATION

	
By:      /s/ Scott Monette              

	
Title:   Treasurer                           

	

	 
	
RIPON FOODS, INC.

	
By:      /s/ Scott Monette               

	
Title:   Treasurer                             

	
	 
	
SUGAR KAKE COOKIE, INC.

	
By:      /s/ Scott Monette               

	
Title:   Treasurer                            

	
	 
	
HERITAGE WAFERS, LLC

	
By:      /s/ Scott Monette               

	
Title:   Treasurer                           

	
	 
	
THE CARRIAGE HOUSE COMPANIES, INC.

	
By:      /s/ Scott Monette               

	
Title:   Treasurer                           

	
	 
	
TORBITT & CASTLEMAN COMPANY, LLC

	
By:      /s/ Scott Monette                 

	
Title:   Treasurer                            

	

 

	
[Signature page to Reaffirmation of Guaranty]

	 		 
	

	 

 

	 
	
BAKERY CHEF, INC.

	
By:      /s/ Scott Monette                

	
Title:   Treasurer                             

	 

	
COMMUNITY SHOPS, INC.

	
By:      /s/ Scott Monette                    

	
Title:   Treasurer                                

	
	 
	
THE BUN BASKET, INC.

	
By:      /s/ Scott Monette                    

	
Title:   Treasurer                                

	
	 
	
VALUE ADDED BAKERY HOLDING

	
COMPANY

	
By:      /s/ Scott Monette                   

	
Title:   Treasurer                                 

	
	 
	
LOFTHOUSE BAKERY PRODUCTS, INC.

	
By:      /s/ Scott Monette                   

	
Title:   Treasurer                                

	

 

	 
[Signature page to Reaffirmation of Guaranty]<PAGE>

                                                                    EXHIBIT 10.8

                        COINSURANCE REINSURANCE AGREEMENT

                                     between

                      CITIZENS INSURANCE COMPANY OF AMERICA

                                Denver, Colorado

                                       and

                   TEXAS INTERNATIONAL LIFE INSURANCE COMPANY

                                  Austin, Texas

                             COINSURANCE AGREEMENT
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                    Page
                                                                                                                    ----
<S>                                                                                                                 <C>
ARTICLE I  DEFINITION OF TERMS....................................................................................    1
         1.1.  Assumed Policy.....................................................................................    1
         1.2.  Assumption Agreement...............................................................................    1
         1.3.  Assumption Effective Date..........................................................................    1
         1.4.  Closing............................................................................................    1
         1.5.  Closing Date.......................................................................................    2
         1.6.  Coinsurance Effective Date.........................................................................    2
         1.7.  Coinsured Policy...................................................................................    2
         1.8.  Excluded Liabilities...............................................................................    2
         1.9.  Existing Reinsurance Coverage......................................................................    2
         1.10.  Non-Consenting Policyholder.......................................................................    2
         1.11.  Policies..........................................................................................    2
         1.12.  Policyholder......................................................................................    2
         1.13.  Producer..........................................................................................    3
         1.14.  Producer Agreement................................................................................    3
         1.15.  Producer Payments.................................................................................    3
         1.16.  Purchase Price....................................................................................    3
         1.17.  Required Closing Date Approvals...................................................................    3
         1.18.  Services Agreement................................................................................    3
         1.19.  Settlement Amount.................................................................................    3
         1.20.  Statutory Reserves and Liabilities................................................................    3
         1.21.  Support Services..................................................................................    3
         1.22.  Taxes.............................................................................................    3
         1.23.  Transition Period.................................................................................    4
         1.24.  Transition Date...................................................................................    4

ARTICLE II  BASIS OF COINSURANCE..................................................................................    4
         2.1.  Coinsurance........................................................................................    4
         2.2.  Duration of Coinsurance; Recapture.................................................................    5
         2.3.  Parties to Coinsurance.............................................................................    5

ARTICLE III  CLOSING AND CONSIDERATION............................................................................    5
         3.1.  Settlement Amount..................................................................................    5
         3.2.  Closing............................................................................................    6
         3.3.  Reinsurer Records..................................................................................    6

ARTICLE IV  UNDERTAKINGS OF THE REINSURER FOLLOWING CLOSING.......................................................    6
         4.1.  Transition Period..................................................................................    6
         4.2.  Premium Payments, Negotiation of Checks............................................................    6
         4.3.  Producer Payments..................................................................................    6
         4.4.  Reserves...........................................................................................    7
         4.5.  Establishment and Maintenance of Trust Account.....................................................    7
         4.6.  Premium Taxes......................................................................................    8
         4.7.  Guaranty Fund Assessments..........................................................................    8
</TABLE>

                                        i

                       COINSURANCE REINSURANCE AGREEMENT

<PAGE>

<TABLE>
<S>                                                                                                                  <C>
         4.8.  Reports............................................................................................    8
         4.9.  Audit..............................................................................................    8

ARTICLE V  UNDERTAKINGS OF COMPANY FOLLOWING CLOSING..............................................................    9
         5.1.  Cooperation........................................................................................    9
         5.2.  Forwarding of Claims and Inquiries.................................................................    9

ARTICLE VI  INDEMNIFICATION.......................................................................................    9
         6.1.  Indemnification by the Company.....................................................................    9
         6.2.  Indemnification by the Reinsurer...................................................................    9
         6.3.  Extracontractual Damages...........................................................................   10
         6.4.  Indemnification and Arbitration Procedures.........................................................   10
         6.5.  Cooperation........................................................................................   10

ARTICLE VII  INSOLVENCY...........................................................................................   10
         7.1.  Payment of Benefits under an Insolvency............................................................   10
         7.2.  Required Notice of and Defense against Claims......................................................   10

ARTICLE VIII  GENERAL PROVISIONS..................................................................................   11
         8.1.  Notices............................................................................................   11
         8.2.  Confidentiality....................................................................................   11
         8.3.  Misunderstandings and Oversights...................................................................   11
         8.4.  Reinstatements.....................................................................................   11
         8.5.  Entire Agreement...................................................................................   11
         8.6.  Waivers and Amendments.............................................................................   11
         8.7.  No Third Party Beneficiaries.......................................................................   12
         8.8.  Assignment.........................................................................................   12
         8.9.  Governing Law......................................................................................   12
         8.10.  Counterparts......................................................................................   13
         8.11.  Severability......................................................................................   13
         8.12.  Exhibits and Paragraph Headings...................................................................   12
         8.13.  Tax Provisions....................................................................................   12

</TABLE>

                                       ii

                        COINSURANCE REINSURANCE AGREEMENT

<PAGE>

                        COINSURANCE REINSURANCE AGREEMENT

                  THIS COINSURANCE REINSURANCE AGREEMENT (the "Agreement") dated
as of the date set forth below, is made and entered into by and between CITIZENS
INSURANCE COMPANY OF AMERICA, a Colorado stock life insurance company
(hereinafter referred to as the "Company") and TEXAS INTERNATIONAL LIFE
INSURANCE COMPANY, a Texas stock life insurance company (hereinafter referred to
as the "Reinsurer").

                  WHEREAS, the Company is the issuer of certain insurance
Policies (as defined herein), which are identified by policy form number and/or
plan code at SCHEDULE 1.11 hereto; and

                  WHEREAS, the Company and the Reinsurer have entered into a
certain Agreement for Reinsurance dated of even date herewith (the "Master
Agreement") pursuant to which the Company and the Reinsurer have mutually agreed
to enter into this Agreement under which the Company desires to cede its risks
under the Policies to the Reinsurer on a one hundred percent (100%) quota share
basis, and the Reinsurer desires to provide indemnity reinsurance of such risks
on the terms and conditions stated herein;

                  NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, and in reliance upon the representations,
warranties, conditions and covenants contained herein and in the Master
Agreement, and intending to be legally bound hereby, the Company and the
Reinsurer hereby agree as follows:

                                   ARTICLE I

                               DEFINITION OF TERMS

                  Capitalized terms used and not otherwise defined herein shall
have the meaning given in the Master Agreement. Other capitalized terms used
herein shall have the meaning given below.

                  1.1.     Assumed Policy. Each Coinsured Policy that has been
reinsured and assumed by the Reinsurer pursuant to the terms of the Assumption
Agreement.

                  1.2.     Assumption Agreement. The Assumption Reinsurance
Agreement to be entered into between the Company and the Reinsurer pursuant to
the provisions of Section 2.1 of the Master Agreement.

                  1.3.     Assumption Effective Date. The date upon which any of
the Coinsured Policies are to be assumed by the Reinsurer under the provisions
of the Assumption Agreement.

                  1.4.     Closing. The closing of the transactions contemplated
in Article III of this Agreement, including the payment of the Purchase Price
and the transfer of the Settlement Amount which shall take place at the offices
of the Company, unless the parties agree to close by facsimile transmission and
wire transfer.

                                       1

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

                  1.5.     Closing Date. The date upon which the Closing shall
take place, which shall be not later than the fifth business day following the
receipt of the last of the Required Closing Date Approvals, or at such other
date and time as the parties may mutually agree in writing.

                  1.6.     Coinsurance Effective Date. The date upon which the
coinsurance of the Policies by the Reinsurer under the terms of this Agreement
shall be effective, which shall be 12:01 a.m. Central time, on January 1, 2004.

                  1.7.     Coinsured Policy. Each Policy reinsured by the
Reinsurer under this Agreement; provided, however, that the Reinsurer shall not
accept any liability for or reinsure any Policy that is the subject matter of
pending litigation or an attorney demand letter threatening litigation against
the Company as of the Transition Date. The Reinsurer agrees to reinsure under
this Agreement any Policy that is the subject matter of pending litigation or
any attorney demand letter threatening litigation against the Company on the
Transition Date that has been successfully settled or concluded by the Company
after the Transition Date and which remains in force; provided, however, that
the Company shall use its best efforts to compromise or settle all disputes
involving Policies that are the subject matter of pending litigation or any
attorney demand letter threatening litigation against the Company on the
Transition Date in such a way that such Policies will not remain in force upon
the conclusion or settlement of such disputes.

                  1.8.     Excluded Liabilities. Any claim or liability under,
in connection with or with respect to the Policies (a) subject to Section 4.6 of
this Agreement, for Taxes payable with respect to premiums collected on Policies
in force in all periods prior to the Assumption Effective Date; (b) for "bad
faith", punitive, exemplary or other extra-contractual damages that are based
upon, relate to or arise out of any act, error or omission of the Company or any
of its officers, directors, agents or employees, whether intentional or
otherwise, which occurred prior to the Transition Date; or (c) subject to
Section 4.7 of this Agreement, arising from participation in any guaranty fund,
insolvency fund, plan, pool, association or other similar organization and which
is based on premiums collected on Coinsured Policies in force in any period on
or prior to the Assumption Effective Date.

                  1.9.     Existing Reinsurance Coverage. All contracts,
agreements and treaties of reinsurance between the Company and any third-party
reinsurer that (i) are in force and effect as of the Coinsurance Effective Date
and (ii) cover any risks associated with the Policies.

                  1.10.    Non-Consenting Policyholder. Any Policyholder who
either fails to give affirmative consent, or specifically objects, to the
assumption of a Coinsured Policy as provided for in the Assumption Agreement in
any jurisdiction in which either affirmative consent or non-objection is
required by law.

                  1.11.    Policies. All of those insurance policy contracts
issued by the Company that are (i) identified by policy form number and/or plan
code at SCHEDULE 1.11 hereto, and (ii) in force and effect as of the Coinsurance
Effective Date or issued or reinstated on or after the Coinsurance Effective
Date under the terms of this agreement.

                  1.12.    Policyholder. Any individual or entity which is the
owner of a Policy or which has the right to terminate or lapse the Policy,
effect changes of beneficiary, coverage limits, add or terminate persons covered
under such Policy or direct any other policy changes in such Policy.

                                       2

                       COINSURANCE REINSURANCE AGREEMENT

<PAGE>

                  1.13.    Producer. Any agent, broker, representative, or
subagent of any person (i) having a Producer Agreement with the Company and (ii)
being entitled to receive any Producer Payments from the Company for the
solicitation, sale, marketing, production or servicing of any of the Policies.

                  1.14.    Producer Agreement. Any written agreement, contract,
understanding or arrangement between the Company and any Producer, including any
assignments of compensation thereunder, and relating to the solicitation, sale,
marketing, production or servicing of any of the Policies.

                  1.15.    Producer Payments. Any expense allowance, commission,
override commission, service fee or other compensation payable by the Company to
a Producer pursuant to a Producer Agreement.

                  1.16.    Purchase Consideration. In addition to the Statutory
Reserve and Liabilities that will be paid as part of the Settlement Amount that
is payable by the Company to the Reinsurer in connection with the reinsurance of
the Policies under this Agreement, an additional part of the Purchase
Consideration shall be the Profit-sharing formula shown in SCHEDULE 1.16.

                  1.17.    Required Closing Date Approvals. The approval of any
insurance regulatory authorities that may be required for the reinsurance of the
Policies by the Reinsurer pursuant to the terms and provisions of this
Agreement.

                  1.18.    Services Agreement. The Administrative Services
Agreement between the Company and the Reinsurer entered into pursuant to the
terms of the Master Agreement.

                  1.19.    Settlement Amount. The amount of the payment to be
made at Closing by the Company to the Reinsurer in connection with the
coinsurance of the Policies under this Agreement, which shall be in an amount
calculated pursuant to SCHEDULE 3.1 attached hereto and made a part hereof.

                  1.20.    Statutory Reserves and Liabilities. The sum of all of
the reserves, deposit fund liabilities (i.e., pre-paid premium, benefits left on
deposit) and liabilities maintained by the Company for the Coinsured Policies,
including liabilities for dividends and coupons payable in the next calendar
year which are required under (a) the terms of the Coinsured Policies and (b)
the reserve requirements, statutory accounting rules and actuarial principles
applicable to the Company under the law of each state of domicile and consistent
with the methodologies and assumptions used by the Company in calculating
reserves and liabilities for the Coinsured Policies on its latest annual
statutory financial statements filed with the insurance regulatory authority in
its state of domicile and as listed in Schedule 3.1 of this Coinsurance
Reinsurance Agreement.

                  1.21.    Support Services. The services to be provided in
connection with the Coinsured Policies under the Services Agreement.

                  1.22.    Taxes. All forms of taxation, whether of the United
States or elsewhere and whether imposed by a local, municipal, state, federal,
foreign or other body or instrumentality, and shall include, without limitation,
income, sales, use, gross receipts, value added and premium taxes, together with
any related interest, penalties and additional amounts imposed by any taxing
authority.

                                       3

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

                  1.23.    Transition Period. The period from the Coinsurance
Effective Date to the Transition Date, during which the Company shall be
responsible for providing all Support Services in connection with the Coinsured
Policies under the terms of the Services Agreement.

                  1.24.    Transition Date. The date upon which the Reinsurer
shall undertake to perform all Support Services in connection with the Policies
under the terms and provisions of the Services Agreement, or one hundred twenty
(120) days after the Closing Date, whichever is later.

                                   ARTICLE II

                              BASIS OF COINSURANCE

                  2.1.     Coinsurance. Subject to the terms and conditions of
this Agreement, and any Existing Reinsurance Coverage, effective as of the
Coinsurance Effective Date, the Company hereby cedes to the Reinsurer and the
Reinsurer hereby accepts reinsurance and coinsures on a one hundred percent
(100%) quota share basis the Company's contractual liabilities (other than
Excluded Liabilities) under the Coinsured Policies, by means of indemnity
reinsurance. Any Existing Reinsurance is to remain in place and will be assigned
from the Company to the Reinsurer upon the effective date of the Coinsurance
Effective Date. The Company and the Reinsurer mutually agree that, on and after
the Coinsurance Effective Date, the Reinsurer shall be entitled to exercise all
contractual rights and privileges of the Company under the Coinsured Policies in
accordance with the terms, provisions and conditions of such Coinsured Policies.
The Reinsurer agrees to be responsible for one hundred percent (100%) of the
Statutory Reserves and Liabilities applicable to the Coinsured Policies (other
than the Excluded Liabilities), and shall be fully responsible, at its sole
expense, for administration of the Coinsured Policies in all respects in the
name, and on behalf, of the Company in accordance with the terms and conditions
of the Services Agreement.

                           2.1.1.   In no event shall such coinsurance with
         respect to a particular Policy be in force and binding unless such
         underlying Policy as issued by the Company is in force and binding or
         has lapsed but would be entitled to reinstatement by its terms as of
         the Coinsurance Effective Date or is issued after the Coinsurance
         Effective Date by the Company under the terms of this agreement.

                           2.1.2.   With respect to each of the Coinsured
         Policies, the amount of coinsurance hereunder shall be maintained in
         force without reduction so long as the Coinsured Policy remains in
         force without reduction. If there is a reduction with respect to a
         Coinsured Policy, the Reinsurer's liability with respect thereto shall
         be equally reduced. All coinsurance for which the Reinsurer is liable
         hereunder shall be subject to the same rates, terms, conditions,
         limitations and restrictions as are contained in the Coinsured Policy.

                           2.1.3.   On and after the Coinsurance Effective Date,
         the Reinsurer shall bear and shall have responsibility for reimbursing
         the Company for all payments the Company makes of liabilities (other
         than Excluded Liabilities) with respect to the Coinsured Policies.

                           2.1.4.   The Company shall comply with any reasonable
         legal directions from the Reinsurer on all matters affecting the
         Reinsurer's obligations with respect to the

                                       4

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

         Coinsured Policies; provided that the Reinsurer shall indemnify and
         defend the Company in connection therewith pursuant to Section 6.2
         hereof.

                           2.1.5.   Reinsurer shall reinsure new policies issued
         by the Company under the terms of this agreement in accordance with the
         standards, policies, procedures and underwriting guidelines as of
         February 1, 2004. The Underwriting Guideline For Health Insurance form
         number UGI-002, attached as Schedule 2.1.5, will be utilized except for
         plans that have been regularly guaranteed issued.

                  2.2.     Duration of Coinsurance; Recapture. The coinsurance
provided under this Agreement shall remain continuously in force and shall
survive hereunder as to any Coinsured Policy of a Non-Consenting Policyholder or
which otherwise is not assumed under the Assumption Agreement. Coinsurance
hereunder will be automatically terminated with respect to Coinsured Policies
upon the assumption reinsurance of such policies by the Reinsurer pursuant to
the terms and provisions of the Assumption Agreement. The Coinsured Policies are
not eligible for recapture by the Company.

                  2.3.     Parties to Coinsurance. Article II of this Agreement
provides for indemnity reinsurance solely between the Company and the Reinsurer.
Unless and until a Coinsured Policy is assumed by the Reinsurer in accordance
with the Assumption Agreement, the acceptance of reinsurance under this Article
II shall not create any right or legal relation between the Reinsurer and any
Policyholder under a Coinsured Policy, and the Company shall be and remain
solely liable to such Policyholder under the Coinsured Policy.

                                  ARTICLE III

                            CLOSING AND CONSIDERATION

                  3.1.     Settlement Amount. On the Closing Date of this
Agreement, the Company agrees to pay the Reinsurer an amount, in cash or
securities mutually agreeable to Reinsurer and the Company, equal to the
Settlement Amount, which shall be remitted by the Company to the Reinsurer by
wire transfer of immediately available funds to an account designated by the
Reinsurer. The Reinsurer shall provide the Company by book-entry transfer or
with wire transfer instructions and bank routing numbers for the payment of the
Settlement Amount at least forty-eight (48) hours prior to the Closing Date. In
addition to the Settlement Amount, the Company shall transfer to the Reinsurer
all rights, title and interest in any (i) due and deferred premiums on the
Policies as of the Coinsurance Effective Date, (ii) policy loans outstanding on
the Policies as of the Coinsurance Effective Date, net of any unearned policy
loan interest on those policy loans, and (iii) pre-paid reinsurance premiums for
other reinsurance on the Policies, as set forth on SCHEDULE 3.1. The parties
agree to make adjustments to the Settlement Amount following Closing, based upon
net Statutory Reserves and Liabilities for any Policies or claims improperly or
inadvertently omitted or miscalculated in determining the Settlement Amount or
which are reinstated after the Coinsurance Effective Date and omitted in the
calculation of the Settlement Amount as of the Closing Date (the "Final
Settlement Amount"). The Final Settlement Amount will be calculated by the
Company and the Reinsurer in the manner set forth on SCHEDULE 3.1 prior to
December 31, 2004, and the difference between the Final Settlement Amount and
the Settlement Amount (the "Reconciliation Amount") shall be paid by the Company
to the Reinsurer, or refunded by the Reinsurer to the Company, as the case may
be, with interest thereon at the rate of four percent (4.00%) per annum from the
Closing

                                       5

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

Date to the date the Reconciliation Amount is paid within ten (10) days the
calculation of the Final Settlement Amount is completed (the "Final Settlement
Date").

                  3.2.     Closing. At the Closing, the Company shall:

                           (a)      transfer the Settlement Amount to the
         Reinsurer by wire transfer of immediately available funds into an
         account as directed by the Reinsurer;

                           (b)      deliver to the Reinsurer a complete listing
         of the Policies to be reinsured under this Agreement.

                  3.3.     Reinsurer Records. The Reinsurer agrees that it will
maintain true and accurate books and records of all reinsurance hereunder,
including all such records as may be required by law. So long as any Coinsured
Policies are in force and subject to coinsurance hereunder pursuant to Article
II, the Reinsurer shall make available for inspection and copying by the Company
any financial or other records pertaining to the Coinsured Policies that may
reasonably be required by the Company for financial statement preparation or any
other reasonable business purpose.

                                   ARTICLE IV

                 UNDERTAKINGS OF THE REINSURER FOLLOWING CLOSING

                  4.1.     Transition Period. During the Transition Period, the
Company shall provide Support Services in connection with the Policies in
accordance with the Services Agreement, and in a manner consistent with the
administration of the Policies prior to the Closing Date, and the Reinsurer
shall pay the Company the Service Fees provided in the Services Agreement for
such Support Services. On and after the Transition Date, the Reinsurer shall be
responsible for providing Support Services under the terms and conditions of the
Services Agreement.

                  4.2.     Premium Payments, Negotiation of Checks. Except as
otherwise provided at Section 2.4 of the Services Agreement, upon and after the
Coinsurance Effective Date, (i) all premium payments under the Policies shall be
the sole property of the Reinsurer, and (ii) any premium payment received by the
Company, to the extent such premium payment covers periods on and after the
Coinsurance Effective Date, shall be remitted to the Reinsurer. The Reinsurer
shall be authorized to endorse for payment all checks, drafts, and money orders
payable to the Company with respect to premiums payable on the Policies. The
Company hereby assigns, to the extent permitted by law, to the Reinsurer all of
its rights and privileges to draft or debit the accounts of any Policyholders
for premiums due under the Policies pursuant to existing pre-authorized bank
draft or electronic fund transfer arrangements between the Company and such
Policyholders.

                  4.3.     Producer Payments. The Reinsurer hereby assumes the
liability of the Company for Producer Payments due in respect of premiums
collected and received by the Reinsurer under the Coinsured Policies for periods
on or after the Coinsurance Effective Date. During the Transition Period,
Producer Payments shall be paid by the Company, for the account of the
Reinsurer, out of premiums collected under the Coinsured Policies in accordance
with Section 2.4 of the Services Agreement. Producer payments due in respect of
Coinsured Policies after the Transition Date shall be paid by the Reinsurer. The
Reinsurer shall be entitled to

                                       6

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

exercise all rights of the Company relating to the Coinsured Policies under the
terms of the Producer Agreements, including without limitation, any rights to
suspend or terminate Producer Payments which relate to the Coinsured Policies to
such Producers for any reason or cause set forth in the Producer Agreements, and
the Company hereby transfers and assigns to the Reinsurer all of its rights
under such Producer Agreements, but only to the extent such rights thereunder
relate to the Coinsured Policies. Any liability for Producer Payments not set
forth in the Producer Agreements furnished by the Company to the Reinsurer shall
remain the obligation of the Company, and the Reinsurer shall be indemnified and
held harmless by the Company for any Producer Payments in excess of that set
forth in the Producer Agreements.

