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EXHIBIT 10.2 

PLEDGE AND SECURITY AGREEMENT

    THIS PLEDGE AND SECURITY AGREEMENT (this “Agreement”) is entered into as of May 5, 2021 among the parties identified as “Obligors” on the signature pages hereto and such other parties that may become Obligors hereunder after the date hereof (each individually an “Obligor” and collectively the “Obligors”), and REGIONS BANK, in its capacity as lender (in such capacity, the “Lender”).

RECITALS

WHEREAS, pursuant to that certain Credit Agreement dated as of the date hereof (as amended, modified, supplemented, increased, extended, restated, renewed, refinanced and replaced from time to time, the “Credit Agreement”) among CITIZENS, INC., a Colorado corporation (the “Borrower”), certain Subsidiaries of the Borrower from time to time party thereto as Guarantors and the Lender, the Lender has agreed to make Loans upon the terms and subject to the conditions set forth therein; and

    WHEREAS, this Agreement is required by the terms of the Credit Agreement.

    NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

    1.    Definitions.

    (a)    Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement and the following terms shall have the meanings set forth in the UCC:  Accession, Account, Account Debtor, Adverse Claim, As-Extracted Collateral, Certificated Securities, Chattel Paper, Commercial Tort Claim, Consumer Goods, Deposit Account, Document, Electronic Chattel Paper, Equipment, Farm Products, Financial Asset, Fixtures, General Intangible, Goods, Instrument, Inventory, Investment Company Security, Investment Property, Letter-of-Credit Right, Manufactured Home, Money, Payment Intangibles, Proceeds, Securities Account, Security Entitlement, Securities Intermediary, Security, Software, Supporting Obligation and Tangible Chattel Paper.

(b)    In addition, the following terms shall have the meanings set forth below:

        “Collateral” has the meaning provided in Section 2 hereof.

        “Copyright License” means any written agreement, naming any Obligor as licensor, granting any right under any Copyright.

        “Copyrights” means (i) all registered United States copyrights in all Works, now existing or hereafter created or acquired, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, registrations, recordings and applications in the United States Copyright Office, and (ii) all renewals thereof.    

“Obligors” has the meaning assigned in the preamble.

CHAR1\1799363v4

“Patent License” means any written agreement providing for the grant by or to an Obligor of any right to manufacture, use or sell any invention covered by a Patent.

        “