                  4.4.     Reserves. The Reinsurer agrees that, on and after the
Closing Date, it will establish and maintain all Statutory Reserves and
Liabilities as may be required under the terms of the Coinsured Policies and the
applicable statutes and regulations of its state of domicile.

                  4.5.     Establishment and Maintenance of Trust Account.. In
order to allow the Company to take full reserve credit with respect to the
reinsurance by the Reinsurer of the Coinsured Policies and to provide the
Company with additional security for the performance by the Reinsurer of its
obligations under this Agreement, the Reinsurer shall establish and maintain a
custodial or trust account ("Trust Account") at Wells Fargo Bank N.A., Austin,
Texas, (the "Trustee"),at the sole cost and expense of the Reinsurer, and shall,
on the Closing Date, enter into a certain trust agreement with the Company and
the Trustee in the form attached hereto as SCHEDULE 4.5 (the "Trust Agreement")
to secure the payment of amounts due the Company under this Agreement. The
Reinsurer shall pay into, and shall thereafter maintain in the Trust Account,
cash in United States currency; securities issued by or backed by the United
States of America and designated as Class 1 securities by the Securities
Valuation Office of the National Association of Insurance Commissioners;
certificates of deposit issued by a bank organized under the laws of the United
States or located in the United States, and payable in United States legal
tender; and/or investments of the types permitted under the provisions of
article 3.10(d), Texas Insurance Code; having a current fair market value equal
to no less than 102% of the then current Statutory Reserves and Liabilities
associated with the Coinsured Policies ("Required Trust Balance").

                           4.5.1.   The Reinsurer shall have investment
         authority with respect to the assets held in the Trust Account,
         provided, however, that such assets shall (i) not consist of
         investments in, or loans to, affiliates of the Company or the
         Reinsurer, and (ii) otherwise qualify as admitted assets under the
         insurer investment rules applicable to the Reinsurer pursuant to the
         applicable statutes and regulations of its state of domicile.

                           4.5.2.   The Required Trust Balance shall be
         calculated on a calendar quarter basis. The Reinsurer shall make such
         further deposits to the Trust Account as are required from time to time
         in order to restore the Required Trust Balance. Any excess assets in
         the Trust Account shall be released from time to time to the Reinsurer.

Unless otherwise agreed upon in writing by the Company, the Reinsurer shall
maintain such Trust Account until all obligations of the Reinsurer under this
Agreement have been fully satisfied, as determined by the Company in its sole
reasonable discretion; provided, however, that the Reinsurer shall be permitted,
on a quarterly basis and subject to the written approval of the Company, to
reduce the balance in the Trust Account by an amount equal to the Statutory
Reserves and Liabilities attributable to each Coinsured Policy which became an
Assumed Policy during the prior quarter. Notwithstanding the foregoing, the
Reinsurer may terminate the Trust

                                       7

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

Agreement and close the Trust Account at any time when the Required Trust
Balance is less than One-thousand Dollars ($1,000.00).

                  4.6.     Premium Taxes. The Company shall be liable for all
premium taxes on premiums received in connection with the Coinsured Policies
prior to the Coinsurance Effective Date and shall remain liable for payment of
premium taxes on premiums received under the Coinsured Policies until such time,
if any, as the Coinsured Policies may be assumed by the Reinsurer under the
Assumption Reinsurance Agreement. The Reinsurer shall pay to the Company a
provision for premium taxes incurred in connection with premiums received under
the Coinsured Policies on and after the Coinsurance Effective Date, but prior to
the Assumption Effective Date. The provision for premium taxes shall be
estimated at two and one-half of one percent (2.5%) of premiums collected, as
calculated on a quarterly basis (net of any premium taxes withheld by the
Company from amounts transferred to the Reinsurer pursuant to Section 2.4 of the
Services Agreement), and shall be paid by the Reinsurer to the Company within
sixty (60) days of the end of each calendar quarter and adjusted annually to an
actual rate within sixty (60) days after the end of each calendar year. The
difference between actual and estimated premium taxes shall be paid by the owing
party to the other party within sixty (60) days after the end of each calendar
year.

                  4.7.     Guaranty Fund Assessments and other Assessments.

                           4.7.1.   Company-Paid Assessments. In the event the
         Company is required to pay an assessment in respect of the Coinsured
         Policies to any insurance guaranty, insolvency or other similar fund
         maintained, or any other regulatory assessment by any jurisdiction and
         such assessment is based on premiums collected or policies in force in
         any period after the Coinsurance Effective Date, the portion, if any,
         of such assessment that relates to the Coinsured Policies shall be
         reimbursed by the Reinsurer to the extent that no premium tax offsets
         are available for use by the Company.

                           4.7.2.   Reinsurer-Paid Assessments. In the event the
         Reinsurer is required to pay any assessment in respect of the Coinsured
         Policies to any insurance guaranty, insolvency or other similar fund
         maintained by any jurisdiction and such assessment is based on premiums
         collected or policies in force in any period on or prior to the
         Coinsurance Effective Date, the portion, if any, of such assessment
         that relates to the Coinsured Policies shall be reimbursed by the
         Company to the extent that no premium tax offsets are available for use
         by the Reinsurer.

                  4.8.     Reports. Subsequent to the Closing Date, the
Reinsurer will forward to the Company within fifteen (15) business days after
the close of each calendar quarter while this Agreement is in force and effect,
on forms mutually agreeable to the parties, such financial and reserve
information, including tax reserve calculations, as may be required by the
Company for use in the preparation of its financial statements and tax returns
and relating to the Coinsured Policies, and any additional information or
reports that may be required by insurance regulatory authorities or reasonably
requested by the Company and agreed to by the Reinsurer, which agreement shall
not unreasonably be withheld.

                  4.9.     Audit. Each party shall have the right to audit, at
its sole expense, at the office of the other during regular business hours and
upon at least forty-eight (48) hours prior written notice, all records and
procedures relating to the Coinsured Policies.

                                       8

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

                  4.10.    Access by Regulators. Each party agrees to provide
access to all records and procedures relating to the Coinsured Policies to any
regulatory agency if such request is made.

                                    ARTICLE V

                    UNDERTAKINGS OF COMPANY FOLLOWING CLOSING

                  5.1.     Cooperation. The Company agrees to provide all
reasonable assistance to the Reinsurer in the transfer to the Reinsurer of the
obligation to provide Support Services in connection with the Coinsured
Policies, including without limitation responding to questions from the
Reinsurer in the conversion of computer records and files to the systems of the
Reinsurer.

                  5.2.     Forwarding of Claims and Inquiries. After the Closing
Date, the Company shall refer to the Reinsurer all inquiries involving the
Coinsured Policies, including, without limitation, inquiries regarding
additional premiums, claims payment or policy provisions, limitations or
exclusions. Claims under the Coinsured Policies submitted to the Company will be
forwarded to the Reinsurer as promptly as practicable. After the Closing Date,
the Company shall promptly, upon receipt thereof, notify the Reinsurer of any
written or oral complaint to or from any official of a state insurance
department, any federal or state regulatory authority or any other person or
entity, and any complaint threatening litigation in connection with any of the
Coinsured Policies.

                                   ARTICLE VI

                                 INDEMNIFICATION

                  6.1.     Indemnification by the Company. From and after the
Coinsurance Effective Date, the Company shall reimburse the Reinsurer for, and
shall indemnify and hold the Reinsurer harmless and defend the Reinsurer from
and against all costs and expenses (including interest, penalties, reasonable
attorneys', accountants' and actuaries' fees, and any other costs and expenses
incident to any suit, action or proceeding), damages, charges, losses,
deficiencies, liabilities, obligations, claims and judgments sustained or
incurred by, or asserted against, the Reinsurer which arise out of (a) any
Excluded Liabilities, (b) any breach or nonfulfillment by the Company of, or any
failure by the Company to perform, any of the covenants, terms or conditions of
or any of its duties or obligations under this Agreement, and (c) any
enforcement of this indemnity.

                  6.2.     Indemnification by the Reinsurer. From and after the
Coinsurance Effective Date, the Reinsurer shall reimburse the Company for, and
shall indemnify and hold the Company harmless and defend the Company from and
against all costs and expenses (including interest, penalties, reasonable
attorneys', accountants' and actuaries' fees, and any other costs and expenses
incident to any suit, action or proceeding), damages, charges, losses,
deficiencies, liabilities, obligations, claims and judgments sustained or
incurred by, or asserted against, the Company (a) with respect to the payment of
amounts due under or in connection with any of the Coinsured Policies (i)
incurred on or after the Coinsurance Effective Date, or (ii) for which a loss
reserve amount is paid to the Reinsurer at Closing (other than Excluded
Liabilities), (b) which

                                       9

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

arise out of (i) any breach or nonfulfillment by the Reinsurer of, or any
failure by the Reinsurer to perform, any of the covenants, terms or conditions
of or any of its duties or obligations under this Agreement; or (ii) any action
or inaction of the Reinsurer under or with respect to any of the Coinsured
Policies (including, without limitation, any extra-contractual liabilities the
Company may have incurred or may incur by reason of any actions, inactions or
misconduct of the Reinsurer in connection with such Coinsured Policies occurring
on or after the Coinsurance Effective Date); or (iii) instructions of the
Reinsurer given pursuant to Section 2.1.4 hereof, or (c) with respect to any
enforcement of this indemnity.

                  6.3.     Extra-contractual Damages. The Reinsurer assumes no
liability of any kind hereunder for any extra-contractual liabilities the
Company may have incurred or may incur by reason of any actions, inactions or
misconduct of the Company in connection with such Reinsured Policies.
Furthermore, the Company assumes no liability of any kind hereunder for any
extra-contractual liabilities the Reinsurer may have incurred or may incur by
reason of any actions, inactions or misconduct of the Reinsurer in connection
with such Reinsured Policies.

                  6.4.     Indemnification and Arbitration Procedures. The
indemnity and arbitration procedures under Articles VIII and IX of the Master
Agreement, shall apply to indemnity claims and disputes arising under this
Agreement, and are incorporated herein by reference. The rights and obligations
of the parties respecting indemnification under this Agreement shall be subject
to the limitations described in Section 9.5 of the Master Agreement, which
limitations are incorporated herein by reference.

                  6.5.     Cooperation. Each party agrees that it will cooperate
fully with the other party in the satisfactory settlement of any and all claims,
insofar as possible.

                                  ARTICLE VII

                                   INSOLVENCY

                  7.1.     Payment of Benefits under an Insolvency. The
obligations of the Reinsurer under this Agreement shall be without diminution or
in any way affected or diminished because of the insolvency of the Company. In
the event of the insolvency of the Company and the appointment of a conservator,
liquidator, receiver or statutory successor of the Company while coinsurance
under this Agreement is in effect as to any Coinsured Policy, all coinsurance
made, ceded, renewed or otherwise becoming effective shall be payable directly
to such conservator, liquidator, receiver or statutory successor immediately
upon demand, with reasonable provision for verification, on the basis of claims
allowed against the Company by any court of competent jurisdiction or by any
conservator, liquidator, receiver or statutory successor of the Company having
authority to allow such claims, without diminution because of such insolvency or
because such conservator, liquidator, receiver or statutory successor has failed
to pay all or a portion of any claims.

                  7.2.     Required Notice of and Defense against Claims. In the
event of the insolvency of the Company while coinsurance as to any Coinsured
Policy is in effect under this Agreement, the conservator, liquidator, receiver
or statutory successor of the Company shall give the Reinsurer written notice of
the pendency of a claim against the Company on a Coinsured Policy within a
reasonable time after such claim is filed in the insolvency proceeding. During
the pendency of any such claim, the Reinsurer may, at its own expense,
investigate such claim and interpose, at its own expense, in the proceeding
where such claim is to be adjudicated, any

                                       10

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

defense or defenses which the Reinsurer may deem available to the Company or its
conservator, liquidator, receiver or statutory successor. The expense thus
incurred by the Reinsurer shall be payable, subject to court approval, out of
the estate of the Company as a part of the expense of conservation or
liquidation to the extent of a proportionate share of the benefit which may
accrue to the Company in conservation or liquidation solely as a result of the
defense undertaken by the Reinsurer.

                                  ARTICLE VIII

                               GENERAL PROVISIONS

                  8.1.     Notices. Any and all notices and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given when (i) received by the receiving party if
mailed by United States registered or certified mail, return receipt requested,
(ii) received by the receiving party if mailed by United States overnight
express mail, (iii) sent by facsimile or telecopy machine, followed by
confirmation mailed by United States first-class mail or overnight express mail,
or (iv) delivered in person to the parties at the addresses set forth in the
Master Agreement.

                  8.2.     Confidentiality. Each of the parties shall maintain
the confidentiality of all information related to the Policies and all other
information denominated as confidential by the other party provided to it in
connection with this Agreement and shall not disclose such information to any
third parties without prior written consent of the other party, except as may be
required by regulatory authorities, or pursuant to legal process.

                  8.3.     Misunderstandings and Oversights. If any failure to
pay amounts due or to perform any other act required of either party under this
Agreement is shown to be unintentional and caused by misunderstanding, oversight
or clerical error, then this Agreement shall not be deemed in breach thereby,
but such error shall be corrected by restoring both parties to the positions
they would have occupied had the error not occurred.

                  8.4.     Reinstatements. If a Policy that was reduced,
terminated, or lapsed, is reinstated, the reinsurance for such Policy under this
Agreement will be reinstated automatically to the amount that would have been in
force if the Policy had not been reduced, terminated, or lapsed.

                  8.5.     Entire Agreement. This Agreement shall constitute the
entire agreement between the parties with respect to the business being
reinsured hereunder. There are no other understandings between the parties other
than as expressed in this agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter of this Agreement, and this Agreement, the Master Agreement, the
Assumption Agreement and the Services Agreement, including the Schedules
attached hereto and thereto, contain the sole and entire agreement between the
parties with respect to the subject matter hereof.

                  8.6.     Waivers and Amendments. Any term or condition of this
Agreement may be waived at any time by the party that is entitled to the benefit
thereof. Such waiver must be in writing and must be executed by an executive
officer of such party. A waiver on one occasion will not be deemed to be a
waiver of the same or any other term or condition on a future

                                       11

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

occasion. This Agreement may be modified or amended only by a writing duly
executed by an executive officer of the Company and the Reinsurer, respectively.

                  8.7.     No Third Party Beneficiaries. This Agreement
constitutes an indemnity reinsurance agreement solely between the Company and
the Reinsurer, and is intended solely for the benefit of the parties hereto and
their permitted successors and assigns. The acceptance of reinsurance hereunder
shall not create any right or legal relation whatever between Reinsurer and the
insured or the beneficiary under any policy of the Company which may be
reinsured hereunder..

                  8.8.     Assignment. This Agreement shall not be assigned by
either of the parties hereto without the prior written approval of the other
party.

                  8.9.     Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Colorado, including the
arbitration provisions as set forth in the Master Agreement, without regard to
its conflicts of law doctrine.

                  8.10.    Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.

                  8.11.    Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law or
if determined by a court of competent jurisdiction to be unenforceable, and if
the rights or obligations of the Company or the Reinsurer under this Agreement
will not be materially and adversely affected thereby, such provision shall be
fully severable, and this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.

                  8.12.    Exhibits and Paragraph Headings. Exhibits attached
hereto are made a part of this Agreement. Paragraph headings are provided for
reference purposes only and are not made a part of this Agreement.

                  8.13.    Tax Provisions. The parties hereby agree to make the
election in accordance with Internal Revenue Regulation 1.848-2(g)(8) (the
"Regulation") under Section 848 of the Internal Revenue Code of 1986 (the
"Code"), as amended, to comply with all of the requirements of such Regulation
regarding such election, including, without limitation, the election statement
and tax return reporting requirements of Regulation Sections 1.848-2(g)(8)(ii)
and 1.848-2(g)(8)(iii), and further agree:

                           (a)      to exchange information pertaining to the
         amount of "net consideration" under this Agreement as defined in the
         Regulation;

                           (b)      that the Company shall submit its
         calculation of the "net consideration" for purposes of that Regulation
         to the Reinsurer not later than May 1st for each and every taxable year
         for which this Agreement is in effect;

                           (c)      that the Reinsurer may challenge such
         calculation within ten (10) business days of its receipt of the
         Company's calculation;

                                       12

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

                           (d)      that should the Reinsurer challenge the
         Company's calculation of the "net consideration" and the parties be
         unable to agree as to the appropriate methodology to determine the "net
         consideration" for purposes of the Regulation, they shall refer such
         dispute to an outside tax consultant unrelated to either of the
         parties, in lieu of the arbitration provisions of this Agreement, and
         the parties agree to be bound by the decision of that consultant;

                           (e)      that, pursuant to such election, the party
         with net positive consideration with respect to this Agreement for each
         taxable year will capitalize specified policy acquisition expenses with
         respect to this Agreement without regard to the general deductions
         limitation of Section 848(c)(1) of the Code; and

                           (f)      that the first taxable year for which such
         election shall be effective is taxable year 2004.

                  8.14.    Qualification as a Reinsurer. During the continuance
of any insurance contracts under this Agreement; Reinsurer agrees, at the option
of the Reinsurer, to either maintain continuous qualifications as a reinsurer in
the state of Colorado, or maintain a Letter of Credit as security acceptable
under Colorado Statute Section 10-3-118(6), or maintain Reinsurance Trust under
the terms of such Reinsurance Trust Agreement.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed effective this 9th day of March, 2004.

                                           CITIZENS INSURANCE COMPANY OF AMERICA

                                           By: /s/ Mark Oliver
                                               ---------------------------------
                                               Mark Oliver, President

                                           TEXAS INTERNATIONAL LIFE INSURANCE
                                           COMPANY

                                           By: /s/ Larry J. Doze
                                               ---------------------------------
                                               Larry J. Doze, President

                                       13

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

                                  SCHEDULE 1.11

                          POLICIES AND RISKS REINSURED

BLOCK DESCRIPTION:

POLICY FORM/
PLAN CODE                                 DESCRIPTION

                                       14

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

                                  SCHEDULE 1.16

                             PROFIT-SHARING FORMULA

1)       Profit-sharing from the Reinsurer to the Company in the amount of 90%
         in the 1st year, 80% in the 2nd year, 70% in the 3rd year, 60% in the
         4th year, 50% in the 5th year, 40% in the 6th year, 30% in the 7th
         year, 20% in the 8th year and 10% in the 9th year will be paid by March
         31 of every calendar year beginning March 31, 2005.

2)       All Policies under this Agreement and any related agreements are to be
         pooled for purposes of the profit-sharing calculations. The Citizens
         and Combined policies and any other policies reinsured by this
         agreement will be pooled together.

3)       Each calendar year's calculation will be cumulative throughout such
         calendar year with profits and losses carried forward and backward
         within each calendar year.

4)       Any losses from each and every calendar year having a loss for such
         calendar year will be carried forward to the next and succeeding
         calendar years and no profits will be paid by the Reinsurer to the
         Company until the cumulative calculation results in a cumulative
         profit. Any losses from any calendar year will not be carried backward
         to any prior year's calculations in which profits were paid by the
         Reinsurer to the Company.

5)       Any profits paid by the Reinsurer to the Company for any and every
         calendar year will not be carried forward in the calculations and will
         not be subject to be returned in any way by the Company to the
         Reinsurer.

6)       Actual earned premiums, incurred claims, statutory reserve and
         liability changes, commissions paid, premium taxes paid, guarantee fund
         assessments and reinsurance transactions other than those reinsurance
         transactions under this Agreement will be used in the profit-sharing
         calculations.

7)       Net investment income in the amount of four percent (4.00%) per annum
         using the quarterly statutory reserves and liabilities as the assets
         will be used in the profit-sharing calculations regardless of the
         actual amount of net investment income earned. The formula will be
         (12/31/XX assets) x ((1.04) Caret ((31 + (28 or 29) + 31) / (365 or
         366)) - 1) + (3/31/XX assets) x ((1.04) Caret ((30+31+30) / (365 or
         366)) - 1) + etc. for the 3rd and 4th quarters.

8)       General expenses in the amount of nine percent (9.00%) of the collected
         premiums will be used in the profit-sharing calculations regardless of
         the actual amount of general expenses incurred.

9)       No DAC-TAX will be charged or used in the profit-sharing calculations.

10)      No Federal Income Tax will be charged or used in the profit-sharing
         calculations.

                                       15

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

                                  SCHEDULE 3.1
                                SETTLEMENT AMOUNT
<TABLE>
<S>                                                                 <C>
Statutory Reserves and Liabilities as of 12/31/03:                  $ __________
         Statutory Annual Statement, Exhibit 6, line 17, column 1
         Plus Exhibit 7, line 14, column 5 (Health Insurance
         only)
         Plus Exhibit 8, Part 1, line 4.4, columns 9, 10 & 11
         Plus Exhibit 1, Part 1, lines 4 & 14, columns 8, 9, & 10
         Plus page 3, line 10, column 1, accident and health
         insert
         Plus page 3, line 11, column 1 (in part) Accident &
         Health only
         Plus Exhibit 4, line 15, column 2
         Minus Exhibit 1, Part 1, lines 1 & 11, columns 8, 9, &
         10 (only
                    premiums less than 30 days overdue)

Plus, Interest on above Statutory Reserve and Liability Amount
         @ 4.00% per annum effective interest rate from the
         Coinsurance Effective Date to the Closing Date:              __________

Plus, Net Premiums Collected from the Coinsurance Effective
         Date to the Closing Date:
              Statutory Annual Statement, Exhibit 1, Part 1,
            lines 6.4, 10.4, 16.4, columns 8, 9, & 10                 __________

Plus Net Commissions and Expense Allowances paid on Reinsurance
         ceded and assumed from the Coinsurance Effective Date to
         the Closing Date:
            Statutory Annual Statement Exhibit 1, Part 2,
            line 26.3, columns 8, 9 & 10 (in part), paid only        __________

Minus, Claims Paid, from the Coinsurance Effective Date to the
         Closing Date:
              Statutory Annual Statement, Exhibit 8,
              Part 2, line 1.4, columns 9, 10 & 11                  (__________)

Minus, Producer Payments Paid on Premiums Collected from the
       Coinsurance Effective Date to the Closing Date:
              Statutory Annual Statement page 5, line 7, column 1
              (in part), Accident & Health Producer Payments only   (__________)

Minus, Administrative Fees of 9% of Collected Premiums from the
       Coinsurance Effective Date to the Closing Date:              (__________)

Minus, Estimated Premium Taxes of 2.5% of Collected Premiums
       from the Coinsurance Effective Date to the Closing Date:     (__________)

                                    Settlement Amount:             $ __________
</TABLE>

(1) All references to pages lines and columns above shall refer to only the
portion of such references that pertain to the business reinsured under this
agreement.

                                       16

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

                                  SCHEDULE 4.5
                           REINSURANCE TRUST AGREEMENT

                                       1

                       COINSURANCE REINSURANCE AGREEMENT
<PAGE>

                            AGREEMENT FOR REINSURANCE

                                     Between

                      CITIZENS INSURANCE COMPANY OF AMERICA

                                Denver, Colorado

                                       and

                   TEXAS INTERNATIONAL LIFE INSURANCE COMPANY

                                  Austin, Texas

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                     Page
                                                                                                                     ----
<S>                                                                                                                  <C>
ARTICLE I  Definitions...........................................................................................      1
         1.1.  Assumed Policy....................................................................................      1
         1.2.  Assumption Agreement..............................................................................      1
         1.3.  Assumption Certificate............................................................................      2
         1.4.  Assumption Effective Date.........................................................................      2
         1.5.  Books and Records.................................................................................      2
         1.6.  Closing...........................................................................................      2
         1.7.  Closing Date......................................................................................      2
         1.8.  Coinsurance Agreement.............................................................................      2
         1.9.  Coinsurance Effective Date........................................................................      2
         1.10.  Coinsured Policy.................................................................................      2
         1.11.  Company Service Period...........................................................................      2
         1.12.  Excluded Liabilities.............................................................................      2
         1.13.  Existing Reinsurance Coverage....................................................................      2
         1.14.  Policies.........................................................................................      3
         1.15.  Policyholder.....................................................................................      3
         1.16.  Producer.........................................................................................      3
         1.17.  Producer Agreement...............................................................................      3
         1.18.  Producer Payments................................................................................      3
         1.19.  Purchase Consideration...........................................................................      3
         1.20.  Reinsurance Agreements...........................................................................      3
         1.21.  Required Assumption Approvals....................................................................      3
         1.22.  Required Assumption Consents.....................................................................      3
         1.23.  Required Closing Date Approvals..................................................................      3
         1.24.  Service Notice...................................................................................      3
         1.25.  Services Agreement...............................................................................      4
         1.26.  Settlement Amount................................................................................      4
         1.27.  Statutory Reserves and Liabilities...............................................................      4
         1.28.  Support Services.................................................................................      4
         1.29.  Transition Date..................................................................................      4

ARTICLE II  Reinsurance..........................................................................................      4
         2.1.  Reinsurance of Policies...........................................................................      4
         2.2.  Entry into Services Agreement.....................................................................      4
         2.3.  Transfer of Books and Records.....................................................................      4
         2.4.  Regulatory Approvals..............................................................................      4
         2.5.  Assignment of Producer Agreements.................................................................      4
         2.6.  Assignment of Existing Reinsurance Coverage.......................................................      5

ARTICLE III  Company Representations and Warranties..............................................................      5
         3.1.  Company's Corporate Existence and Authority.......................................................      5
         3.2.  Sufficiency of Statutory Reserves and Liabilities.................................................      6
</TABLE>

                                       i

                           Agreement for Reinsurance
<PAGE>

<TABLE>
<S>                                                                                                                  <C>
         3.3.  Policy Forms......................................................................................      6
         3.4.  Accuracy of Books and Records.....................................................................      6
         3.5.  Premium Taxes.....................................................................................      6
         3.6.  Reinsurance Coverage..............................................................................      6
         3.7.  Validity of Producer Agreements...................................................................      6
         3.8.  Compliance with Law...............................................................................      7
         3.9.  Litigation Against Company........................................................................      7
         3.10.  Company's Brokers................................................................................
         3.11.  Company Disclosure...............................................................................      7

ARTICLE IV  Reinsurer Representations and Warranties.............................................................      7
         4.1.  Reinsurer's Corporate Existence and Authority.....................................................      7
         4.2.  Litigation Against Reinsurer......................................................................      8
         4.3.  Reinsurer's Brokers...............................................................................      8
         4.4.  Reinsurer Disclosure..............................................................................      8

ARTICLE V  Covenants of the Parties..............................................................................      8
         5.1.  Maintenance of Business by the Company............................................................      8
         5.2.  No Change in Reserving Policies, Methods or Assumptions...........................................      9
         5.3.  Maintenance and Assignment of Existing Reinsurance Coverage.......................................      9
         5.4.  Continued Access to Books and Records Retained by the Company.....................................      9
         5.5.  Notice of Actions Received by the Company.........................................................     10
         5.6.  Continued Access to Books and Records Transferred to the Reinsurer................................     10
         5.7.  Notice of Actions Received by the Reinsurer.......................................................     10
         5.8.  Unfair Practices..................................................................................     11
         5.9.  Filings, Consents and Approvals...................................................................     11
         5.10.  HSR Act Filings..................................................................................     11
         5.11.  Conduct Pending Closing..........................................................................     11
         5.12.  Further Assurances...............................................................................     12
         5.13.  Use by the Reinsurer of the Company's Name, Logo or Service Marks................................     12
         5.14.  Communications with Policyholders................................................................     12
         5.15.  Expenses.........................................................................................    132
         5.16   Access by Regulators.............................................................................     13

ARTICLE VI  Conditions to Closing................................................................................     13
         6.1.  Conditions to the Reinsurer's Obligations to Close................................................     13
         6.2.  Conditions to the Company's Obligations to Close..................................................     13

ARTICLE VII  Survival of Representations and Warranties..........................................................     14

ARTICLE VIII  Arbitration........................................................................................     14
         8.1.  Agreement to Arbitrate............................................................................     14
         8.2.  Method............................................................................................     15

ARTICLE IX  Indemnification......................................................................................     16
         9.1.  Indemnification Under Reinsurance Agreements......................................................     16
         9.2.  Indemnification Under this Agreement..............................................................     16
</TABLE>

                                       ii

                           Agreement for Reinsurance
<PAGE>

<TABLE>
<S>                                                                                                                  <C>
         9.3.  Notice of Claim...................................................................................     16
         9.4.  Opportunity to Defend.............................................................................     16
         9.5.  Limitation on Indemnification.....................................................................     17

ARTICLE X  Termination...........................................................................................     17
         10.1.  Termination......................................................................................     17
         10.2.  Effect of Termination............................................................................     18

ARTICLE XI  Miscellaneous Provisions.............................................................................     18
         11.1.  Notice...........................................................................................     18
         11.2.  Entire Agreement.................................................................................     19
         11.3.  Assignment.......................................................................................     19
         11.4.  Waivers and Amendments...........................................................................     19
         11.5.  No Third Party Beneficiaries.....................................................................     19
         11.6.  Public Announcements.............................................................................     19
         11.7.  Confidentiality..................................................................................     20
         11.8.  Governing Law....................................................................................     20
         11.9.  Counterparts.....................................................................................     20
         11.10.  Headings........................................................................................     20
         11.11.  Severability....................................................................................     20

ARTICLE XII  Legal Requirements..................................................................................     21
         12.1.  Compliance with Laws.............................................................................     21
         12.2.  USA Patriots Act.................................................................................     21
         12.3.  Gramm-Leach-Bliley Act...........................................................................     21
         12.4.  Health Insurance Portability and Accountability Act of 1996 ("HIPAA")............................     21
         12.5.  Indemnification..................................................................................     23
         12.6.  Defined Terms....................................................................................     23
</TABLE>

                                      iii

                           Agreement for Reinsurance
<PAGE>

                            AGREEMENT FOR REINSURANCE

         THIS AGREEMENT FOR REINSURANCE ("Agreement"), dated as of the date set
forth below, is entered into by and between CITIZENS INSURANCE COMPANY OF
AMERICA, a Colorado stock life insurance company (the "Company"), and TEXAS
INTERNATIONAL LIFE INSURANCE COMPANY, a Texas stock life insurance company
("Reinsurer").

         WHEREAS, the Company is the issuer of certain insurance Policies (as
defined herein); and

         WHEREAS, the Company desires to sell, transfer and cede its contractual
obligations and risks under the Policies to the Reinsurer, and the Reinsurer
desires to purchase, acquire, assume and reinsure such contractual obligations
and risks pursuant to the terms of, first, a coinsurance reinsurance agreement
in the form attached hereto, and ultimately, conditioned upon the receipt of
certain required regulatory approvals, an assumption reinsurance agreement in
the form attached hereto; and

         WHEREAS, the Company will undertake to provide certain support services
with respect to the Policies on behalf of the Reinsurer for a period of time
following the closing under this Agreement and, thereafter the Reinsurer shall
undertake and assume full responsibility for such support services pursuant to
the terms of a certain administrative services agreement between the Company and
the Reinsurer in the form attached hereto.

         NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, and in reliance upon the representations, warranties,
conditions and covenants herein contained, and intending to be legally bound
hereby, the Company and the Reinsurer do hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Capitalized terms used in this Agreement, but not defined in this
Article I, shall have the meaning given them in the other articles of this
Agreement. The following capitalized words and terms shall have the following
meanings when used in this Agreement:

                  1.1.     Assumed Policy. Each Policy that has been reinsured
and assumed by the Reinsurer pursuant to the terms of the Assumption Agreement.

                  1.2.     Assumption Agreement. The assumption reinsurance
agreement to be entered into between the Company and the Reinsurer pursuant to
the provisions of Section 2.1 of this Agreement, which shall be in the form
shown at SCHEDULE 1.2 hereto.

                                       1

                           AGREEMENT FOR REINSURANCE
<PAGE>

                  1.3.     Assumption Certificate. The certificate to be issued
by the Reinsurer to the Policyholder of any Assumed Policy and which is
substantially in the form provided in the Assumption Agreement, as modified and
approved by various state insurance regulatory authorities.

                  1.4.     Assumption Effective Date. The date upon which any of
the Coinsured Policies are to be assumed by the Reinsurer under the provisions
of the Assumption Agreement.

                  1.5.     Books and Records. All original files and records, in
whatever form, in the possession or under the control of the Company related to
the Policies, including, but not limited to policy files, claims files and
underwriting files, policy form files (including all files relating to the
filing and approval of policy forms, applications and riders with insurance
regulatory authorities); copies of Producer Agreements; rate filings and
actuarial data developed or utilized by the Company or on its behalf in support
of premium rates charged under the Policies; and premium tax records and reports
for the Policies covering any period prior to the Transition Date.

                  1.6.     Closing. The closing of the transactions contemplated
in Article II of this Agreement, which shall take place at the offices of the
Company, unless the parties agree to close by facsimile transmission and wire
transfer.

                  1.7.     Closing Date. The date upon which the Closing shall
take place, which shall be not later than the fifth business day following the
receipt of the last of the Required Closing Date Approvals, or at such other
date and time as the parties may mutually agree in writing.

                  1.8.     Coinsurance Agreement. The coinsurance reinsurance
agreement to be entered into between the Company and the Reinsurer pursuant to
the provisions of Section 2.1 of this Agreement, which shall be in the form
shown at SCHEDULE 1.8 hereto.

                  1.9.     Coinsurance Effective Date. The date upon which the
coinsurance of the Policies by the Reinsurer under the terms of the Coinsurance
Agreement shall be effective.

                  1.10.    Coinsured Policy. Each Policy reinsured by the
Reinsurer under the Coinsurance Agreement.

                  1.11.    Company Service Period. The period of time from the
Coinsurance Effective Date until the Transition Date, during which the Company
shall be required to provide Support Services in connection with the Policies
under the terms of the Services Agreement.

                  1.12.    Excluded Liabilities. Any claims or liability under,
in connection with or with respect to the Policies not assumed by the Reinsurer
and defined as "Excluded Liabilities" under the terms and provisions of the
Coinsurance Agreement.

                  1.13.    Existing Reinsurance Coverage. All contracts,
agreements and treaties of reinsurance between the Company and a third-party
reinsurer that (a) are in force and effect as of the Coinsurance Effective Date
and (b) cover any risks associated with the Policies.

                                       2

                           Agreement for Reinsurance
<PAGE>

                  1.14.    Policies. All of those insurance policy contracts
issued by the Company that are (a) identified by policy form number and/or plan
code at SCHEDULE 1.11 attached to the Coinsurance Agreement, and (b) in force
and effect as of the Coinsurance Effective Date or issued or reinstated on or
after the Coinsurance Effective Date.

                  1.15.    Policyholder. Any individual or entity which is the
owner of a Policy or which has the right to terminate or lapse the Policy,
effect changes of beneficiary, coverage limits, add or terminate persons covered
under such Policy or direct any other policy changes in such Policy.

                  1.16.    Producer. Any agent, broker, representative, or
subagent of any person (a) having a Producer Agreement and (b) being entitled to
receive any Producer Payments for the solicitation, sale, marketing, production
or servicing of any of the Policies.

                  1.17.    Producer Agreement. Any written agreement, contract,
understanding or arrangement between the Company and any Producer, including any
assignments of compensation thereunder, and relating to the solicitation, sale,
marketing, production or servicing of any of the Policies.

                  1.18.    Producer Payments. Any expense allowance, commission,
override commission, service fee or other compensation payable by the Company to
a Producer pursuant to a Producer Agreement.

                  1.19.    Purchase Consideration. The additional deficiency
reserve over and above the Statutory Reserve and Liabilities that will be paid
as part of the Settlement Amount that is payable by the Company to the Reinsurer
in connection with the coinsurance of the Policies under the Coinsurance
Agreement.

                  1.20.    Reinsurance Agreements. Collectively, the Assumption
Agreement and the Coinsurance Agreement.

                  1.21.    Required Assumption Approvals. The approvals of any
insurance regulatory authorities that may be required in connection with the
reinsurance of any of the Coinsured Policies by the Reinsurer on an assumption
reinsurance basis pursuant to the terms and provisions of the Assumption
Agreement, including the approval of the Assumption Certificates to be issued by
the Reinsurer to the Policyholders of any Assumed Policies.

                  1.22.    Required Assumption Consents. Any consent of any
Policyholder to the assumption of a Coinsured Policy by the Reinsurer on an
assumption reinsurance basis that may be required under applicable insurance
laws or regulations in any jurisdiction where the Coinsured Policies were issued
or, as applicable, where such Policyholders reside.

                  1.23.    Required Closing Date Approvals. The approval of any
insurance regulatory authorities that may be required for the reinsurance of the
Policies by the Reinsurer pursuant to the terms and provisions of the
Coinsurance Agreement.

                  1.24.    Service Notice. The notice to be sent by the
Reinsurer to the Policyholders of the Coinsured Policies in the form provided in
the Services Agreement.

                                       3

                           Agreement for Reinsurance
<PAGE>

                  1.25.    Services Agreement. The administrative services
agreement to be entered into between the Company and the Reinsurer pursuant to
the provisions of Section 2.2 of this Agreement, which shall be in the form
shown at SCHEDULE 1.25 hereto.

                  1.26.    Settlement Amount. The amount of the payment to be
made by the Company to the Reinsurer at Closing pursuant to the terms of the
Coinsurance Agreement.

                  1.27.    Statutory Reserves and Liabilities. "Statutory
Reserves and Liabilities" shall have the same meaning as set forth in Section
1.20 of the Coinsurance Agreement.

                  1.28.    Support Services. The services to be provided in
connection with the Coinsured Policies under the Services Agreement.

                  1.29.    Transition Date. The date upon which the Reinsurer
shall undertake to perform all Support Services in connection with the Policies
under the terms and provisions of the Services Agreement.

                                   ARTICLE II

                                   REINSURANCE

                  2.1.     Reinsurance of Policies. Subject to the terms and
conditions of this Agreement, on or before the Closing Date, the Company and the
Reinsurer shall enter into the Reinsurance Agreements. At the Closing, the
Reinsurer shall reinsure the Policies, effective as of the Coinsurance Effective
Date, and the Company, in consideration of the Reinsurer's reinsurance of the
Policies, shall pay the Settlement Amount to the Reinsurer.

                  2.2.     Entry into Services Agreement. Subject to the terms
and conditions of this Agreement, on or before the Closing Date, the Company and
the Reinsurer shall enter into the Services Agreement.

                  2.3.     Transfer of Books and Records. On the Transition
Date, the Company shall transfer the Books and Records relating to the Policies
to the Reinsurer. All Books and Records in electronic form shall be transferred
in an electronic format acceptable to the Reinsurer.

                  2.4.     Regulatory Approvals. The Company shall be
responsible for obtaining all Required Closing Date Approvals of the insurance
regulatory authorities in its state of domicile on or before the Closing Date.
The Reinsurer shall be responsible for obtaining all other Required Closing Date
Approvals and, on and after the Closing Date, all Required Assumption Approvals
and Required Assumption Consents.

                  2.5.     Assignment of Producer Agreements. Effective as of
the Coinsurance Effective Date, the Company hereby assigns, transfers, sets over
and conveys to the Reinsurer all of the Company's rights, liabilities and
obligations, to the extent such rights, liabilities and obligations relate to
the Policies, under the Producer Agreements (excluding, however, any such

                                       4

                           Agreement for Reinsurance
<PAGE>

rights, liabilities or obligations that relate to any period prior to the
Coinsurance Effective Date or insurance policies other than the Policies), and
the Reinsurer shall undertake and agree to assume and perform, effective as of
the Coinsurance Effective Date, the obligations of the Company to pay any
Producer Payments due such Producers from the Company pursuant to any Producer
Agreement with respect to premiums collected and received by the Reinsurer or
for the Reinsurer's account under the Policies for any periods on and after the
Coinsurance Effective Date. If required by law or regulatory authorities, the
Company shall cooperate with the Reinsurer to cause the appointment of Producers
as agents of the Reinsurer for the purpose of paying such Producer Payments. Any
liability for compensation to Producers not set forth in the Producer Agreements
furnished by the Company to the Reinsurer shall remain the obligation of the
Company, and the Reinsurer shall be indemnified and held harmless by the Company
for any compensation to Producers in excess of that set forth in the Producer
Agreements.

                  2.6.     Assignment of Existing Reinsurance Coverage. To the
extent permitted by its existing Reinsurance Agreements the Company shall assign
to the Reinsurer all of its rights, duties and obligations under its Existing
Reinsurance Coverage as further described in Section 5.3.

                                  ARTICLE III

                     COMPANY REPRESENTATIONS AND WARRANTIES

         The Company hereby represents and warrants to the Reinsurer as follows:

                  3.1.     Company's Corporate Existence and Authority. The
Company is a stock life insurance company organized, existing and in good
standing under the laws of the State of Colorado, and the execution, delivery
and performance of this Agreement, the Reinsurance Agreements and the Services
Agreement by the Company have been duly authorized by all necessary corporate
action on the part of the Company. This Agreement has been duly and validly
executed and delivered to the Reinsurer by the Company and constitutes the valid
and legally binding obligation of the Company, enforceable in accordance with
its terms except (i) as the same may be limited by applicable bankruptcy,
insolvency, rehabilitation, moratorium or similar laws of general application
relating to or affecting creditors' rights, including, without limitation, the
effect of statutory or other laws regarding fraudulent conveyances and
preferential transfers, and (ii) for the limitations imposed by general
principles of equity. The execution, delivery and performance by the Company of
this Agreement do not and will not:

                           3.1.1.   Conflict with or result in any breach or
         violation of or any default under (or give rise to any right of
         termination, cancellation or acceleration under) the bylaws or
         certificate of incorporation of the Company or any note, bond,
         mortgage, indenture, lease, license, permit, agreement or other
         instrument or obligation to which the Company is a party or by which
         the Company is or may be bound.

                           3.1.2.   Subject to obtaining any Required Closing
         Date Approvals, violate any law, order, rule, or regulation applicable
         to the Company.

                                       5

                           Agreement for Reinsurance
<PAGE>

                  3.2.     Sufficiency of Statutory Reserves and Liabilities.
The Statutory Reserves and Liabilities have been calculated by the Company (for
purposes of the Settlement Amount payment to be made at Closing) in accordance
with (a) the terms and conditions of the Policies; (b) the reserve requirements
and generally accepted statutory accounting rules and actuarial principles and
practices applicable to the Company under the laws and applicable regulations of
its State of domicile and each of the states in which the Policies have been
issued or delivered; and (c) methodologies used by the Company in calculating
Statutory Reserves and Liabilities for the Policies for the purposes of the most
recent annual and quarterly statements of the Company filed with the insurance
regulatory authorities in its State of domicile, consistently applied with prior
periods, and such Statutory Reserves and Liabilities are, as of the dates of
such financial statements, good, sufficient and adequate (under commonly
accepted actuarial standards consistently applied and fairly stated in
accordance with sound actuarial principles) to cover the total amount of all
reasonably anticipated matured and unmatured benefits, dividends, claims, and
other liabilities of the Company under the Policies.

                  3.3.     Policy Forms. Each policy, amendment, rider and form
used in connection with the Policies has been properly approved or deemed
approved by appropriate insurance regulatory authorities, and any of these items
issued to Policyholders have been validly issued on approved forms in
compliance, in all material respects, with applicable state insurance laws and
regulations, and the Company has provided or has agreed to provide the Reinsurer
with true, correct and complete specimen copies of all forms representing the
Policies. The rates charged for insurance under the Policies (a) have been
determined in accordance with usual and customary actuarial principals and
practices; (b) have been approved, where required, by insurance regulatory
authorities in each state in which such Policies have been issued and are not in
excess of such approved rates; and (c) are not based on the race of the proposed
insureds under the Policies.

                  3.4.     Accuracy of Books and Records. To the best of the
Company's knowledge, information and belief, all of the Books and Records of the
Company relating to the Policies and which will be transferred by the Company,
to the Reinsurer pursuant to the terms and provisions of this Agreement are
current, complete and accurate in all material respects.

                  3.5.     Premium Taxes. Subject to Sections 4.6 and 4.7 of the
Coinsurance Agreement, the Company has paid, or will cause to be paid, all
premium taxes and guaranty fund assessments due with respect to the Policies for
the period prior to the Assumption Effective Date.

                  3.6.     Reinsurance Coverage. The Company has maintained all
Existing Reinsurance Coverage in connection with the Policies in full force and
effect through the Coinsurance Effective Date, and has paid all reinsurance
premiums due with respect to such Existing Reinsurance Coverage through or
beyond the Coinsurance Effective Date, and the Company has provided the
Reinsurer with true, correct and complete copies of all contracts, agreements or
treaties representing such Existing Reinsurance Coverage.

                  3.7.     Validity of Producer Agreements. All obligations of
the Company to make any Producer Payments to Producers in connection with the
Policies are set forth in written Producer Agreements, true, correct and
complete copies of which have been furnished by the

                                       6

                           Agreement for Reinsurance
<PAGE>

Company to the Reinsurer, and the Company is not liable for any compensation to
any Producers with respect to the Policies except to the extent set forth in the
Producer Agreements.

                  3.8.     Compliance with Law. The Company has, to the best of
its knowledge, information and belief, conducted its business, including,
without limitation, the underwriting, sale, issuance and administration of the
Policies, in material compliance with all applicable laws (including, without
limitation, insurance laws and federal and state laws), statutes, ordinances,
rules, governmental regulations, writs, injunctions, judgments, decrees or
orders of any governmental instrumentality or court.

                  3.9.     Litigation Against Company. Except as disclosed on
SCHEDULE 3.9 hereto, there are no actions, suits, investigations or proceedings
pending or (to the best knowledge of the Company) threatened against the Company
at law or in equity, in, before, or by any person (a) that involve any of the
Policies or (b) that individually or in the aggregate have or may reasonably be
expected to have a material adverse effect on the validity or enforceability of
this Agreement or the transactions contemplated hereby.

                  3.10.    Company Disclosure. To the best of the Company's
knowledge, information and belief, no warranty or representation made by the
Company in this Agreement nor in any writing furnished or to be furnished by the
Company to the Reinsurer pursuant hereto or in connection herewith contains or
will contain any untrue statement of a material fact or omits, or will fail to
state, any material fact necessary to make the statements contained herein or
therein not misleading.

                                   ARTICLE IV

                    REINSURER REPRESENTATIONS AND WARRANTIES

         The Reinsurer represents and warrants to the Company as follows:

                  4.1.     Reinsurer's Corporate Existence and Authority. The
Reinsurer is a stock life insurance company duly organized, validly existing and
in good standing under the laws of the State of Texas and is duly qualified and
possesses all licenses, permits, approvals, authorizations and consents
necessary to transact and reinsure life, accident, and health insurance on an
authorized basis in each of the jurisdictions in the United States show on
Schedule 4.1. The execution, delivery and performance of this Agreement, the
Reinsurance Agreements and the Services Agreement by the Reinsurer have been
duly authorized by all necessary corporate action on the part of the Reinsurer.
This Agreement has been duly and validly executed and delivered to the Company
by the Reinsurer and constitutes the valid and legally binding obligation of the
Reinsurer, enforceable in accordance with its terms except (i) as the same may
be limited by applicable bankruptcy, insolvency, rehabilitation, moratorium or
similar laws of general application relating to or affecting creditors' rights,
including, without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers, and (ii) for the limitations
imposed by general principles of equity. The execution, delivery and performance
by the Reinsurer of this Agreement do not and will not:

                                       7

                           Agreement for Reinsurance
<PAGE>

                           4.1.1.   Conflict with or result in any breach or
         violation of or any default under (or give rise to any right of
         termination, cancellation or acceleration) the bylaws or certificate of
         incorporation of the Reinsurer or any note, bond, mortgage, indenture,
         lease, license, permit, agreement or other instrument or obligation to
         which the Reinsurer is a party or by which the Reinsurer is or may be
         bound.

                           4.1.2.   Subject to obtaining any Required Closing
         Date Approvals, violate any law, order, rule, or regulation applicable
         to the Reinsurer.

                  4.2.     Litigation Against Reinsurer. There are no actions,
suits, investigations or proceedings pending or (to the best knowledge of the
Reinsurer) threatened against the Reinsurer at law or in equity, in, before, or
by any person, that individually or in the aggregate have or may reasonably be
expected to have a material adverse effect on the validity or enforceability of
this Agreement or the transactions contemplated hereby.

                  4.3.     Reinsurer's Brokers. Except for the persons or
entities identified on SCHEDULE 4.3 hereto (and for whose compensation the
Reinsurer shall be solely responsible), no broker or finder has acted directly
or indirectly for the Reinsurer, nor has the Reinsurer incurred any obligation
to pay any brokerage or finder's fee or other commission in connection with this
Agreement and the transactions contemplated hereby.

                  4.4.     Reinsurer Disclosure. No warranty or representation
made by the Reinsurer in this Agreement or in any writing furnished or to be
furnished to the Company by the Reinsurer pursuant hereto or in connection
herewith contains or will contain any untrue statement of a material fact or
omits or will fail to state any material fact necessary to make the statements
herein or therein not misleading.

                                   ARTICLE V

                            COVENANTS OF THE PARTIES

         The Company and the Reinsurer hereby covenant and agree as follows:

                  5.1.     Maintenance of Business by the Company. From the date
of this Agreement until the Closing Date, the Company shall (a) carry on its
business in the ordinary course and consistent with past practice, using
reasonable efforts, equivalent in all material respects to those business
methods and practices historically followed by the Company, to maintain its
relationships with those customers, Policyholders, Producers and others with
whom it has business relationships with respect to the Policies; (b) preserve
intact the Company's present business organization, reputation and Policyholder
relations; (c) maintain all licenses, qualifications and authorizations of the
Company to do business in each jurisdiction in which it is presently licensed,
qualified or authorized; (d) use reasonable efforts, equivalent in all material
respects to those business methods and practices historically followed by the
Company, to service and conserve the Policies and maintain them in full force
and effect; and (e) continue to process new applications and issue new policies
as provided in 5.2.2. in each jurisdiction in

                                       8

                           Agreement for Reinsurance
<PAGE>

which it is presently licensed, qualified or authorized on the policy forms
attached as Schedule 1.11.

                  5.2.     No Change in Reserving Policies, Methods or
Assumptions. Except as provided in the subsections to this Section 5.2, from the
date of this Agreement until the Closing Date, the Company shall make no
material change in its underwriting or reserving policies, practices or
procedures applicable to the Policies.

                           5.2.1.   In providing Support Services in connection
         with the Policies during the Company Service Period under the terms of
         the Services Agreement, the Company shall be permitted to process and
         allow reinstatements, renewals, the exercise of purchase options under,
         or the exercise of contractual conversion rights under, the Policies if
         and to the extent required or permitted by the provisions of the
         Policies (collectively, the "Permitted Transactions"). If a Permitted
         Transaction is, under the terms of a Policy, conditioned upon evidence
         of insurability, the Company will (a) require such evidence of
         insurability and (b) secure the Reinsurer's prior written approval of
         the Permitted Transaction before processing such Permitted Transaction,
         which approval shall not be unreasonably withheld.

                           5.2.2.   In addition to Permitted Transactions under
         Section 5.2.1, the Reinsurer shall reinsure or assume new policies
         issued by the Company after the Closing Date unless the Reinsurer gives
         thirty (30) days written notice that it will no longer accept new
         business applications.

                  5.3.     Maintenance and Assignment of Existing Reinsurance
Coverage. From and after the date of this Agreement until the Closing Date, the
Company shall maintain the Existing Reinsurance Coverage with respect to the
Policies in full force and effect and shall, subject to the terms and conditions
of the Existing Reinsurance Coverage, assign all of its rights, duties and
obligations thereunder for losses incurred and premiums earned on and after the
Coinsurance Effective Date to the Reinsurer on the Closing Date. The Reinsurer
has reviewed the Existing Reinsurance Coverage and will assume the Company's
obligations thereunder effective as of the Coinsurance Effective Date, subject
to the consent, if any, of third party reinsurers as may be required thereunder.

                  5.4.     Continued Access to Books and Records Retained by the
Company. In addition to the Books and Records transferred to the Reinsurer
pursuant to the provisions of Section 2.3 of this Agreement, the Company shall
retain historical Books and Records relating to the Policies in accordance with
the Company's generally applicable records retention policies, as in effect at
the date hereof, including, without limitation, advertising materials, complaint
files, loss ratio data, closed claims files, and other records relating to the
Coinsured Policies or representing compilations of data with respect thereto
("Retained Books and Records"). On and after the Closing Date, the Company shall
provide the Reinsurer with access to all non-privileged information in the
possession or control of the Company which pertains to, and which the Reinsurer
reasonably requests in connection with, any claim, loss or obligation arising
out of any of the Coinsured Policies, provided, however, that the Reinsurer
shall comply with all applicable privacy laws and regulations with respect to
the use and disclosure of such information. Such access shall be provided by the
Company during normal business hours of the Company upon

                                       9

                           Agreement for Reinsurance
<PAGE>

forty-eight (48) hours advance notice or as otherwise reasonably requested by
the Reinsurer or its employees, accountants, actuaries, attorneys and other
agents for any reasonable purpose including, without limitation, the preparation
or examination of tax returns and financial statements, the review of payment
and claims procedures, the adequacy of established reserves, the compliance by
the Company with any obligations it has under this Agreement, the Reinsurance
Agreements or the Services Agreement, and the conduct of any litigation or
regulatory dispute resolution, whether pending or threatened, concerning the
sale of Policies, or the servicing of the Policies by the Company prior to the
Transition Date.

                  5.5.     Notice of Actions Received by the Company. On and
after the Closing Date, the Company shall promptly provide the Reinsurer with
notice of the receipt by the Company of (a) any inquiry, complaint, notice or
other communication, whether oral or written, from any insurance regulatory
authority that is related to the Coinsured Policies or to this Agreement, the
Reinsurance Agreements or the Services Agreement, including, without limitation,
an alleged violation of any law, rule, regulation, bulletin or order, or a
threat of any other action or proceeding against the Company or the Reinsurer;
and (b) any notice, including service of process, summons or other litigation
document, indicating the commencement or threatened commencement of any
litigation or arbitration proceeding against the Company or the Reinsurer
related to any loss arising under the Coinsured Policies or any matter
contemplated under this Agreement, the Reinsurance Agreements or the Services
Agreement.

                  5.6.     Continued Access to Books and Records Transferred to
the Reinsurer. On and after the Transition Date and continuing to the applicable
Assumption Effective Date, the Reinsurer agrees to provide the Company with
access to all information in the possession or control of the Reinsurer which
the Company reasonably requests in connection with the Coinsured Policies. Such
access shall be provided by the Reinsurer during normal business hours of the
Reinsurer upon forty-eight (48) hours advance notice or as otherwise reasonably
requested by the Company or its employees, accountants, actuaries, attorneys or
other agents for any reasonable purpose including, without limitation, the
preparation or examination of tax returns and financial statements, the review
of payment and claims procedures, the adequacy of established reserves, the
compliance by the Reinsurer with any obligations it has under this Agreement,
the Reinsurance Agreements or the Services Agreement, and the conduct of any
litigation or regulatory dispute resolution, whether pending or threatened,
concerning the sale of the Coinsured Policies or the servicing of the Coinsured
Policies by the Reinsurer following the Transition Date. The Reinsurer shall
maintain all books, records, files and other information related to the
Coinsured Policies for such period of time as specified by applicable state laws
and regulations regulating the preservation of books and records or such longer
period of time as determined by the Reinsurer.

                  5.7.     Notice of Actions Received by the Reinsurer. On and
after the Closing Date, the Reinsurer shall promptly provide the Company with
notice of the receipt by the Reinsurer of (a) any inquiry, complaint, notice or
other communication, whether oral or written, from any insurance regulatory
authority that is related to the Coinsured Policies or to this Agreement, the
Reinsurance Agreements or the Services Agreement, including, without limitation,
an alleged violation of any law, rule, regulation, bulletin or order, or a
threat of any other action or proceeding against the Company or the Reinsurer;
and (b) any notice, including service of process, summons or other litigation
document, indicating the commencement or

                                       10

                           Agreement for Reinsurance
<PAGE>

threatened commencement of any litigation or arbitration proceeding against the
Company or the Reinsurer related to any loss arising under the Coinsured
Policies or any matter contemplated under this Agreement, the Reinsurance
Agreements or the Services Agreement.

                  5.8.     Unfair Practices. The Company shall cooperate with
the Reinsurer in preserving and exercising all legal and contractual rights that
may be available to the Company against any person who shall "twist," rewrite,
or solicit the lapse or termination of, any of the Coinsured Policies, or who
shall otherwise engage in any unfair or deceptive acts or practices in
connection with the Coinsured Policies, which acts or practices have caused or
may result in deterioration of the block of Policies reinsured by the Reinsurer
or in injury to the Reinsurer's commercial interests. The Company shall have the
right to approve any action proposed to be taken by, on behalf of, or in the
name of, the Company under this Section 5.8, which approval shall not be
unreasonably withheld. The Reinsurer shall indemnify, defend and hold the
Company harmless from and against any Losses (as defined at Article IX hereof)
incurred by the Company as a result of actions taken by or at request of the
Reinsurer under this Section 5.8.

                  5.9.     Filings, Consents and Approvals. The parties will
take all commercially reasonable steps necessary or desirable, and shall proceed
diligently and in good faith, to obtain as promptly as practicable all
approvals, authorizations and clearances of governmental and regulatory
authorities and consents of Policyholders required of the Company and the
Reinsurer to consummate the transactions contemplated in this Agreement, the
Reinsurance Agreements and the Services Agreement, including, without
limitation, the Required Assumption Approvals, the Required Assumption Consents
and the Required Closing Date Approvals, and shall cooperate with each other and
provide such information and communications to such governmental and regulatory
authorities as the party responsible for obtaining such approvals may reasonably
request.

                  5.10.    HSR Act Filings. If required by law, the Company and
the Reinsurer shall, as promptly as practicable, file any Notification and
Report Forms under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the rules of the Federal Trade Commission ("FTC")
thereunder, with the FTC and the Antitrust Division of the U.S. Department of
Justice (the "Antitrust Division") in connection with the transactions
contemplated by this Agreement and the Reinsurance Agreements, and shall use
their best efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional information or
documentation. Each of the Company and the Reinsurer will furnish to the other
such necessary information and reasonable assistance as the other may request in
connection with its preparation of necessary filings or submissions to any
governmental or regulatory agency, including, without limitation, any filings
necessary under the provisions of the HSR Act.

                  5.11.    Conduct Pending Closing. From the date of this
Agreement to the Closing Date, (a) the Company shall use its best efforts to
conduct its affairs in such a manner so that, except as otherwise contemplated
or permitted by this Agreement, the Reinsurance Agreements and the Services
Agreement, the representations and warranties of the Company contained in
Article III hereof shall continue to be true and correct in all material
respects on and as of the Closing Date as if made on and as of the Closing Date;
(b) the Reinsurer shall use its best efforts to conduct its affairs in such a
manner so that, except as otherwise contemplated or permitted by

                                       11

                           Agreement for Reinsurance
<PAGE>

this Agreement, the Reinsurance Agreements and the Services Agreement, the
representations and warranties of the Reinsurer contained in Article IV hereof
shall continue to be true and correct in all material respects on and as of the
Closing Date as if made on and as of the Closing Date; (c) the Company shall
notify the Reinsurer promptly of any event, condition or circumstance occurring
from the date hereof through the Closing Date that would constitute a material
violation or breach of this Agreement by the Company; and (d) the Reinsurer
shall notify the Company promptly of any event, condition or circumstance
occurring from the date hereof through the Closing Date that would constitute a
material violation or breach of this Agreement by the Reinsurer.

                  5.12.    Further Assurances. Subject to the terms and
conditions of this Agreement, the Company and the Reinsurer will use their best
efforts to take, or cause to be taken, all actions or to do, or cause to be
done, all things or execute any documents reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, the Reinsurance Agreements and the Services Agreement. On and after
the Closing Date, the Company and the Reinsurer will take all appropriate action
and execute any documents, instruments or conveyances of any kind which may be
reasonably necessary or advisable to carry out any of the provisions hereof, the
Reinsurance Agreements or the Services Agreement.

                  5.13.    Use by the Reinsurer of the Company's Name, Logo or
Service Marks. Except as otherwise agreed upon in writing, the Reinsurer has not
acquired by means of this Agreement, the Reinsurance Agreements or the Services
Agreement or by any other means, the right to use the name, "CITIZENS, INC.
GROUP", "CITIZENS INSURANCE COMPANY OF AMERICA", "CITIZENS USA LIFE INSURANCE
COMPANY", "CITIZENS NATIONAL LIFE INSURANCE COMPANY OF ILLINOIS", "COMBINED
UNDERWRITERS LIFE INSURANCE COMPANY", "EXCALIBUR INSURANCE CORPORATION", "FIRST
ALLIANCE INSURANCE COMPANY", "LIFELINE UNDERWRITERS LIFE INSURANCE COMPANY,
MID-AMERICAN CENTURY LIFE INSURANCE COMPANY", SECURITY ALLIANCE INSURANCE
COMPANY", UNITED INTERNATIONAL LIFE INSURANCE COMPANY" OR "UNITED SECURITY LIFE
INSURANCE COMPANY" or any of the Company's service marks, trademarks, designs or
logos related to that name. The Reinsurer agrees that it will not use such name,
service marks, trademarks, designs or logos unless the Company shall have agreed
in writing to such use; provided, however, that the Reinsurer may utilize
existing forms of the Policies in processing Permitted Transactions under the
Policies after the Transition Date but not later than the applicable Assumption
Effective Date.

                  5.14.    Communications with Policyholders. All communications
with Policyholders by either the Company or the Reinsurer in connection with the
reinsurance of the Policies by the Reinsurer under the Reinsurance Agreements,
or the servicing of the Policies under the Services Agreement, including without
limitation the Assumption Certificates and the Service Notices, shall be in such
form as shall be mutually agreed upon by the parties hereto prior to any release
thereof, except for communications with Policyholders as required to service the
Policies in the ordinary course of business. The Company and the Reinsurer agree
to cooperate fully and promptly regarding the preparation and distribution of
any such communications to Policyholders.

                                       12

                           Agreement for Reinsurance
<PAGE>

                  5.15.    Expenses. Except as otherwise specifically provided
in this Agreement, the parties hereto shall each bear their own respective
expenses incurred in connection with the preparation, execution and performance
of this Agreement, the Reinsurance Agreements and the Services Agreement,
including without limitation all fees and expenses of counsel, actuaries and
accountants.

                  5.16.    Access by Regulators. Each party agrees to provide
access to all records and procedures relating to the Coinsured Policies to any
regulatory agency if such request is made.

                                   ARTICLE VI

                              CONDITIONS TO CLOSING

                  6.1.     Conditions to the Reinsurer's Obligations to Close.
The obligation of the Reinsurer to close the transactions contemplated under
this Agreement shall be subject to the fulfillment of the following conditions,
any one or more of which may be waived by the Reinsurer to the extent permitted
by law:

                           6.1.1.   Receipt of All Required Closing Date
         Approvals. All Required Closing Date Approvals shall have been
         received, and the Company shall have delivered to the Reinsurer a copy
         of any Required Closing Date Approval issued by the insurance
         regulatory authorities in its State of domicile.

                           6.1.2.   Truth of Representations and Warranties of
         Company. The representations and warranties of the Company contained in
         this Agreement shall be true and correct in all material respects on
         and as of the Closing Date.

                           6.1.3.   Performance of Covenants and Obligations of
         Company. The Company shall have performed and complied with all
         agreements, covenants, obligations and conditions required by this
         Agreement to be so performed or complied with by the Company at or
         before the Closing.

                           6.1.4.   Receipt of the Settlement Amount. The
         Settlement Amount shall have been paid to the Reinsurer.

                           6.1.5.   Execution and Delivery of Agreements. The
         Reinsurance Agreements and the Services Agreement shall have been
         executed by a duly authorized executive officer of the Company and
         delivered to the Reinsurer.

                           6.1.6.   Delivery of Listing of Policies. The Company
         shall have delivered to the Reinsurer a final listing of the Policies
         to be reinsured by the Reinsurer under the Reinsurance Agreements.

                  6.2.     Conditions to the Company's Obligations to Close. The
obligation of the Company to close the transactions contemplated under this
Agreement shall be subject to the

                                       13

                           Agreement for Reinsurance
<PAGE>

fulfillment of the following conditions, any one or more of which may be waived
by the Company to the extent permitted by law:

                           6.2.1.   Receipt of All Required Closing Date
         Approvals. All Required Closing Date Approvals shall have been
         obtained.

                           6.2.2.   Truth of Representations and Warranties of
         Reinsurer. The representations and warranties of the Reinsurer
         contained in this Agreement shall be true and correct in all material
         respects on and as of the Closing Date.

                           6.2.3.   Performance of Covenants and Obligations of
         Reinsurer. The Reinsurer shall have performed and complied with all
         agreements, covenants, obligations and conditions required by this
         Agreement to be so performed or complied with by the Reinsurer at or
         before the Closing.

                           6.2.4.   Receipt of Purchase Price. The Purchase
         Price shall have been duly credited to the Company in the calculation
         of the Settlement Amount transferred to the Reinsurer.

                           6.2.5.   Execution and Delivery of Agreements. The
         Reinsurance Agreements and the Services Agreement shall have been
         executed by a duly authorized executive officer of the Reinsurer and
         delivered to Company.

                                  ARTICLE VII

                   SURVIVAL OF REPRESENTATIONS AND WARRANTIES

         Except as otherwise expressly provided herein or therein, the
representations and warranties made by the Company and the Reinsurer in this
Agreement, the Reinsurance Agreements and the Services Agreement, or in any
certificate delivered by the Company or the Reinsurer pursuant hereto or
thereto, shall survive for a period of two years following the Closing Date;
provided, however, that the representations and warranties made by the Company
and the Reinsurer in Sections 3.1, 3.10, 4.1 and 4.3 shall survive indefinitely.

                                  ARTICLE VIII

                                   ARBITRATION

                  8.1.     Agreement to Arbitrate. It is the intention of the
parties that customs and usages of the business of insurance shall be given full
effect in the interpretation of this Agreement, the Reinsurance Agreements and
the Services Agreement. The parties shall act in all things with the highest
good faith. All disputes between the Reinsurer and the Company arising under
this Agreement, the Reinsurance Agreements and the Services Agreement on which
an amicable understanding cannot be reached will be decided by arbitration
between the parties at a location to be mutually agreed upon between the parties
or as designated by the arbitrators if

                                       14

                           Agreement for Reinsurance
<PAGE>

agreement as to a location cannot be reached by the parties. Notwithstanding any
other provision of this Article VIII, if either the Reinsurer or the Company
seeks, consents to, or acquiesces in the appointment of or otherwise becomes
subject to any trustee, receiver, liquidator or conservator (including any state
insurance regulatory agency or authority acting in such a capacity), the other
party shall not be obligated to resolve any claim, dispute or cause of action
under this Agreement by arbitration. Notwithstanding any other provision of this
Article VIII, nothing contained in this Agreement shall require arbitration of
any issue for which equitable or injunctive relief, including specific
performance, is sought.

                  8.2.     Method. The parties intend this Article VIII to be
enforceable in accordance with the Federal Arbitration Act (9 U.S.C. Section 1,
et seq.), including any amendments to that Act which are subsequently adopted,
notwithstanding any other choice of law provision set forth in this Agreement.
In the event that either party refuses to submit to arbitration as required
herein, the other party may request a United States Federal District Court to
compel arbitration in accordance with the Federal Arbitration Act. Both parties
consent to the jurisdiction of such court to enforce this article and to confirm
and enforce the performance of any award of the arbitrators. To initiate
arbitration, either party shall notify the other in writing in the manner set
forth in this Agreement for sending notices to the parties of its desire to
arbitrate, stating the nature of the dispute and the remedy sought, and
designating an arbitrator. The party to which the notice is sent shall respond
thereto in writing within thirty (30) days of its receipt of such notice. In
such response, the party shall also assert any claim, defense and other dispute
it may have against the party initiating arbitration, and which arises out of or
relates in any way to this Agreement, the Reinsurance Agreements or the Services
Agreement, and designate its arbitrator. If the second party fails to respond
within the time period set forth in this Section 8.2, or fails to designate its
arbitrator in its response, the party initiating arbitration shall appoint a
second arbitrator. The two arbitrators shall select a third arbitrator within
thirty (30) days of the designation of the second arbitrator. If they are unable
to agree upon the selection of the third arbitrator, they shall, within such
period, each name three (3) individuals of whom the other shall decline two (2),
and the decision of the third arbitrator shall be determined by drawing lots
from the two remaining designees. All arbitrators shall be active or retired
officers of life or health insurance companies and be unaffiliated in any way
with the parties and disinterested in the outcome of the arbitration. The
arbitrators shall have the power to determine all procedural rules for the
conduct of the arbitration, including but not limited to the production and
inspection of documents, the examination of witnesses and any other matter
relating to the conduct of the arbitration. The arbitrators shall interpret this
Agreement, the Reinsurance Agreements and the Services Agreement as an honorable
engagement and not merely as legal obligations between the parties. They shall
reach their decision from the standpoint of equity and the customs and practices
of the insurance industry, and may abstain from following the strict rules of
law; provided, however, that the arbitrators shall have no authority to award
punitive damages against or in favor of either party (except to reimburse a
party for extra-contractual or punitive damages that either the Company or the
Reinsurer has paid or is legally obligated to pay to third parties). The costs
of the arbitration (except legal fees of the parties) shall be split equally
between the parties, unless the arbitrators shall otherwise require in their
award. Each party shall pay its own legal fees in connection with the
arbitration, unless the arbitrators award legal fees and expenses of the
prevailing party as part of any award. Except as otherwise specifically provided
herein, the arbitration shall be conducted in accordance with rules established
by the American Arbitration Association. The decision, in writing, of the

                                       15

                           Agreement for Reinsurance
<PAGE>

arbitrators shall be final and binding upon both of the parties. Judgment may be
entered upon the final decision of the arbitrators in any court having
jurisdiction.

                                   ARTICLE IX

                                 INDEMNIFICATION

                  9.1.     Indemnification Under Reinsurance Agreements. The
parties agree to indemnify and defend each other and hold each other harmless
against all claims, losses, liabilities, damages, deficiencies, diminution in
value, costs and expenses, including interest, penalties, punitive or
extracontractual damages, and reasonable attorneys fees and disbursements
("Loss" or "Losses") arising under or in relation to the Policies as and to the
extent provided under the Reinsurance Agreements.

                  9.2.     Indemnification Under this Agreement. In addition to
the indemnification provided at Section 9.1 of this Agreement:

                  The Company agrees to indemnify the Reinsurer and hold it
harmless from and against Losses based upon or arising out of (i) the Company's
material breach of any representation, warranty, covenant or agreement under
this Agreement, and (ii) any Excluded Liabilities.

                  The Reinsurer agrees to indemnify the Company and hold it
harmless from and against Losses based upon or arising out of the Reinsurer's
material breach of any representation, warranty, covenant or agreement under
this Agreement.

                  9.3.     Notice of Claim. As soon as reasonably possible, but
in no event subsequent to thirty (30) days after receipt by an indemnified party
hereunder of written notice of any demand, claim or circumstances which, upon
the lapse of time, would give rise to a claim or the commencement (or threatened
commencement) of any action, proceeding or investigation (a "Claim") that may
result in a Loss, such indemnified party shall give notice thereof ("Claims
Notice") to the indemnifying party. The Claims Notice shall describe the Claim
in reasonable detail, and shall indicate the amount (estimated, if necessary) of
the Loss that has been or may be suffered by such indemnified party. The failure
of the indemnified party to give the Claims Notice within in the time provided
for herein shall not affect the indemnifying party's obligation under this
Article IX except if, and then only to the extent that, such failure materially
prejudices the indemnifying party or its ability to defend such Claim.

                  9.4.     Opportunity to Defend. Within thirty (30) days of
receipt of any Claims Notice given pursuant to Section 9.3, the indemnifying
party shall notify the indemnified party in writing of the acceptance of or
objection to the Claim and whether the indemnifying party will indemnify the
indemnified party and defend the same at the expense of the indemnifying party
with counsel selected by the indemnifying party (who shall be approved in
writing by the indemnified party, such approval not to be unreasonably
withheld); provided that the indemnified party shall at all times have the right
to fully participate in the defense of the Claim at its own expense or, as
provided hereinbelow, at the expense of the indemnifying party.

                                       16

                           Agreement for Reinsurance
<PAGE>

Failure by the indemnifying party to object in writing within such thirty (30)
day period shall be deemed to be acceptance of the Claim by the indemnifying
party. In the event that the indemnifying party objects to a Claim within said
thirty (30) days or does not object but fails to vigorously defend and appears
to be unable or unwilling to meet its indemnification obligations hereunder, the
indemnified party shall have the right, but not the obligation, to undertake the
defense, and to compromise and/or settle (in the exercise of reasonable business
judgment) the Claim, all at the risk and expense (including, without limitation,
reasonable attorneys fees and expenses) of the indemnifying party. Except as
provided in the preceding sentence, the indemnified party shall not compromise
and/or settle any Claim without the prior written consent of the indemnifying
party. If the Claim is one that cannot by its nature be defended solely by the
indemnifying party, the indemnified party shall make available all information
and assistance that the indemnifying party may reasonably request, provided that
any associated expense shall be paid by the indemnifying party.

                  9.5.     Limitation on Indemnification. Neither party shall be
entitled to indemnification unless the party seeking indemnification makes claim
therefore pursuant to the procedures set forth in Section 9.3 of this Agreement.

                                    ARTICLE X

                                   TERMINATION

                  10.1.    Termination. This Agreement may be terminated as
provided in this Section 10.1.

                           10.1.1.  This Agreement may be terminated at any time
         before the Closing, by mutual written agreement of the Company and the
         Reinsurer.

                           10.1.2.  The Reinsurer may terminate this Agreement
         at any time prior to Closing for material breach by the Company of any
         of the terms or conditions of this Agreement or for failure of any
         condition to Closing, the satisfaction of which is solely within the
         Company's control; provided, however, that the Company shall have ten
         (10) days to cure such breach or satisfy such condition after receipt
         of proper notice by the Company from the Reinsurer.

                           10.1.3.  The Company may terminate this Agreement at
         any time prior to Closing for material breach by the Reinsurer of any
         of the terms or conditions of this Agreement or for failure of any
         condition to Closing, the satisfaction of which is solely within the
         Reinsurer's control; provided, however, that the Reinsurer shall have
         ten (10) days to cure such breach or satisfy such condition after
         receipt of proper notice by the Reinsurer from the Company.

                           10.1.4.  Either the Company or the Reinsurer may
         terminate this Agreement at any time prior to Closing for failure of
         any condition to Closing, the satisfaction of which is not within
         either the Company or the Reinsurer's control, or otherwise chargeable
         to any act or omission to act on the part of either party.

                                       17

                           Agreement for Reinsurance
<PAGE>

                           10.1.5.  Either the Company or the Reinsurer may
         terminate this Agreement if Closing hereunder has not occurred by June
         30, 2004; provided, however, if Closing has not occurred due to the
         lack of receiving all Required Closing Date Approvals, the parties
         shall extend the Closing Date an additional sixty (60) days.

                  10.2.    Effect of Termination. If this Agreement is
terminated pursuant to Sections 10.1.1, 10.1.4 or 10.1.5, this Agreement will
forthwith become null and void, and there will be no liability on the part of
the Company or the Reinsurer to the other hereunder. In the event of termination
under Sections 10.1.2 or 10.1.3, the parties shall be deemed to have reserved
all of their respective rights and remedies hereunder and at law or in equity.

                                   ARTICLE XI

                            MISCELLANEOUS PROVISIONS

                  11.1.    Notice. Any and all notices and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given when (a) received by the receiving party if
mailed via United States registered or certified mail, return receipt requested,
(b) received by the receiving party if mailed by United States overnight express
mail, (c) sent by facsimile or telecopy machine, followed by confirmation mailed
by United States first-class mail or overnight express mail, or (d) delivered in
person or by commercial courier to the parties at the following addresses:

                  If to the Company, to:

                           CITIZENS INSURANCE COMPANY OF AMERICA
                           400 East Anderson Lane
                           Austin, TX 78752
                           Attention: Mark Oliver, President
                           FAX No.: (___) ___-____

                  With a copy to (which shall not constitute notice):

                           [Counsel to CITIZENS INSURANCE COMPANY OF AMERICA]
                           ________________________________
                           ________________________________
                           ________________________________
                           FAX No.:  (___) ___-____

                                       18

                           Agreement for Reinsurance
<PAGE>

                  If to the Reinsurer, to:

                           Texas International Life Insurance Company
                           Bridgepoint Square, Building One
                           6300 Bridgepoint Parkway, Suite 340
                           Austin, TX 78730
                           Attention: Larry J. Doze, President
                           FAX No.: (512) 342-1892

                  With a copy to (which shall not constitute notice):

                           David D. Knoll, Esq.
                           Winstead Sechrest & Minick, P.C.
                           910 Travis St., Suite 2400
                           Houston, TX 77002-5895
                           FAX No.: (713) 650-2400

Either party may change the names or addresses where notice is to be given by
providing notice to the other party of such change in accordance with this
Section 11.1.

                  11.2.    Entire Agreement. This Agreement shall constitute the
entire Agreement between the parties with respect to the business being
reinsured hereunder. There are no other understandings between the parties other
than as expressed in this Agreement. This Agreement, including the Exhibits and
Schedules thereto including without limitation the Reinsurance Agreements and
the Services Agreement, constitutes the sole and entire agreement between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior discussions and agreements between the parties with respect to the subject
matter hereof, which are merged with and into this Agreement.

                  11.3.    Assignment. This Agreement shall not be assigned by
either of the parties hereto without the prior written approval of the other
party.

                  11.4.    Waivers and Amendments. Any term or condition of this
Agreement may be waived at any time by the party that is entitled to the benefit
thereof. Such waiver must be in writing and must be executed by an executive
officer of such party. A waiver on one occasion will not be deemed to be a
waiver of the same or any other term or condition on a future occasion. This
Agreement may be modified or amended only by a writing duly executed by an
executive officer of the Company and the Reinsurer, respectively.

                  11.5.    No Third Party Beneficiaries. The terms and
provisions of this Agreement are intended solely for the benefit of the Company
and the Reinsurer and their permitted successors and assigns, and it is not the
intention of the parties to confer rights as a third-party beneficiary to this
Agreement upon any other person, except as may be contemplated in the Assumption
Agreement.

                  11.6.    Public Announcements. At all times at or before the
Closing, the Company and the Reinsurer will each consult with the other before
issuing or making any reports, statements or releases to the public with respect
to this Agreement or the transactions

                                       19

                           Agreement for Reinsurance
<PAGE>

contemplated hereby and will use good faith efforts to obtain the other party's
approval of the form, content and timing of any public report, statement or
release to be made solely on behalf of a party. If the Company and the Reinsurer
are unable to agree upon or approve the form, content and timing of any such
public report, statement or release and such report, statement or release is, in
the opinion of legal counsel to the party, required by law or by legal
disclosure obligations, then such party may make or issue the legally required
report, statement or release.

                  11.7.    Confidentiality. Each of the Company and the
Reinsurer will hold, and will cause its respective officers, directors,
employees, agents, consultants, attorneys and other representatives to hold, in
strict confidence, unless compelled to disclose by judicial or administrative
process (including, without limitation, in connection with obtaining any
Required Closing Date Approval or Required Assumption Approval) or by other
requirements of law, all confidential documents and confidential information
concerning the other party furnished to it by the other party or such other
party's officers, directors, employees, agents, consultants, attorneys or
representatives in connection with this Agreement or the transactions
contemplated hereby ("Confidential Information"), except to the extent that such
documents or information can be shown to have been (a) previously lawfully known
by the party receiving such documents or information, (b) in the public domain
through no fault of the receiving party, or (c) later acquired by the receiving
party from other sources not themselves bound by, and in breach of, a
confidentiality agreement. Neither the Company nor the Reinsurer will disclose
or otherwise provide any such Confidential Information to any other person,
except to that party's respective auditors, actuaries, attorneys, financial
advisors and other consultants who need access to such Confidential Information
in connection with this Agreement and the transactions contemplated herein. If
this Agreement is terminated pursuant to Article X, each of the parties will
return to the other party all Confidential Information furnished to that party
by the other party, and retrieve and destroy all copies of such Confidential
Information distributed to any other person.

                  11.8.    Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Colorado, including the
arbitration provisions as set forth in Article VIII, without regard to its
conflicts of law doctrine.

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

                  11.10.   Headings. The headings in this Agreement have been
inserted for convenience and do not constitute matter to be construed or
interpreted in connection with this Agreement.

                  11.11.   Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future law or
if determined by a court of competent jurisdiction to be unenforceable, and if
the rights or obligations of the Company or the Reinsurer under this Agreement
will not be materially and adversely affected thereby, such provision shall be
fully severable, and this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.

                                       20

                           Agreement for Reinsurance
<PAGE>

                                  ARTICLE XII
                               LEGAL REQUIREMENTS

                  12.1.    Compliance with Laws. The Reinsurer agrees to comply
with all applicable local, state, and federal laws, rules and regulations in the
performance of its obligations under this Agreement. The Reinsurer will
indemnify the Company for all Losses arising from any actions, legal or
regulatory, as a result of the Reinsurer's failure to comply as set forth in
this Section 12.1 and as specifically delineated hereafter in Sections 12.2
through 12.4 (and its subsections).

                  12.2.    USA Patriots Act. The Reinsurer agrees to comply with
the provisions and obligations of the USA Patriots Act of 2001 and such rules
and regulations as may from time to time be promulgated in relation thereto.

                  12.3.    Gramm-Leach-Bliley Act. The Reinsurer agrees to
protect the privacy of the Company's employees, Producers, Policyholders,
licensors and contractors, all personal information relating to any such
individual which may be shared with, or obtained by, the Reinsurer in its
performance under this Agreement and the Reinsurance Agreements shall be
considered confidential personal information. Therefore, the Reinsurer shall
comply with all applicable provisions of the Gramm-Leach-Bliley Act with respect
to this Agreement and the Reinsurance Agreements.

                  12.4.    Health Insurance Portability and Accountability Act
of 1996 ("HIPAA"). The Reinsurer agrees to comply with the provisions and
obligations of the HIPAA and such rules and regulations as may from time to time
be promulgated in relation thereto, including but not limited to the obligations
under the Administrative Simplification Provisions of HIPAA relating to privacy,
security and electronic transactions (including the ability to receive and
transmit all required electronic transactions). More particularly with regard to
the regulations set forth in 45 C.F.R. Parts 160 and 164 relating to privacy and
confidentiality, the Reinsurer agrees, effective April 14, 2003, or the date the
Company has to be in compliance with the HIPAA regulations if later, as follows:

                  12.5.    The use and/or disclosure of Protected Health
Information shall be limited to only those purposes that are necessary to
perform its obligations under the Reinsurance Agreements. The Reinsurer shall
disclose the Protected Health Information only as expressly approved in writing
by the Company.

                                    (a) The Reinsurer shall use Protected Health
                           Information only for the servicing of Coinsured
                           Policies as set forth in Article IV of the
                           Coinsurance Agreement.

                                    (b) The Reinsurer shall disclose the
                           Protected Health Information only to the Company or
                           as necessary to fulfill its obligations to the
                           Company under this Agreement and the Reinsurance
                           Agreements.

                           12.5.2.  Unless otherwise limited by this Agreement,
         the Reinsurer may also:

                                       21

                           Agreement for Reinsurance
<PAGE>

                                    (a) Use the Protected Health Information in
                           its possession for the proper management and
                           administration of the Reinsurer or to carry out its
                           legal responsibilities.

                                    (b) Disclose the Protected Health
                           Information in its possession for the proper
                           management and administration of the Reinsurer or to
                           carry out its legal responsibilities, if such
                           disclosure is required by law or is addressed in this
                           Agreement and such disclosure is performed in
                           accordance with applicable law.

                           12.5.3.  The Reinsurer may not use or disclose
         Protected Health Information in any manner that would constitute a
         violation of 45 C.F.R. Parts 160 and 164 if used or disclosed by the
         Company.

                           12.5.4.  The Reinsurer agrees to not use or further
         disclose Protected Health Information other than as authorized by this
         Agreement or as required by law.

                           12.5.5.  The Reinsurer shall use appropriate
         safeguards to prevent uses or disclosures of Protected Health
         Information other than as provided for by this Agreement.

                           12.5.6.  If the Reinsurer becomes aware of any use or
         disclosure of Protected Health Information not provided for by this
         Agreement, it shall report such use or disclosure to the Company within
         three (3) business days of gaining such knowledge, and shall
         immediately implement remedial measures to prevent further uses or
         disclosures not permitted by this Agreement or by law.

                           12.5.7.  The Reinsurer shall require that its agents,
         including subcontractors, to whom it provides Protected Health
         Information under this Agreement, agree to the same restrictions and
         conditions that apply to Reinsurer's with respect to such information.

                           12.5.8.  Within fifteen (15) days of a request by the
         Company, the Reinsurer agrees to, and shall, comply with an
         individual's request to accommodate the individual's access to his/her
         Protected Health Information.

                           12.5.9.  Within fifteen (15) days of a request by the
         Company, the Reinsurer agrees to, and shall, comply with the Company's
         request to make amendments to Protected Health Information. The
         Reinsurer shall promptly incorporate any such amendments into the
         Protected Health Information. In the event an individual contacts the
         Reinsurer directly about making amendments to Protected Health
         Information, the Reinsurer will not make any amendments to the
         individual's Protected Health Information but shall forward such
         request to the Company within three (3) business days of such contact,
         except that the Reinsurer may address the individual's request directly
         if such individual is a Policyholder under an Assumed Policy.

                           12.5.10. The Reinsurer shall keep a record of
         disclosures of Protected Health Information and agrees to make
         information regarding disclosures of Protected Health Information
         available to the Company within fifteen (15) days of a

                                       22

                           Agreement for Reinsurance
<PAGE>

         request by the Company. The Reinsurer shall provide, at a minimum, the
         following information: (i) the date of disclosure; (ii) the name of the
         entity or person who received the Protected Health Information, and the
         address of such entity or person, if known; (iii) a brief description
         of the Protected Health Information disclosed; (iv) a brief statement
         regarding the purpose and explanation of the basis of such disclosure
         and (v) the names of all individuals whose protected health information
         was disclosed.

                           12.5.11. The Reinsurer agrees to comply with any
         other restrictions on the use or disclosure of Protected Health
         Information that the Company may from time to time request or as
         otherwise imposed by applicable law, rule, regulation, order or decree.

                           12.5.12. The Reinsurer shall make its internal
         practices, books and records relating to uses and disclosures of
         Protected Health Information available to the Company, or to the
         Secretary of the U.S. Department of Health and Human Services or
         designee, for purposes of determining the Company's and Reinsurer's
         compliance with 45 C.F.R. Parts 160 and 164.

                           12.5.13. In order to assure this Agreement is
         consistent with HIPAA, the Reinsurer agrees that this Agreement and
         Addenda thereto may be further amended from time to time upon written
         notice from the Company to the Reinsurer as to the revisions required
         to make this Agreement consistent with HIPAA.

                           12.5.14. Upon the termination of this Agreement, the
         Reinsurer shall, at the Company's instruction, return or destroy all
         Protected Health Information and will retain no copies of such
         information. Together with the destruction of all Protected Health
         Information, the Reinsurer shall deliver a certificate executed by an
         executive officer of the Reinsurer certifying the destruction of all
         Protected Health Information, which the Company may rely upon as a
         representation and warranty of the Reinsurer. If such return or
         destruction of Protected Health Information is not feasible as approved
         by the Company, the Reinsurer agrees that the provisions of this
         Article XII are extended beyond termination to the Protected Health
         Information, and Reinsurer shall limit all further uses and disclosures
         to those purposes that make the return or destruction of the Protected
         Health Information infeasible.

                  12.6.    Indemnification. In addition to any indemnification
provision in this Agreement, the Reinsurer agrees to indemnify, defend and hold
the Company and each of its officers, directors, and employees harmless from any
alleged claim or penalty against the Company or any of its officers, directors
or employees arising from the breach of this Article XII.

                  12.7.    Defined Terms. For purposes of this Article 12,
"Protected Health Information," as defined at 45 C.F.R. Section 164.501, and as
may be periodically revised or amended by the U.S. Department of Health and
Human Services, the U.S. Congress or other federal agency, means information
that is received by the Reinsurer from, created by the Reinsurer for or received
by Reinsurer on behalf of the Company and is information about an individual
which relates to the past, present or future physical or mental health or
condition of an individual; the

                                       23

                           Agreement for Reinsurance
<PAGE>

provision of health care to an individual; or the past, present, or future
payment for the provision of health care to an individual. "Individual" shall
have the same meaning as the term "individual" in 45 CFR 164.501 and shall
include a person who qualifies as a personal representative in accordance with
45 CFR 164.502(g). Protected Health Information also either identifies the
individual or there is a reasonable basis to believe the information can be used
to identify the individual. Protected Health Information pertains to both living
and deceased individuals.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 9th day of March, 2004.

                                   CITIZENS INSURANCE COMPANY OF AMERICA

                                   By: /s/ Mark Oliver
                                       ---------------------------------
                                       Mark Oliver, President

                                   TEXAS INTERNATIONAL LIFE
                                   INSURANCE COMPANY

                                   By: /s/ Larry J. Doze
                                       ---------------------------------
                                       Larry J. Doze, President

                                       24

                           Agreement for Reinsurance
<PAGE>

                                  SCHEDULE 1.2

                              ASSUMPTION AGREEMENT

                                   (attached)

<PAGE>

                                  SCHEDULE 1.8

                              COINSURANCE AGREEMENT

                                   (attached)

<PAGE>

                                  SCHEDULE 1.25

                        ADMINISTRATIVE SERVICES AGREEMENT

                                   (attached)

<PAGE>

                                  SCHEDULE 3.9

                     SCHEDULE OF LITIGATION AGAINST COMPANY

                                      None

<PAGE>

                                  SCHEDULE 4.1
                   TEXAS INTERNATIONAL LIFE INSURANCE COMPANY
                         JURISDICTIONS IN WHICH LICENSED

                                    Louisiana
                                      Texas

<PAGE>

                        ASSUMPTION REINSURANCE AGREEMENT

                                     between

                      CITIZENS INSURANCE COMPANY OF AMERICA

                                Denver, Colorado

                                       and

                   TEXAS INTERNATIONAL LIFE INSURANCE COMPANY

                                  Austin, Texas

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                  Page
                                                                                                                  ----
<S>                                                                                                               <C>
ARTICLE I  DEFINITION OF TERMS................................................................................      1
         1.1  Assumed Policy..................................................................................      1
         1.2  Assumption Certificate..........................................................................      1
         1.3  Assumption Effective Date.......................................................................      1
         1.4  Coinsurance Agreement...........................................................................      1
         1.5  Coinsured Policies..............................................................................      2
         1.6  Existing Reinsurance Coverage...................................................................      2
         1.7  Novation........................................................................................      2
         1.8  Policies........................................................................................      2
         1.9  Policyholder....................................................................................      2
         1.10  Producer.......................................................................................      2
         1.11  Producer Agreement.............................................................................      2
         1.12  Producer Payments..............................................................................      2
         1.13  Required Assumption Approvals..................................................................      2
         1.14  Required Assumption Consents...................................................................      2
         1.15  Statutory Reserves and Liabilities.............................................................      3
         1.16  Purchase Consideration.........................................................................      3

ARTICLE II  BASIS OF REINSURANCE..............................................................................      3
         2.1  Assumption Reinsurance..........................................................................      3
         2.2  Conditions of Reinsurance; Regulatory Approvals.................................................      3
         2.3  Effect of Reinsurance...........................................................................      4

ARTICLE III  UNDERTAKINGS OF REINSURER........................................................................      4
         3.1  Policy Administration...........................................................................      4
         3.2  Premium Payments; Negotiation of Checks.........................................................      4
         3.3  Producer Payments...............................................................................      5
         3.4  Assumption Certificates.........................................................................      5
         3.5  Reserves........................................................................................      5
         3.6  Premium Taxes...................................................................................      5
         3.7  Forwarding Checks and Correspondence............................................................      5

ARTICLE IV  INDEMNIFICATION...................................................................................      6
         4.1  Reinsured Claims................................................................................      6
         4.2  Extracontractual Damages........................................................................      6
         4.3  Cooperation.....................................................................................      6
         4.4  Indemnification.................................................................................      6

ARTICLE V  GENERAL PROVISIONS.................................................................................      6
         5.1  Notices.........................................................................................      6
         5.2  Confidentiality.................................................................................      7
         5.3  Misunderstandings and Oversights................................................................      7
         5.4  Reinstatements..................................................................................      7
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                                               <C>
         5.5  Entire Agreement................................................................................      7
         5.6  Assignment......................................................................................      7
         5.7  Waivers and Amendments..........................................................................      7
         5.8  Law Governing...................................................................................      7
         5.9  Counterparts....................................................................................      7
         5.10  Severability...................................................................................      8
         5.11  Schedules and Paragraph Headings...............................................................      8
         5.12  Third Party Beneficiaries......................................................................      8
         5.13  Tax Provisions.................................................................................      8
</TABLE>

                                       ii

<PAGE>

                        ASSUMPTION REINSURANCE AGREEMENT

         This Assumption Reinsurance Agreement dated as of the date set forth
below, is made and entered into by and between CITIZENS INSURANCE COMPANY OF
AMERICA, a Colorado stock life insurance company (hereinafter referred to as the
"Company") and TEXAS INTERNATIONAL LIFE INSURANCE COMPANY, a Texas stock life
insurance company (hereinafter referred to as the "Reinsurer").

         WHEREAS, the Company is the issuer of certain Coinsured Policies (as
defined herein) which have been reinsured by the Reinsurer under a certain
Coinsurance Agreement (as defined herein) of even date herewith; and

         WHEREAS, the Company and the Reinsurer have entered into a certain
Agreement for Reinsurance dated of even date herewith (the "Master Agreement")
pursuant to which the Company and the Reinsurer have agreed to enter into this
Agreement and to reinsure the Coinsured Policies on the terms and conditions
stated herein;

         NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, and in reliance upon the representations, warranties,
conditions and covenants contained herein and in the Master Agreement, and
intending to be legally bound hereby, the Company and the Reinsurer hereby agree
as follows:

                                   ARTICLE I
                               DEFINITION OF TERMS

         Capitalized words and terms used and not otherwise defined herein shall
have the meaning given in the Master Agreement. The other capitalized words and
terms used herein shall have the meaning given below.

         1.1      Assumed Policy. Each Coinsured Policy which has been reinsured
and assumed by the Reinsurer pursuant to the terms and provisions of this
Agreement.

         1.2      Assumption Certificate. The certificate to be issued by the
Reinsurer to the Policyholder of any Coinsured Policy that is reinsured on an
assumption reinsurance basis under the terms and provisions of this Agreement,
and which shall be in substantially the form as set forth on SCHEDULE 1.2 to
this Agreement and made a part hereof, as modified by and approved by various
state insurance regulatory authorities.

         1.3      Assumption Effective Date. The date, set forth in the
Assumption Certificate issued by the Reinsurer with respect to a Coinsured
Policy, upon which the Coinsured Policy shall be assumed by the Reinsurer on an
assumption reinsurance basis pursuant to this Agreement, which shall not be
earlier than either: (i) February 28, 2004, or (ii) the date on which all
Required Assumption Approvals and Required Assumption Consents have been
obtained in the state where such Coinsured Policy was issued or delivered.

         1.4      Coinsurance Agreement. The coinsurance reinsurance agreement
entered into between the Company and the Reinsurer which provides for indemnity
reinsurance of the

                                       1
<PAGE>

Company's risks under the Coinsured Policies by the Reinsurer on a 100%
quota-share plan of coinsurance.

         1.5      Coinsured Policies. All Policies which have been reinsured by
the Reinsurer pursuant to the terms of the Coinsurance Agreement, including any
reinstated Policies, and which are in force and effect as of the applicable
Assumption Effective Date.

         1.6      Existing Reinsurance Coverage. All contracts, agreements and
treaties of reinsurance between (a) the Company and/or the Reinsurer and (b) any
third-party reinsurer that (i) are in force and effect on the applicable
Assumption Effective Date and (ii) cover any risks associated with the Coinsured
Policies.

         1.7      Novation. The substitution of the Reinsurer for the Company
under an Assumed Policy with the result that the Reinsurer becomes directly
liable to the Policyholder as of the Assumption Effective Date and the Company's
liability to the Policyholder under such Assumed Policy is extinguished.

         1.8      Policies. All of the Coinsured Policies that are (i)
identified by the policy form number and/or plan code at Schedule 1.8 hereto and
(ii) issued or reinstated on or after the Coinsurance Effective Date and in
force and effect as of the applicable Assumption Effective Date.

         1.9      Policyholder. Any individual or entity which is the owner of a
Coinsured Policy or which has the right to terminate or lapse the Coinsured
Policy, effect changes of beneficiary, coverage limits, add or terminate persons
covered under such Coinsured Policy or direct any other changes in such
Coinsured Policy.

         1.10     Producer. Any agent, broker, representative, or sub-agent of
any such person (i) having a Producer Agreement with the Company and (ii) being
entitled to receive any Producer Payments from the Company for the solicitation,
sale, marketing, production or servicing of any of the Coinsured Policies.

         1.11     Producer Agreement. Any written agreement, contract,
understanding or arrangement between the Company and any Producer, including any
assignments of compensation thereunder, and relating to the solicitation, sale,
marketing, production or servicing of any of the Coinsured Policies.

         1.12     Producer Payments. Any expense allowance, commission,
overriding commission, service fee or other compensation payable by the Company
to a Producer pursuant to a Producer Agreement.

         1.13     Required Assumption Approvals. The approvals of any insurance
regulatory authorities that may be required in connection with the reinsurance
of the Coinsured Policies by the Reinsurer on an assumption reinsurance basis
pursuant to this Agreement, including the approval of the Assumption
Certificates to be issued by the Reinsurer to the Policyholders of any Assumed
Policies.

         1.14     Required Assumption Consents. Any consent of any Policyholder
to the assumption of a Coinsured Policy by the Reinsurer on an assumption
reinsurance basis that may

                                       2
<PAGE>

be required under applicable insurance laws or regulations in any jurisdiction
in which the Coinsured Policies were issued or, as applicable, where such
Policyholders reside.

         1.15     Statutory Reserves and Liabilities. The sum of all of the
reserves, deposit fund liabilities (i.e., pre-paid premium, benefits left on
deposit) and liabilities maintained by the Company for the Coinsured Policies,
including liabilities for dividends and coupons payable in the next calendar
year which are required under (a) the terms of the Coinsured Policies and (b)
the reserve requirements, statutory accounting rules and actuarial principles
applicable to the Company under the law of each state of domicile and consistent
with the methodologies and assumptions used by the Company in calculating
reserves and liabilities for the Coinsured Policies on its latest annual
statutory financial statements filed with the insurance regulatory authority in
its state of domicile and as listed in Schedule 3.1 of the Coinsurance
Reinsurance Agreement.

         1.16     Purchase Consideration. In addition to the Statutory Reserve
and Liabilities that will be paid as part of the Settlement Amount that is
payable by the Company to the Reinsurer in connection with the reinsurance of
the Policies under this Agreement, an additional part of the Purchase
Consideration shall be the Profit-sharing formula shown in Schedule 1.16.

                                   ARTICLE II
                              BASIS OF REINSURANCE

         2.1      Assumption Reinsurance. From time to time after the date of
this Agreement, effective as of the applicable Assumption Effective Date, and
subject to any Existing Reinsurance Coverage, the Company hereby sells, cedes,
transfers to, assigns and reinsures with the Reinsurer and the Reinsurer hereby
purchases, undertakes, reinsures and assumes, by means of assumption
reinsurance, all of the contractual rights, obligations, liabilities and risks
of the Company under or with respect to the Coinsured Policies then being
assumed. It is the intent of the parties to this Agreement to accomplish, as of
the applicable Assumption Effective Date, a complete transfer of all of the
Company's contractual rights, obligations, liabilities and risks with respect to
the Coinsured Policies then being assumed to the Reinsurer, with the result that
the Reinsurer, as transferee, in all respects and conditions, shall succeed the
Company as the insurer under the terms and provisions of each of the Assumed
Policies, as though the Reinsurer had originally issued such Assumed Policies,
and to transfer to the Reinsurer, as administrator, full and complete
responsibility for servicing and administering the Assumed Policies in
accordance with the terms and conditions of this Agreement and the Assumed
Policies. Upon the Assumption Effective Date, all assets supporting the
Statutory Reserves and Liabilities with respect to each such Assumed Policy
shall be and become the sole and exclusive property of the Reinsurer. No
consideration shall be due from the Reinsurer to the Company upon the assumption
of any Coinsured Policies on an assumption reinsurance basis under the terms and
provisions of this Agreement, and no additional reserves shall be transferred by
the Company to the Reinsurer in connection therewith.

         2.2      Conditions of Reinsurance; Regulatory Approvals. Consummation
of the reinsurance contemplated by this Agreement with respect to any Coinsured
Policy is subject to and contingent upon receipt by the Reinsurer of all
Required Assumption Approvals and Required Assumption Consents with respect to
such Coinsured Policy. The Reinsurer shall be

                                       3
<PAGE>

responsible for obtaining all Required Assumption Approvals and for obtaining
all Required Assumption Consents. Each party shall use its best efforts to
assist the other party in obtaining the Required Assumption Approvals and the
Required Assumption Consents. In the event the Reinsurer is unable to obtain any
Required Assumption Approval or Required Assumption Consent with respect to a
Coinsured Policy, the Coinsured Policy will continue to be reinsured by the
Reinsurer under the terms and provisions of the Coinsurance Agreement. The
Reinsurer shall, as it obtains the Required Assumption Approvals and the
Required Assumption Consents, provide the Company with prompt notice of such
approvals and the assumption of the Coinsured Policies under the terms and
provisions of this Agreement.

         2.3      Effect of Reinsurance. The reinsurance effected by this
Agreement shall have the effect of creating a Novation under all of the Assumed
Policies in accordance with each of the terms and conditions thereof, and
subject to all rights, privileges, defenses, offsets, cross-actions and
counterclaims to which the Company would have been entitled had it continued to
act as the insurer thereunder. It is expressly understood and agreed by the
parties to this Agreement that no such rights, privileges, defenses, offsets,
cross-actions or counterclaims are waived by the execution of this Agreement or
the consummation of the transactions contemplated herein, and that the Reinsurer
shall be fully subrogated to all such rights, privileges, defenses, offsets,
cross-actions and counterclaims. On the applicable Assumption Effective Date,
the Reinsurer shall be the successor of the Company with respect to the Assumed
Policy, and such Assumed Policy shall be the direct obligation of the Reinsurer,
and the Company shall have no further rights or liability thereunder. The
Policyholder and any persons insured under the Assumed Policy shall thereafter
disregard the Company as a party to the Assumed Policy and treat the Reinsurer
as if it had been originally obligated under the Assumed Policy. On and after
the applicable Assumption Effective Date, the Policyholder and the insured or
beneficiary under any Assumed Policy shall have the right to file claims for
benefits under the Assumed Policy directly with the Reinsurer, and shall have a
direct right of action against the Reinsurer therefore. Any payments for
benefits made under any Assumed Policy by the Company or by the Reinsurer on
behalf of the Company under the Coinsurance Agreement prior to the applicable
Assumption Effective Date shall be deemed to have been made by the Reinsurer for
purposes of determining any maximum benefits payable under any of the Assumed
Policies.

                                  ARTICLE III
                            UNDERTAKINGS OF REINSURER

         3.1      Policy Administration. On and after the applicable Assumption
Effective Date, the Reinsurer shall assume all responsibility for, and agrees to
undertake and perform all servicing and administration of the Assumed Policies,
including without limitation, the payment of all allowable claims for benefits
under the Assumed Policies and the investigation, adjustment, appraisal, defense
or settlement thereof, at the Reinsurer's sole cost and expense; billing and
collection of premiums under the Assumed Policies; preparation of policy
changes, endorsements, issuance of conversion policies, and such other
administrative services as the Reinsurer, in its sole discretion, deems
necessary, appropriate, or lawful in connection with the Assumed Policies, as
though such Assumed Policies were originally issued as direct insurance
obligations of the Reinsurer.

         3.2      Premium Payments; Negotiation of Checks. Upon and after the
applicable Assumption Effective Date, all premium payments under the Assumed
Policies shall be the sole property of the Reinsurer. The Reinsurer shall be
authorized to endorse for payment all checks,

                                       4
<PAGE>

drafts, and money orders payable to the Company with respect to premiums payable
on the Assumed Policies. Effective as of the applicable Assumption Date, the
Company hereby assigns all of its rights and privileges, to the extent permitted
by law, to draft or debit the accounts of any Policyholders for premiums due
under the Assumed Policies pursuant to existing pre-authorized bank draft or
electronic fund transfer arrangements between the Company and such
Policyholders.

         3.3      Producer Payments. On and after the applicable Assumption
Effective Date, the Reinsurer shall assume the liability of the Company for
Producer Payments for premiums collected and received by the Reinsurer for any
periods after the applicable Assumption Effective Date. The Reinsurer shall be
entitled to exercise all rights of the Company relating to the Assumed Policies
under the terms of the Producer Agreements, including without limitation, any
rights to suspend or terminate Producer Payments which relate to the Assumed
Policies to any Producer for any reason or cause set forth in the Producer
Agreement, and effective as of the applicable Assumption Effective Date, the
Company hereby transfers and assigns to the Reinsurer all of its rights under
such Producer Agreements, but only to the extent such rights thereunder relate
to the Assumed Policies. The Reinsurer shall have the right to appoint any
Producer as an agent of the Reinsurer for the purpose of providing services to
any of the Policyholders of the Assumed Policies. The Reinsurer further agrees
to honor all properly executed assignments of Producer Payments by Producers,
and to provide directly to all Producers customary reports of Producer Payments
paid and an annual report of earnings at year end. Any liability for Producer
Payments not set forth in the Producer Agreements furnished by the Company to
the Reinsurer shall remain the obligation of the Company, and the Reinsurer
shall be indemnified and held harmless by the Company for any such Producer
Payments to Producers in excess of that set forth in the Producer Agreements.

         3.4      Assumption Certificates. As promptly as possible after the
receipt of any Required Assumption Approvals, the Reinsurer shall issue to each
of the Policyholders of the Assumed Policies an Assumption Certificate, and
provide satisfactory evidence thereof to the Company. The Assumption
Certificates shall be effective on the applicable Assumption Effective Date, and
shall be mailed to each Policyholder's last known address of record furnished to
the Reinsurer by the Company.

         3.5      Reserves. The Reinsurer agrees that, on and after the
applicable Assumption Effective Date, it will establish and maintain all
Statutory Reserves and Liabilities as may be required under the terms of the
Assumed Policies and the applicable statutes and regulations of its state of
domicile.

         3.6      Premium Taxes. Subject to Sections 4.6 and 4.7 of the
Coinsurance Agreement, the Company shall be liable for all premium taxes, State
Guaranty Fund assessments and other state regulatory assessments on premiums
received in connection with the Coinsured Policies prior to the applicable
Assumption Effective Date. On and after the applicable Assumption Effective
Date, the Reinsurer shall be and shall remain liable for payment of premium
taxes and State Guaranty Fund assessments on premiums received under the Assumed
Policies on and after the applicable Assumption Effective Date.

         3.7      Forwarding Checks and Correspondence. On and after the
applicable Assumption Effective Date, all notices, claims and correspondence
received by the Company pertaining to the Assumed Policies, including
applications for reinstatements of lapsed policies, will be

                                       5
<PAGE>

forwarded promptly by the Company to the Reinsurer. All checks, drafts or money
orders held or received by the Company for premiums due under the Assumed
Policies shall be properly endorsed to the Reinsurer and forwarded promptly to
the Reinsurer by the Company, or shall be deposited by the Company which shall,
on a weekly basis, issue and forward its checks to the Reinsurer for the amount
of premiums received and deposited with respect to the Assumed Policies,
together with a listing of the items received in a format and with such detail
that the Reinsurer can utilize to apply the premiums to the correct accounts.

                                   ARTICLE IV
                                 INDEMNIFICATION

         4.1      Reinsured Claims. All claims under the Assumed Policies on and
after the applicable Assumption Effective Date shall be the responsibility of
the Reinsurer, and the Reinsurer shall indemnify and hold the Company harmless
from and against all such claims, including the Company's costs in connection
therewith.

         4.2      Extracontractual Damages. The Reinsurer assumes no liability
of any kind hereunder for any extra-contractual liabilities the Company may have
incurred or may incur by reason of any actions, inactions or misconduct of the
Company in connection with such Assumed Policies occurring prior to the
Transition Date, as such term is defined in the Coinsurance Agreement.

         4.3      Cooperation. Each party agrees that it will cooperate fully
with the other party in the satisfactory settlement of any and all claims,
insofar as possible.

         4.4      Indemnification. From and after the applicable Assumption
Effective Date, the Reinsurer shall reimburse the Company for, and shall
indemnify and hold the Company harmless and defend the Company from and against
any and all costs and expenses (including interest, penalties, reasonable
attorneys', accountants' and actuaries' fees, and any other costs and expenses
incident to any suit, action or proceeding), damages, charges, losses,
deficiencies, liabilities, obligations, claims and judgments sustained or
incurred by, or asserted against, the Company (a) with respect to the payment of
amounts due under or in connection with any of the Assumed Policies, whether
incurred on or before the Assumption Effective Date; (b) which arise out of (i)
any breach or nonfulfillment by the Reinsurer of, or any failure by the
Reinsurer to perform, any of the covenants, terms or conditions of or any of its
duties or obligations under this Agreement; or (ii) any action or inaction of
the Reinsurer under or with respect to any of the Assumed Policies (including,
without limitation, any extra-contractual liabilities the Company may have
incurred or may incur by reason of any actions, inactions or misconduct of the
Reinsurer in connection with such Assumed Policies occurring on or after the
Transition Date); or (c) with respect to any enforcement of this indemnity. The
rights and obligations of the parties regarding indemnification under this
Agreement shall be subject to the limitations described in Section 9.5 of the
Master Agreement, which limitations are incorporated herein by reference.

                                   ARTICLE V
                               GENERAL PROVISIONS

         5.1      Notices. Any and all notices and other communications required
or permitted under this Agreement shall be in writing and will be deemed to have
been duly given at the time

                                       6
<PAGE>

when (i) received by the receiving party if mailed by United States registered
or certified mail, return receipt requested; (ii) received by the receiving
party if mailed by overnight express mail; (iii) sent by the sending party by
means of facsimile or telecopy machine, followed by confirmation mailed by
first-class mail or overnight express mail; or (iv) delivered in person or by
commercial courier to the receiving party. All such notices and communications
shall be sent or delivered to the parties at the addresses set forth in the
Master Agreement.

         5.2      Confidentiality. Each of the parties shall maintain the
confidentiality of all information related to the Coinsured Policies and all
other information denominated as confidential by the other party provided to it
in connection with this Agreement and shall not disclose such information to any
third parties without prior written consent of the other party, except as may be
required by regulatory authorities, or pursuant to legal process.

         5.3      Misunderstandings and Oversights. If any failure to pay
amounts due or to perform any other act required of either party by this
Agreement is shown to be unintentional and caused by misunderstanding, oversight
or clerical error, then this Agreement shall not be deemed in breach thereby,
but such error shall be corrected by restoring both parties to the positions
they would have occupied had the error not occurred.

         5.4      Reinstatements. If a Coinsured Policy that was reduced,
terminated, or lapsed, is reinstated, the reinsurance for such Coinsured Policy
under this Agreement will be reinstated automatically to the amount that would
have been in force if the Coinsured Policy had not been reduced, terminated, or
lapsed.

         5.5      Entire Agreement. This Agreement shall constitute the entire
agreement between the parties with respect to the business being assumed
hereunder. There are no other understandings between the parties other than as
expressed in this agreement. This Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter of this
Agreement, and this Agreement, the Master Agreement, the Coinsurance Agreement
and the Services Agreement, including the Schedules attached hereto and thereto,
contain the sole and entire agreement between the parties with respect to the
subject matter hereof.

         5.6      Assignment. This Agreement shall not be assigned by either of
the parties hereto without the prior written approval of the other party.

         5.7      Waivers and Amendments. Any term or condition of this
Agreement may be waived at any time by the party that is entitled to the benefit
thereof. Such waiver must be in writing and must be executed by an executive
officer of such party. A waiver on one occasion will not be deemed to be a
waiver of the same or any other term or condition on a future occasion. This
Agreement may be modified or amended only by a writing duly executed by an
executive officer of the Company and the Reinsurer, respectively.

         5.8      Law Governing. This Agreement will be governed by and
construed in accordance with the laws of the State of Colorado including the
arbitration provisions as set forth in the Master Agreement, without regard to
its conflicts of law doctrine.

         5.9      Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.

                                       7
<PAGE>

         5.10     Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law or if
determined by a court of competent jurisdiction to be unenforceable, and if the
rights or obligations of the Company or the Reinsurer will not be materially and
adversely affected thereby, such provision shall be fully severable, and this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom.

         5.11     Schedules and Paragraph Headings. Schedules attached hereto
are made a part of this Agreement. Paragraph headings are provided for reference
purposes only and are not made a part of this Agreement.

         5.12     Third Party Beneficiaries. This Agreement is for the sole and
exclusive benefit of the parties and their successors and permitted assigns and,
to the extent expressly set forth in this Agreement, those Policyholders,
insureds and beneficiaries who are insured under Assumed Policies.

         5.13     Tax Provisions. The parties hereby agree to make the election
in accordance with Internal Revenue Regulation 1.848-2(g)(8) (the "Regulation")
under Section 848 of the Internal Revenue Code of 1986 (the "Code"), as amended,
to comply with all of the requirements of such Regulation regarding such
election, including, without limitation, the election statement and tax return
reporting requirements of Regulation Sections 1.848-2(g)(8)(ii) and
1.848-2(g)(8)(iii), and further agree:

                  A.       to exchange information pertaining to the amount of
         "net consideration" under this Agreement as defined in the Regulation;

                  B.       that the Company shall submit its calculation of the
         "net consideration" for purposes of that Regulation to the Reinsurer
         not later than May 1st for each and every taxable year for which this
         Agreement is in effect;

                  C.       that the Reinsurer may challenge such calculation
         within ten (10) business days of its receipt of the Company's
         calculation;

                  D.       that should the Reinsurer challenge the Company's
         calculation of the "net consideration" and the parties be unable to
         agree as to the appropriate methodology to determine the "net
         consideration" for purposes of the Regulation, they shall refer such
         dispute to an outside tax consultant unrelated to either of the
         parties, in lieu of the arbitration provisions of this Agreement, and
         the parties agree to be bound by the decision of that consultant;

                  E.       that, pursuant to such election, the party with net
         positive consideration with respect to this Agreement for each taxable
         year will capitalize specified policy acquisition expenses with respect
         to this Agreement without regard to the general deductions limitation
         of Section 848(c)(1) of the Code; and

                  F.       that the first taxable year for which such election
         shall be effective is taxable year 2004.

                                       8
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on this 9th day of March, 2004.

                                    CITIZENS INSURANCE COMPANY OF AMERICA

                                    By: /s/ Mark Oliver
                                        ---------------------------------
                                        Mark Oliver
                                        President

                                    TEXAS INTERNATIONAL LIFE INSURANCE COMPANY

                                    By: /s/ Larry J. Doze
                                        ---------------------------------
                                        Larry J. Doze
                                        President

                                       9
<PAGE>

                                  SCHEDULE 1.2

                             ASSUMPTION CERTIFICATE

                                    [TO COME]

                                       10
<PAGE>

                                  SCHEDULE 1.8

                          POLICIES AND RISKS REINSURED

BLOCK DESCRIPTION:

POLICY FORM/
PLAN CODE                                 DESCRIPTION

                                       11
<PAGE>

                                  SCHEDULE 1.16

                             PROFIT-SHARING FORMULA

1)       Profit-sharing from the Reinsurer to the Company in the amount of 90%
         in the 1st year, 80% in the 2nd year, 70% in the 3rd year, 60% in the
         4th year, 50% in the 5th year, 40% in the 6th year, 30% in the 7th
         year, 20% in the 8th year and 10% in the 9th year will be paid by March
         31 of every calendar year beginning March 31, 2005.

2)       All Policies under this Agreement and any related agreements are to be
         pooled for purposes of the profit-sharing calculations. The Citizens
         and Combined policies and any other policies reinsured by this
         agreement will be pooled together.

3)       Each calendar year's calculation will be cumulative throughout such
         calendar year with profits and losses carried forward and backward
         within each calendar year.

4)       Any losses from each and every calendar year having a loss for such
         calendar year will be carried forward to the next and succeeding
         calendar years and no profits will be paid by the Reinsurer to the
         Company until the cumulative calculation results in a cumulative
         profit. Any losses from any calendar year will not be carried backward
         to any prior year's calculations in which profits were paid by the
         Reinsurer to the Company.

5)       Any profits paid by the Reinsurer to the Company for any and every
         calendar year will not be carried forward in the calculations and will
         not be subject to be returned in any way by the Company to the
         Reinsurer.

6)       Actual earned premiums, incurred claims, statutory reserve and
         liability changes, commissions paid, premium taxes paid, guarantee fund
         assessments and reinsurance transactions other than those reinsurance
         transactions under this Agreement will be used in the profit-sharing
         calculations.

7)       Net investment income in the amount of four percent (4.00%) per annum
         using the quarterly statutory reserves and liabilities as the assets
         will be used in the profit-sharing calculations regardless of the
         actual amount of net investment income earned. The formula will be
         (12/31/XX assets) x ((1.04) Caret ((31 + (28 or 29) + 31) / (365 or
         366)) - 1) + (3/31/XX assets) x ((1.04) Caret ((30+31+30) / (365 or
         366)) - 1) + etc. for the 3rd and 4th quarters.

8)       General expenses in the amount of nine percent (9.00%) of the collected
         premiums will be used in the profit-sharing calculations regardless of
         the actual amount of general expenses incurred.

9)       No DAC-TAX will be charged or used in the profit-sharing calculations.

No Federal Income Tax will be charged or used in the profit-sharing
calculations.

                                       12
<PAGE>

                        ADMINISTRATIVE SERVICES AGREEMENT

                                     Between

                      CITIZENS INSURANCE COMPANY OF AMERICA

                                Denver, Colorado

                                       and

                   TEXAS INTERNATIONAL LIFE INSURANCE COMPANY

                                  Austin, Texas

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                             Page
                                                                                                             ----
<S>                                                                                                          <C>
ARTICLE I  DEFINITIONS......................................................................................   1
     1.1  Company Service Period............................................................................   1
     1.2  Interim Services..................................................................................   1
     1.3  Reinsurer Service Period..........................................................................   1
     1.4  Required Services.................................................................................   2
     1.5  Transition Date...................................................................................   2

ARTICLE II  INTERIM SERVICES IN THE COMPANY SERVICE PERIOD..................................................   2
     2.1  Commitment to Provide.............................................................................   2
     2.2  Description of the Interim Services...............................................................   2
     2.3  Compensation......................................................................................   4
     2.4  Premium Payments..................................................................................   4
     2.5  Books and Records.................................................................................   5
     2.6  Expiration of Company Service Period..............................................................   5

ARTICLE III  REQUIRED SERVICES IN THE REINSURER SERVICE PERIOD..............................................   5
     3.1  Commitment to Provide.............................................................................   5
     3.2  Description of the Required Services..............................................................   5
     3.3  No Compensation...................................................................................   7
     3.4  Books and Records.................................................................................   7
     3.5  Notice of Excluded Liability Claims...............................................................   7
     3.6  Notice to Policyholders...........................................................................   8

ARTICLE IV  INDEMNIFICATION.................................................................................   8
     4.1  Reinsurer Indemnification.........................................................................   8
     4.2  Company Indemnification...........................................................................   8
     4.3  Indemnification and Arbitration Procedures........................................................   9

ARTICLE V  MISCELLANEOUS....................................................................................   9
     5.1  Privacy Rights....................................................................................   9
     5.2  Certain Notices...................................................................................   9
     5.3  Notice Generally..................................................................................   9
     5.4  Assignment........................................................................................   9
     5.5  Governing Law.....................................................................................  10
     5.6  Independent Contractors...........................................................................  10
     5.7  Entire Agreement..................................................................................  10
     5.8  Waiver...........................................................................................   10
     5.9  Amendment.........................................................................................  10
     5.10  Counterparts.....................................................................................  10
     5.11  Headings.........................................................................................  10
     5.12  No Third Party Beneficiaries.....................................................................  10
     5.13  Confidentiality..................................................................................  10
     5.14  Severability.....................................................................................  10
</TABLE>

                                       i
<PAGE>

                        ADMINISTRATIVE SERVICES AGREEMENT

         THIS ADMINISTRATIVE SERVICES AGREEMENT ("Agreement") is made as of the
date set forth below by and between CITIZENS INSURANCE COMPANY OF AMERICAN (the
"Company"), a Colorado stock life insurance company, and TEXAS INTERNATIONAL
LIFE INSURANCE COMPANY (the "Reinsurer"), a Texas stock life insurance company.

                                    RECITALS

         WHEREAS, the Reinsurer and the Company have entered into an Agreement
for Reinsurance ("Master Agreement"), a Coinsurance Reinsurance Agreement
("Coinsurance Agreement"), and an Assumption Reinsurance Agreement ("Assumption
Agreement"), all of even date herewith, pursuant to which the Reinsurer will
coinsure, on a 100% quota share basis, and ultimately will assume, the Coinsured
Policies, all as defined and provided in the Master Agreement, the Coinsurance
Agreement and the Assumption Agreement (the Coinsurance Agreement and the
Assumption Agreement being collectively referenced herein as the "Reinsurance
Agreements"); and

         WHEREAS, this is the Administrative Services Agreement referenced in
the Master Agreement and in the Reinsurance Agreements pursuant to which (i) the
Company will provide the Reinsurer with Interim Services in respect of the
Coinsured Policies during the Company Service Period (as defined below), and
(ii) the Reinsurer will provide the Company with Required Services in respect of
the Coinsured Policies during the Reinsurer Service Period (as defined below)
(the "Interim Services" as defined herein and the "Required Services" as defined
herein being the "Support Services" as defined in the Master Agreement).

         NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         Capitalized terms used and not otherwise defined herein shall have the
meaning given in the Master Agreement and the Reinsurance Agreements. The other
capitalized terms used herein shall have the meaning given below.

         1.1      Company Service Period. means the period commencing on the
Coinsurance Effective Date and ending on the Transition Date.

         1.2      Interim Services. means the services the Company is to provide
in respect of the Reinsured Policies during the Company Service Period, as more
fully described at Article II of this Agreement.

         1.3      Reinsurer Service Period. means the period commencing on the
Transition Date and continuing for so long as any of the Coinsured Policies
remain in force.

                                       1
<PAGE>

         1.4      Required Services. means the services the Reinsurer is to
provide in respect of the Coinsured Policies during the Reinsurer Service
Period, as more fully described at Article III of this Agreement.

         1.5      Transition Date. shall have the meaning given in Section 2.6
hereof.

                                   ARTICLE II
                 INTERIM SERVICES IN THE COMPANY SERVICE PERIOD

         2.1      Commitment to Provide. During the Company Service Period, the
Company will provide the Reinsurer with the Interim Services described in this
Article II.

         2.2      Description of the Interim Services. The Interim Services
shall consist of the following:

                  2.2.1    Billing and collection of premiums due under the
         Coinsured Policies and return of unearned premiums.

                  2.2.2    Preparation of such reports for the Reinsurer as may
         reasonably be required to calculate premium taxes due under the
         Coinsured Policies.

                  2.2.3    Maintenance of applications, policyholder, premium
         and other necessary records, including all computer records, so as to
         enable the Reinsurer to determine, at any time, the true and accurate
         status of the insurance in force under the Coinsured Policies.

                  2.2.4    The making available of all records relating to the
         Coinsured Policies for audit by the Reinsurer upon reasonable notice
         and during regular business hours. Such records shall include, but not
         be limited to, policyholder records, in-force listings, premium
         records, claim forms, itemized billings and eligibility documentation.

                  2.2.5    The giving of required notices to Policyholders of
         any cancellation, non-renewal or lapse in coverage under the Coinsured
         Policies and any required privacy notices to Policyholders pursuant to
         the Gramm-Leach-Bliley Act and any state law or regulation implementing
         same.

                  2.2.6    With respect to that portion of the Company Service
         Period occurring after the Closing Date, the giving of immediate notice
         to the Reinsurer of any consumer complaint which threatens legal action
         and the forwarding to the Reinsurer of all written consumer complaints
         within twenty-four (24) hours of receipt by Company, if possible, but
         in no instance longer than four (4) business days after receipt
         thereof, as well as all pertinent files and correspondence relating
         thereto.

                  2.2.7    The provision of those standard supplies needed for
         the administration of the Coinsured Policies.

                  2.2.8    Processing of policy loan requests and policy loan
         repayments received from Policyholders, if any.

                                       2
<PAGE>

                  2.2.9    Processing of policy changes requested by
         policyholders including, but not limited to name changes, address
         changes, beneficiary changes, reinstatements, assignments and the like.

                  2.2.10   Processing of reports of transactions under the
         Coinsured Policies from time to time as reasonably requested by the
         Reinsurer.

                  2.2.11   Calculation of reserves on the Coinsured Policies on
         not less than a calendar quarter basis, and otherwise as may reasonably
         be required by the Reinsurer from time to time in order to comply with
         the Reinsurer's financial reporting requirements and obligations.
         Reinsurer will assist Company as needed.

                  2.2.12   Reporting of such information with respect to the
         Coinsured Policies as the Reinsurer may reasonably require from time to
         time for statutory filing and reporting purposes.

                  2.2.13   Communication with the Policyholders of the Coinsured
         Policies.

                  2.2.14   The administration and processing of claims under the
         Coinsured Policies, including the following:

                           2.2.14.1 Claims arising under and covered by the
                  terms of the Coinsured Policies shall be paid promptly and
                  accurately in accordance with the terms of this Section
                  2.2.14. The Company's obligation to pay claims under this
                  Section 2.2.14.1 shall be subject to the Reinsurer's deposit
                  from time to time as requested by the Company, by wire
                  transfer to an account designated by the Company, of
                  immediately available funds in an amount equal to any claims
                  then due and owing. The Company also shall have the right to
                  fund the payment of claims allowed under this Section 2.2.14.1
                  out of the amounts received and held for the account of the
                  Reinsurer pursuant to Section 2.4 hereof.

                           2.2.14.2 In the event of non-payment of a claim on
                  account of incomplete or insufficient data, receipt of the
                  claim shall be confirmed with, and the reason for nonpayment
                  shall be communicated to, the claimant within thirty (30)
                  business days from date of receipt of the claim form or the
                  period prescribed by applicable law, whichever is less. Claims
                  decisions and payments will be made in compliance with all
                  applicable insurance regulatory requirements.

                           2.2.14.3 The Company hereby agrees to continue its
                  current practices and procedures with regard to payment of
                  claims and as soon as reasonably possible notify the Reinsurer
                  regarding the disposition of any payments of claims that would
                  be subject to the Company's upper management approval under a
                  Coinsured Policy. All payments of claims either to be paid or
                  denied in excess of $50,000 shall be subject to the
                  Reinsurer's approval and the Company agrees to notify
                  Reinsurer as soon as reasonably possible. If suit is brought
                  with respect to a claim, the Reinsurer shall be notified as
                  soon as reasonably possible. The Company and the Reinsurer
                  shall consult regarding the disposition of the claim and in
                  the event of disagreement, the Reinsurer shall have final
                  authority over the disposition of the claim; provided,
                  however, that the Reinsurer shall indemnify

                                       3
<PAGE>

                  and defend the Company (pursuant to Section 4.1 of this
                  Agreement) for any loss resulting from disposition of the
                  claim in accordance with the Reinsurer's instructions.

                           2.2.14.4 Conform to the reasonable requirements set
                  by the Reinsurer for monthly submission of claims reports.

                           2.2.14.5 Perform such other claim services as the
                  Reinsurer may reasonably require in connection with the
                  maintenance of the Coinsured Policies.

                  2.2.15   Payment of Producer Payments due Producers under
         Producer Agreements that are in force with respect to the Coinsured
         Policies as of the Coinsurance Effective Date, for the account of the
         Reinsurer out of premium collected under the Coinsured Policies, in
         accordance with Section 2.4 of this Agreement, and as provided at
         Section 4.3 of the Coinsurance Agreement.

                  2.2.16   Such other administrative services as the Reinsurer
         may reasonably require from time to time in connection with the
         maintenance, support and administration of the Coinsured Policies.

                  2.2.17   Underwriting of new applications and reinstatement
         applications using the standards, policies, procedures and underwriting
         guidelines as of February 1, 2004. The Underwriting Guideline For
         Health Insurance form number UGI-0702, attached as Schedule 2.2.17,
         will be utilized except for plans that have been regularly guaranteed
         issued.

                  2.2.18   Appointment and licensing of new and existing
         producers as required in connection with the maintenance, support and
         administration of the existing and new applications of the Coinsured
         Policies.

         2.3      Compensation. In consideration of the Company's performance of
the Interim Services, the Reinsurer shall pay the Company a service fee in
accordance with the fee schedule set forth in Schedule 2.3 attached hereto
("Service Fee") with respect to the Coinsured Policies in force at the beginning
of the month for each month in the Company Service Period during which Interim
Services under this Article II are provided. If the Company Service Period ends
on other than a month-end date, the Service Fee payable by the Reinsurer
hereunder shall be prorated for the number of days in the last monthly period
during which Interim Services were provided. The Company shall render a monthly
statement, in arrears, to the Reinsurer covering the Interim Services rendered
in the period. Payment shall be due within ten (10) business days of the
Reinsurer's receipt of the Company's statement. Late payments shall bear
interest at an annual interest rate of four percent (4 %) per annum.

         2.4      Amounts Collected Under the Coinsured Policies. The Company
will hold all amounts collected under the Coinsured Policies for the account of
the Reinsurer in a fiduciary capacity. During the Company Service Period, the
Company shall regularly remit to the Reinsurer, on no less than a monthly basis,
the Net Proceeds of transactions under the Coinsured Policies. For purposes of
this Section 2.4, "Net Proceeds" means (a) premiums collected, adjusted for
reinsurance paid, less (b) benefits paid, net of reinsurance settlements, less
(c) Producer Payments paid, less (d) a provision for premium taxes equal to 2.5%
of premiums

                                       4
<PAGE>

collected, calculated pursuant to Section 4.6 of the Coinsurance Agreement, plus
or minus (e) such other adjustments as may be specified in this Agreement or
otherwise be agreed to by the parties; provided, that the Company shall have the
right to deduct from the remittance of Net Proceeds any Service Fee amount then
due and owing to the Company for Interim Services rendered under this Article
II.

         2.5      Books and Records. During the Company Service Period, the
Company will maintain true and accurate Books and Records with respect to the
Coinsured Policies and the Interim Services provided under this Article II,
including such Books and Records as may be required by law. The Company's Books
and Records in respect of the Coinsured Policies and the Interim Services
provided under this Article II shall be available for inspection and copying by
the Reinsurer upon reasonable notice to the Company. The Company shall transfer,
at its own risk and expense all policy files, Books and Records in its
possession or under its control to the Reinsurer on the Transition Date.

         2.6      Expiration of Company Service Period. The Company Service
Period will end on the Transition Date, which shall be the earlier of: (a) one
hundred twenty (120) days after the Closing Date; or (b) the date upon which the
Reinsurer shall specify in a notice to the Company that it is prepared to
provide the Required Services under Article III of this Agreement.

                                  ARTICLE III
                REQUIRED SERVICES IN THE REINSURER SERVICE PERIOD

         3.1      Commitment to Provide. The Reinsurer will provide the Company
with the Required Services described in this Article III during the Reinsurer
Service Period.

         3.2      Description of the Required Services. The Required Services
shall consist of the following:

                  3.2.1    Billing and collection of premiums due under the
         Coinsured Policies and return of unearned premiums.

                  3.2.2    Preparation of such reports for the Company as may
         reasonably be required to calculate premium taxes due in respect of the
         Coinsured Policies.

                  3.2.3    Maintenance of applications, policyholder, premium
         and other necessary records, including all computer records, so as to
         enable the Company to determine, at any time, the true and accurate
         status of the insurance in force under the Coinsured Policies.

                  3.2.4    The making available of all records relating to the
         Coinsured Policies for audit by the Company upon reasonable notice and
         during regular business hours. Such records shall include, but not be
         limited to, policyholder records, in-force listings, premium records,
         claim forms, itemized billings and eligibility documentation.

                  3.2.5    The giving of required notices to Policyholders of
         any cancellation, non-renewal or lapse in coverage under the Coinsured
         Policies and any required privacy notices to Policyholders pursuant to
         the Gramm-Leach-Bliley Act and any state law or regulation implementing
         same.

                                       5
<PAGE>

                  3.2.6    The giving of immediate notice to the Company of any
         consumer complaint which threatens legal action and the forwarding to
         the Company of all written consumer complaints within twenty four (24)
         hours, if possible, but in no instance longer than four (4) business
         days after receipt thereof, as well as all pertinent files and
         correspondence relating thereto.

                  3.2.7    The provision of those standard supplies needed for
         the administration of the Coinsured Policies; provided, however, that
         the Company will supply such Company forms, letterhead, stationery and
         other similar materials as are reasonably necessary for the Reinsurer's
         administration and servicing of the Coinsured Policies, and such use
         shall be limited in accordance with such instructions and restrictions
         as the Company may provide.

                  3.2.8    Processing of policy loan requests and policy loan
         repayments received from Policyholders, if any.

                  3.2.9    Processing of policy changes requested by
         Policyholders including, but not limited to name changes, address
         changes, beneficiary changes, reinstatements, assignments and the like
         and the preparation and delivery of policy forms, certificates and
         endorsements relating to the Coinsured Policies.

                  3.2.10   Processing of reports of transactions under the
         Coinsured Policies from time to time as reasonably requested by the
         Company.

                  3.2.11   Calculation of reserves on the Coinsured Policies on
         not less than a calendar quarter basis, and otherwise as may reasonably
         be required by the Company from time to time in order to comply with
         the Company's financial reporting requirements and obligations.

                  3.2.12   Reporting of such information with respect to the
         Coinsured Policies as the Company may reasonably require from time to
         time for statutory filing and reporting purposes.

                  3.2.13   Communication with the Policyholders of the Coinsured
         Policies.

                  3.2.14   The administration and processing of claims under the
         Coinsured Policies, including the following:

                           3.2.14.1 Claims arising under and covered by the
                  terms of the Coinsured Policies shall be paid promptly and
                  accurately in accordance with the terms of this Section
                  3.2.14.

                           3.2.14.2 In the event of non-payment of a claim on
                  account of incomplete or insufficient data, receipt of the
                  claim shall be confirmed with, and the reason for nonpayment
                  shall be communicated to, the claimant within thirty (30)
                  working days from date of receipt of the claim form or the
                  period prescribed by applicable law, whichever is less. Claims
                  decisions and payments will be made in compliance with all
                  applicable insurance regulatory requirements.

                                       6
<PAGE>

                           3.2.14.3 If suit is brought or threatened with
                  respect to any claim denied by the Reinsurer, the Company
                  shall be promptly notified. The Reinsurer and the Company
                  shall consult regarding the disposition of the claim. In the
                  event of disagreement, the Reinsurer shall have final
                  authority over the disposition of the claim; provided,
                  however, that the Reinsurer shall indemnify and defend the
                  Company (pursuant to Section 4.1 of this Agreement) for any
                  loss resulting from disposition of the claim in accordance
                  with the Reinsurer's final determination.

                           3.2.14.4 Conform to the reasonable requirements set
                  by the Company for monthly submission of claims reports.

                           3.2.14.5 Perform such other claim services as the
                  Company may reasonably require in connection with the
                  maintenance of the Coinsured Policies.

                  3.2.15   Payment of Producer Payments due Producers under
         Producer Agreements that are in force with respect to the Coinsured
         Policies as of the Coinsurance Effective Date, for the account of the
         Company out of premium collected under the Coinsured Policies as
         provided at Section 4.3 of the Coinsurance Agreement.

                  3.2.16   Such other administrative services as the Company may
         reasonably require from time to time in connection with the
         maintenance, support and administration of the Coinsured Policies,
         including, without limitation, any matters relating to risk management
         and policy administration required under applicable laws or
         regulations, premium rate or credited interest rate changes, and the
         development and implementation of such policy administration practices,
         methods, procedures and standards as may be lawful and necessary in the
         discretion of the Reinsurer as administrator of the Coinsured Policies.

                  3.2.17   Underwriting of new applications and reinstatement
         applications using the standards, policies, procedures and underwriting
         guidelines as of February 1, 2004. The Underwriting Guideline For
         Health Insurance form number UGI-0702, attached as Schedule 2.2.17,
         will be utilized except for plans that have been regularly guaranteed
         issued.

         3.3      No Compensation. No compensation shall be payable to the
Reinsurer for the Required Services.

         3.4      Books and Records. During the Reinsurer Service Period, the
Reinsurer will maintain true and accurate Books and Records with respect to the
Coinsured Policies and the Required Services provided under this Article III,
including such Books and Records as may be required by law. The Reinsurer's
Books and Records in respect of the Coinsured Policies and the Required Services
provided under this Article III shall be available for inspection and copying by
the Company as provided pursuant to Section 5.6 of the Agreement for
Reinsurance.

         3.5      Notice of Excluded Liability Claims. In the event that a claim
or liability constituting an Excluded Liability becomes known to the Reinsurer
during the Reinsurer Service Period, the Reinsurer shall immediately notify the
Company, shall provide the Company with all supporting documentation and records
pertaining to the claim or liability, and shall provide the Company with
reasonable assistance in recovering any reinsurance payable by a person other

                                       7
<PAGE>

than the Reinsurer with respect thereto; provided that the Company shall
reimburse the Reinsurer for any extraordinary costs incurred in providing such
assistance. The terms of this Section 3.5 shall survive termination of this
Agreement.

         3.6      Notice to Policyholders. Within thirty (30) days after the
Transition Date, the Reinsurer shall send to each Policyholder of the Coinsured
Policies a service notice which shall indicate that the Reinsurer has assumed
all of the obligations of the Company for servicing the Coinsured Policies, and
which shall contain all of the conditions necessary to provide adequate notice
to the Policyholders that the Coinsured Policies will be administered by the
Reinsurer in accordance with the terms thereof, subject to any and all offsets,
counterclaims, cross-actions and defenses that are now or may hereafter become
available to the Company or the Reinsurer against such Policyholders. The form
of the service notices shall be provided to the Company for its review and
approval prior to distribution to Policyholders and shall comply with all
applicable laws. The service notices shall be mailed to each Policyholder's last
known address of record furnished by the Company to the Reinsurer.

                                   ARTICLE IV
                                 INDEMNIFICATION

         4.1      Reinsurer Indemnification. From and after the Coinsurance
Effective Date, the Reinsurer shall reimburse the Company for, and shall
indemnify and hold the Company harmless and defend the Company from and against
all costs and expenses (including interest, penalties, reasonable attorneys'
fees, and any other costs and expenses incident to any suit, action or
proceeding), damages, charges, losses, deficiencies, liabilities, obligations,
claims and judgments, sustained or incurred by, or asserted against the Company
which arise out of (i) any breach of any term, condition, or obligation to be
performed by the Reinsurer under this Agreement, (ii) any act, error, or
omission of the Reinsurer, any officer, director, or employee of the Reinsurer
or any other individual or entity (other than the Company or any of its
officers, directors, employees, agents, or representatives unless such act,
error or omission of the Company is made at the direction or pursuant to the
instructions of the Reinsurer) acting for, through, or on behalf of the
Reinsurer in connection with this Agreement, or (iii) any enforcement of this
indemnity.

         4.2      Company Indemnification. From and after the Coinsurance
Effective Date, the Company shall reimburse the Reinsurer for, and shall
indemnify and hold the Reinsurer harmless and defend the Reinsurer from and
against all costs and expenses (including interest, penalties, reasonable
attorneys' fees, and any other costs and expenses incident to any suit, action
or proceeding), damages, charges, losses, deficiencies, liabilities,
obligations, claims and judgments, sustained or incurred by, or asserted against
the Reinsurer which arise out of (i) any breach of any term, condition, or
obligation to be performed by the Company under this Agreement, (ii) any act,
error, or omission of the Company, any officer, director, or employee of the
Company or any other individual or entity (other than the Reinsurer or any of
its officers, directors, employees, agents, or representatives unless such act,
error or omission of the Reinsurer is made at the direction or pursuant to the
instructions of the Company) acting for, through, or on behalf of the Company in
connection with this Agreement, or (iii) any enforcement of this indemnity.

                                       8
<PAGE>

         4.3      Indemnification and Arbitration Procedures. The indemnity
claim and arbitration procedures under Articles VIII and IX of the Master
Agreement shall apply to indemnity claims and disputes arising under this
Agreement, and are incorporated herein by reference. The rights and obligations
of the parties respecting indemnification under this Agreement shall be subject
to the limitations described in Section 9.5 of the Master Agreement, which
limitations are incorporated herein by reference.

                                    ARTICLE V
                                  MISCELLANEOUS

         5.1      Privacy Rights. Pursuant to the provisions of the Gramm-Leach
Bliley Act, the NAIC Insurance Information and Privacy Protection Model Act and
the NAIC Privacy of Consumer Financial and Health Information Model Regulation
and/or similar laws and regulations as enacted in various states, the parties
recognize that, in the performance of their respective obligations under this
Agreement, they each may obtain from the other nonpublic personal or privileged
information about individuals collected or received in connection with insurance
transactions under the Coinsured Policies. Each of the parties agrees not to
disclose such information to third-parties without the individual's written
authorization unless such disclosure is otherwise permitted by law.

         5.2      Certain Notices. The Company will notify the Reinsurer during
that portion of the Company Service Period occurring after the Closing Date, and
the Reinsurer will notify the Company during the Reinsurer Service Period, of
all communications and notices (excluding routine claim notices) received in
connection with claims arising under the Coinsured Policies, including, but not
limited to:

         (i)      Legal notices, summonses, complaints, subpoenas, and other
                  legal process.

         (ii)     Inquiries, complaints, and notices from insurance regulatory
                  authorities and other governmental authorities.

         (iii)    Correspondence disagreeing with, or critical of, either the
                  Reinsurer or the Company in connection with the administration
                  of the Coinsured Policies or claims thereunder pursuant to
                  this Agreement.

         5.3      Notice Generally. Any and all notices or other communications
required or permitted under this Agreement shall be in writing and shall be
deemed duly given at the time when (i) received by the receiving party if mailed
by United States registered or certified mail, return receipt requested; (ii)
received by the receiving party if mailed by overnight express mail; (iii) sent
by the sending party by means of facsimile or telecopy machine, followed by
confirmation mailed by first-class mail or overnight express mail; or (iv)
delivered to the receiving party in person or by commercial courier. All such
notices and communications shall be sent or delivered to the parties at the
address set forth in the Master Agreement.

         5.4      Assignment. This Agreement shall not be assigned by any party
hereto without the prior written approval of the other party. Subject to the
foregoing, the rights and obligations of the parties under this Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective transferees, successors and assigns.

                                       9
<PAGE>

         5.5      Governing Law. This Agreement shall be governed by, and shall
be construed and enforced in accordance with, the laws of the State of Colorado,
without regard to its conflict of laws doctrine.

         5.6      Independent Contractors. Each party hereto shall be deemed an
independent contractor of the other for all purposes hereunder. This Agreement
shall not be construed to create the relationship of employer or employee
between either party hereto, and shall not create any right or legal relation
between either party hereto and any other person or entity.

         5.7      Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter of this Agreement, and this Agreement, the Master Agreement, the
Coinsurance Agreement and the Assumption Agreement, including the Schedules
attached hereto and thereto, contain the sole and entire agreement between the
parties with respect to the subject matter hereof.

         5.8      Waiver. Any term or condition of this Agreement may be waived
at any time by the party which is entitled to the benefit thereof by a writing
executed by the President or a Vice President of such party. A waiver on any one
occasion shall not be deemed to be a waiver of the same term or condition or any
other term or condition on any future occasion.

         5.9      Amendment. This Agreement may be modified or amended only by a
writing duly executed by the parties hereto.

         5.10     Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.

         5.11     Headings. The headings in this Agreement are for convenience
only and shall not constitute a part hereof.

         5.12     No Third Party Beneficiaries. This Agreement is intended
solely for the benefit of the parties hereto and their permitted successors and
assigns, and it is not the intention of the parties to confer any rights as a
third-party beneficiary to this Agreement upon any other person.

         5.13     Confidentiality. Each of the parties shall maintain the
confidentiality of all information related to the Coinsured Policies and all
other information denominated as confidential by the other party provided to it
in connection with this Agreement and shall not disclose such information to any
third parties without prior written consent of the other party, except as may be
required by regulatory authorities, or pursuant to legal process.

         5.14     Severability. If any portion of this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable, the
unenforceable term or provision shall be stricken or interpreted in such manner
as may be necessary to permit it to be enforceable, and the remaining portions
of this Agreement shall be enforced in accordance with their respective terms.

                                       10
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers this 9th day of March, 2004.

CITIZENS INSURANCE COMPANY                    TEXAS INTERNATIONAL LIFE INSURANCE
OF AMERICA                                    COMPANY

By: /s/ Mark Oliver                           By: /s/ Larry J. Doze
    --------------------------                    ------------------------------
        Mark Oliver                                   Larry J. Doze
        President                                     President

                                       11
<PAGE>

                                  SCHEDULE 2.3

                             COMPENSATION AND FEES*

         Compensation for the administration of Coinsured Policies shall be nine
percent (9%) per annum of Collected Premium.

MISCELLANEOUS:

* The fees listed herein shall only apply to, and be payable on, the Coinsured
Policies.

                                       12
<PAGE>

                           REINSURANCE TRUST AGREEMENT

                                  by and among

                   TEXAS INTERNATIONAL LIFE INSURANCE COMPANY

                                of Austin, Texas

                                       and

                      CITIZENS INSURANCE COMPANY OF AMERICA

                               of Denver, Colorado

                                       and

                             WELLS FARGO BANK, N.A.

                                of Austin, Texas

<PAGE>

                           REINSURANCE TRUST AGREEMENT

         THIS REINSURANCE TRUST AGREEMENT, dated as of the date set forth below
(the "Agreement"), by and among TEXAS INTERNATIONAL LIFE INSURANCE COMPANY, a
corporation organized and existing under the laws of the State of Texas (the
"Grantor"), CITIZENS INSURANCE COMPANY OF AMERICA , a corporation organized and
existing under the laws of the State of Colorado (the "Beneficiary"), and WELLS
FARGO BANK, N.A., a national banking association operating in the State of Texas
(the "Trustee"), which is a member of the Federal Reserve System.

                              W I T N E S S E T H:

         WHEREAS Grantor and Beneficiary have entered into a Coinsurance
Reinsurance Agreement dated of even date herewith (the "Reinsurance Agreement"),
under which Grantor has agreed to reinsure certain liabilities of Beneficiary
for certain risks on certain Coinsured Policies (as defined in the Reinsurance
Agreement) issued by Beneficiary; and

         WHEREAS, Grantor desires to establish a trust account qualified under
Article 3.10, Section (d) Texas Insurance Code, to secure the performance by
Grantor of its obligations to Beneficiary in connection with the Coinsured
Policies coinsured under the Reinsurance Agreement.

         NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, Grantor, Beneficiary and Trustee agree as follows:

                                   ARTICLE I
                    PROVISIONS RELATING TO THE TRUST ACCOUNT

         Section 1.1 Establishment of Trust Account.

         (a)      Grantor hereby establishes the Trust Account with Trustee for
the sole use and benefit of Beneficiary upon the terms and conditions
hereinafter set forth. For all purposes of this Agreement, the term "Trust
Account" means the funds and securities held by Trustee hereunder constituting
the principal of the trust as defined under the laws of the State of Texas (the
"Trust Assets") and does not include the income received by Trustee.

         (b)      Trustee hereby accepts appointment as trustee and agrees to
establish and maintain the Trust Account as provided hereunder.

         (c)      Trustee is authorized to receive such funds and securities as
Grantor from time to time may transfer to Trustee, and to hold, invest,
reinvest, manage and dispose of the same at its office in the United States, for
the purposes and according to the provisions herein. Trustee is authorized and
instructed to utilize the book-entry system for securities maintained at The
Federal Reserve Bank of New York (the "Book-Entry System"), depositories such as
the Depository Trust Company and Participants Trust Company ("Depositories") and
the receipt and delivery of physical certificates or any combination thereof in
connection with its performance hereunder. Securities held at the Book-Entry
System or a Depository will be represented in accounts at the Book-Entry System
and the appropriate Depository in the names of Grantor and Trustee or its
nominee which include only assets held by Trustee for customers, including, but

                                       1
<PAGE>

not limited to, accounts in which Trustee acts in a fiduciary or agency
capacity. The Trust Account shall at all times be maintained separate and
distinct from all other accounts of the Trustee.

         Section 1.2 Trust Account Assets. Funds and securities deposited in the
Trust Account by Grantor and investments and reinvestments thereof shall consist
only of cash in United States currency, certificates of deposit issued by a
United States bank and payable in United States currency and other investments
of the types permitted under the provisions of Articles 3.10 Section (d) and
3.33 of the Texas Insurance Code; provided, however, that such investments are
issued by an institution that is not the parent, subsidiary or affiliate of
Beneficiary or Grantor. Grantor's deposit to the Trust Account or investment
instruction to Trustee shall constitute a certificate by Grantor to Trustee that
the funds and securities so deposited, or to be purchased pursuant to such
investment instruction, are of the types permitted as stated in this paragraph.
Beneficiary's consent with respect to any funds and/or securities so deposited
or purchased pursuant to both Grantor's direction and Beneficiary's instructions
or consent shall constitute Beneficiary's certification to the same effect.

         Section 1.3 Withdrawals. Beneficiary represents and covenants that it
shall make withdrawals of Trust Assets to satisfy amounts due without diminution
because of the insolvency of Beneficiary or Grantor, for the following purposes
only:

         (a)      to pay or reimburse Beneficiary for Grantor's share under the
Reinsurance Agreement of any losses and allocated loss expenses paid by
Beneficiary but not recovered from Grantor or for unearned premiums due
Beneficiary, if not otherwise paid by Grantor; or

         (b)      to make payment to Grantor of any amounts held in the Trust
Account that exceed 102 percent of the actual amount required to fund Grantor's
obligations under the Reinsurance Agreement; or

         (c)      where Beneficiary has received notification of termination of
the Trust Account and where any of Grantor's obligations under the Reinsurance
Agreements remain unliquidated and undischarged ten (10) days prior to such
termination date, to withdraw amounts equal to such obligations and deposit such
amounts in a separate account in the name of Beneficiary in any United States
bank or trust company, apart from its general assets in trust for such uses and
purposes specified in (a) and (b) above as may remain executory after such
withdrawal and for any period after such termination date.

         Section 1.4 Withdrawal Instructions. Subject to the provisions of
Section 1.3, Beneficiary shall have the right to withdraw Trust Assets from the
Trust Account without notice to Grantor at any time and from time to time,
subject only to written notice from Beneficiary to Trustee. No statement or
document need be presented by Beneficiary to Trustee in order to withdraw Trust
Assets from the Trust Account. Beneficiary may, however, be required by Trustee
to acknowledge receipt of such assets. Upon receipt of the aforementioned
Beneficiary's notice, Trustee shall immediately take any and all necessary steps
to transfer absolutely and unequivocally to Beneficiary all right, title and
interest in the Trust Assets being withdrawn and, when appropriate, to deliver
the physical custody thereof to Beneficiary. Trustee shall be protected in
relying upon any such notice from Beneficiary for such withdrawal and shall not
be

                                       2
<PAGE>

obligated to investigate or ascertain that Beneficiary intends to, or uses the
Trust Assets withdrawn for the purposes set forth herein. Trustee shall not be
liable to Grantor or Beneficiary or any third party, for any transfer of assets
made pursuant to Beneficiary's written notice.

         Section 1.5 Substitution of Trust Account Trust Assets. Grantor shall
be entitled to withdraw Trust Assets from the Trust Account and deposit in the
Trust Account a like amount of assets of the type permitted under Section 1.2,
upon five (5) days written notice prior to the substitution date to Beneficiary
and Trustee. Beneficiary may object to such substitution if the assets to be
substituted do not qualify as permitted investments under Section 1.2. If
Grantor is so permitted such substitution, the then current fair market value of
the assets so substituted shall not be less than the current fair market value
of the Trust Assets withdrawn. Beneficiary's failure to object to Grantor's
notice of substitution prior to the substitution date shall constitute
Beneficiary's consent to such substitution and its certification to Trustee,
which Trustee shall be entitled to rely upon, that any Trust Assets so
substituted are a permitted investment as provided in Section 1.2 hereof, and
that the current market value of the assets so substituted is no less than the
market value of the Trust Assets so withdrawn. Trustee shall have no obligation
at any time to determine the current fair market value of the Trust Assets.

         Section 1.6 Negotiation of Trust Assets. Grantor shall, prior to
depositing assets with Trustee, and as required thereafter, execute assignments,
endorsements or appropriate stock or bond powers with respect to all Trust
Assets in the Trust Account so that Beneficiary or Trustee upon direction by
Beneficiary may whenever necessary negotiate such Trust Assets without consent
or signature from Grantor or any other person or entity. Trustee shall determine
that the requirements of this Section 1.6 as to form for Trust Assets deposited
in the Trust Account have been complied with by Grantor.

         Section 1.7 Investment of Trust Assets. Grantor shall be responsible
for directing Trustee to invest and reinvest the Trust Assets and the income
thereof and, unless and until directed by Grantor, Trustee shall not be required
to take any action with respect to the investment or reinvestment of Trust
Assets in the Trust Account or the income thereof. Trustee shall invest and
reinvest the Trust Assets in such investments as Grantor shall direct which are
permitted under Section 1.2 hereof and consistent with the requirements hereof.
Trustee shall have no liability to Grantor or Beneficiary with respect to
investments made in compliance with such directives, except for Trustee's
negligence, willful misconduct or bad faith in complying with such instructions.

         Section 1.8 Income. Income, including interest and dividends, arising
from investment of the Trust Assets shall be the property of Grantor and to the
extent that Trustee shall collect and receive such income from the Trust
Account, it shall pay over the amount of such income, from time to time as
agreed with Grantor, after deduction of Trustee's compensation and expenses as
provided herein. Trustee shall have no obligation with respect to the collection
of such income.

         Section 1.9 Statements of Assets. Trustee shall provide to Grantor and
Beneficiary statements of Trust Assets in the Trust Account, and statements of
account (such statements to be in form and content like those that Trustee
customarily maintains for custody accounts similar to the Trust Account) showing
all transactions in the Trust Account upon its inception and

                                       3
<PAGE>

thereafter within fifteen (15) days of the end of each calendar month. Trustee
shall also furnish to Grantor and Beneficiary notice of any deposits to or
withdrawals from the Trust Account at the end of each month following the
occurrence of such event.

                                   ARTICLE II
                         PROVISIONS RELATING TO TRUSTEE

         Section 2.1 Responsibilities. Trustee shall be liable for the
safekeeping and administration of the Trust Account in accordance with the
provisions of this Trust Agreement, provided that the duties and
responsibilities of Trustee hereunder shall be determined solely by the express
provisions of this Trust Agreement and no other or further duties or
responsibilities shall be implied. Trustee shall not be liable or responsible
for any loss to the Trust Account unless the same be caused by its own
negligence, willful misconduct, or lack of good faith. Trustee shall have no
obligation hereunder for costs, expenses, damages, liabilities or claims,
including attorneys' fees, which are sustained or incurred by reason of any
action or inaction by the Book-Entry System or any Depository, or their
respective successors or nominees. in no event shall Trustee be liable to
Grantor, Beneficiary or any third party for special, indirect or consequential
damages.

         Section 2.2 Indemnification of Trustee. Grantor and Beneficiary agree
to indemnify Trustee and to hold it harmless against any and all costs,
expenses, damages, liabilities or claims, including reasonable fees and expenses
of counsel, which Trustee may sustain or incur or which may be asserted against
the Trustee by reason of or as a result of any action taken or omitted by
Trustee in connection with operating under this Agreement or incurred by the
Trustee in a successful defense of claims by Grantor and/or Beneficiary, except
those costs, expenses, damages, liabilities or claims arising out of Trustee's
negligence, willful misconduct, or lack of good faith. This indemnity shall be a
continuing obligation of Grantor and Beneficiary notwithstanding the termination
of this Agreement.

         Section 2.3 Identification of Authorized Persons. Grantor and
Beneficiary agree to deliver to Trustee a certificate listing the persons
authorized by Grantor and Beneficiary, respectively, to provide instructions to
Trustee hereunder ("Authorized Persons"). Such certificate shall also contain
the facsimile signature of such Authorized Persons. Any statement, certificate,
notice, request, consent, approval, or other instrument to be delivered or
furnished by Grantor or Beneficiary shall be sufficiently executed if it
purports to be executed in the name of the respective party by an Authorized
Person.

         Section 2.4 Reliance by Trustee. Trustee shall be protected in acting
upon any statement, notice, instruction, facsimile, certificate, report, letter,
or other document believed by Trustee to be genuine and which purports to have
been signed, sent or presented by an Authorized Person. Trustee's understanding
of any oral or telephone instructions shall be controlling notwithstanding any
discrepancy between such understanding and any confirming letter sent by
Beneficiary or Grantor. Grantor and Beneficiary shall notify Trustees in writing
forthwith of any change of address from that listed on the signature page
hereof.

         Section 2.5 Trustee's Counsel. Trustee may consult with counsel of its
own choice and shall have full and complete authorization and protection for any
action taken, omitted or

                                       4
<PAGE>

suffered by it hereunder in good faith in accordance with the opinion of such
counsel and in the absence of negligence or willful misconduct.

         Section 2.6 Administration of Trust Assets.

         (a)      When Trustee is directed to deliver Trust Assets of the Trust
Account against payment, delivery will be made in accordance with generally
accepted market practice.

         (b)      Trustee is authorized and empowered in its sole administrative
discretion, with respect to the Trust Account:

                  (1)      to make, execute, acknowledge and deliver any and all
                           documents of transfer and conveyance and any and all
                           other instruments that may be necessary or
                           appropriate to carry out the powers granted herein;

                  (2)      to collect all interest, dividends and other income
                           payable with respect to Trust Assets in the Trust
                           Account, and to surrender securities at maturity or
                           when advised of earlier call for redemption, provided
                           that Trustee shall not be liable for failure to
                           surrender any security in the Trust Account for
                           redemption prior to maturity or take other action if
                           notice of such redemption or other action was not
                           provided to Trustee by the issuer, Grantor,
                           Beneficiary or one of the nationally recognized bond
                           or corporate action services to which Trustee
                           subscribes;

                  (3)      to exchange securities in temporary form for
                           securities in definitive form, and to effect an
                           exchange of shares where the par value is changed;
                           and

                  (4)      to endorse for collection checks, drafts or other
                           negotiable instruments.

         (c)      When fractional shares of stock of a declaring corporation are
received as a stock distribution, Trustee is authorized to sell the fraction
unless otherwise instructed by Grantor. Trustee is authorized to exchange
securities in bearer form for securities in registered form unless Grantors
specifically instruct in writing to the contrary. If the issuer of any security
held in the Trust Account so requests, Trustee may, until Trustee receives
contrary instructions, release the identity of Grantor to such issuer for the
specific purpose of direct communication between such issuer and Grantor.

         (d)      With respect to all securities, however registered, it is
understood that the voting and other rights and powers shall be exercised by
Grantor. Trustee's only duty shall be to mail to Grantor any documents received,
including proxy statements and offering circulars, with any proxies for
securities registered in a nominee name executed by such nominee. Where
warrants, options, tenders, or other securities or rights have fixed expiration
dates, Grantor understands that in order for Trustee to act, it must receive
Grantor's instructions at its offices in Austin, Texas, addressed as Trustee may
from time to time request, by no later than noon (Central time) at least one
business day prior to the last scheduled date to act with respect thereto (or
such earlier date or time as Trustee may specify to Grantor). Absent Trustee's
timely receipt of such instructions, Trustee shall not be liable if such
instruments expire. Corporate reports need not be forwarded to Grantor.

                                       5
<PAGE>

         (e)      On the instructions and for the account and risk of Grantor,
and subject to the provisions hereof, Trustee will use its best efforts in
placing or negotiating orders to buy or sell Trust Assets for Grantor and the
Trust Account. Trustee or any of its subsidiaries or affiliates, acting as
principal, may sell such property to, or buy such property from, Grantor and the
Trust Account, and may act as agent for, provide banking and other services to,
and generally engage in any kind of business with, issuers of securities and
money market instruments purchased for Grantor and the Trust Account to the same
extent as if Trustee were not custodian hereunder.

         Section 2.7 Records. Trustee shall keep full and complete records of
the administration of the Trust Account. Grantor or Beneficiary may upon
reasonable notice to Trustee examine such records during business hours by any
person or persons duly authorized in writing by Grantor or Beneficiary as the
case may be.

         Section 2.8 Compensation of Trustee. Grantor hereby agrees to
compensate Trustee for the services to be rendered hereunder at rates and at
such times as Grantor and Trustee shall agree, and to pay or reimburse Trustee
upon request for all expenses, disbursements and advances, including reasonable
attorneys' fees, incurred or made by it in connection with carrying out its
duties hereunder or defending itself against any claim of liability. Trustee is
entitled to receive its compensation and other expense from the income paid with
respect to the Trust Account prior to the payment thereof to Grantor. Grantor
and Trustee acknowledge that the Trust Account is established solely for the
benefit of Beneficiary and may not be invaded for the purpose of paying
compensation to, or reimbursing, Trustee.

         Section 2.9 Resignation or Removal of Trustee.

         (a)      Trustee may resign, by written notice of resignation,
effective not less than ninety (90) days after receipt by Grantor and
Beneficiary of such notice. Grantor may remove Trustee at any time, without
assigning any cause therefor, upon ninety (90) days prior written notice to
Trustee. Grantor and Beneficiary shall appoint and approve a successor Trustee
upon receipt of Trustee's notice of resignation, or upon removal. No such
resignation or removal shall be effective until a successor trustee has been
duly appointed and approved and such successor trustee has accepted such
appointment and all Trust Assets has been duly transferred to the successor
trustee; provided that, Trustee reserves the right, in the event of its
resignation or removal to seek appropriate judicial relief in the event a
successor Trustee has not been appointed or approved within 90 days after the
effective date of Trustee's resignation. In case of appointment of a successor
trustee, all of the powers, rights and duties of Trustee named herein shall
survive and continue in the successor trustee and every successor trustee shall
succeed to, take and have all the estate, powers, rights and duties which
belonged to or were held by its predecessor. In the case of the resignation or
removal of a trustee, such trustee shall have the right to an accounting with
respect to the Trust Account and payment of any and all fees, and expenses and
other obligations owing to such trustee.

         (b)      Any successor trustee shall be a bank or trust company
organized and existing under laws of the State of Texas or shall be a member of
the Federal Reserve System of the United States, and shall not be parent,
subsidiary or affiliate of either Grantor or Beneficiary.

                                       6
<PAGE>

                                   ARTICLE III
                            MISCELLANEOUS PROVISIONS

         Section 3.1 Termination. This Trust Agreement may be terminated by
Grantor upon sixty (60) days prior written notice to Trustee by Grantor. Such
written notice of termination shall be delivered by Trustee to Beneficiary at
least thirty (30) but not more than forty-five (45) days prior to termination.
This Trust Agreement shall terminate, and the Trust Account shall be closed, at
such time as the value of the Trust Assets is less than $1,000.00. Upon the
termination of this Trust Agreement and the Trust Account, Trustee shall, after
deduction of any and all fees and expenses of Trustee, transfer, pay over and
deliver to Grantor any undistributed income and with written approval of
Beneficiary all of the Trust Assets not previously withdrawn by Beneficiary
(without adjustment for any accrued income), and such payment, transfer and
delivery shall constitute a full and sufficient discharge and release of Trustee
in respect thereof.

         Section 3.2 Law Governing. This Trust Agreement, and any amendments
thereto, shall be administered, governed by, and construed in accordance with,
the internal substantive laws of the State of Texas. Grantor, Beneficiary and
Trustee each consents to the jurisdiction of the federal court situated in
Austin, Texas in connection with any dispute arising hereunder.

         Section 3.3 Amendments. This Trust Agreement may not be amended or
modified in any manner except by a written agreement executed by all parties.

         Section 3.4 Severability. In the event any provisions of this Trust
Agreement shall be held invalid or unenforceable for any reason, such invalidity
or unenforceability shall not affect the validity, legality or enforceability of
any other provision.

         Section 3.5 Assignment. This Trust Agreement shall extend to and shall
be binding upon the parties hereto, and their respective successors and assigns;
provided, however, that this Trust Agreement shall not be assignable by any
party without the written consent of the other parties.

         Section 3.6 Multiple Originals. This Trust Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original, but
such counterparts shall, together, constitute only one instrument.

         Section 3.7 Entire Agreement. This Trust Agreement constitutes the
entire Agreement of the parties hereto with respect to the Trust Account and is
not subject to any conditions or qualifications not expressed herein.

                                       7
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be executed by their respective corporate officers, thereunto duly
authorized, this 9th day of March, 2004.

GRANTOR                                      Address for Notice

TEXAS INTERNATIONAL LIFE INSURANCE
COMPANY

                                             Bridgepoint Square, Building One
By: /s/ Larry J. Doze                        6300 Bridgepoint Parkway, Suite 340
    ------------------------------           Austin, Texas 78730
        Larry J. Doze, President

BENEFICIARY                                  Address for Notice

CITIZENS INSURANCE COMPANY

By: /s/ Mark Oliver
    ------------------------------
        Mark Oliver, President

TRUSTEE                                      Address for Notice

WELLS FARGO BANK, N.A.

By: /s/ Wells Fargo Bank
    ------------------------------
Title:
       ---------------------------

                                       8

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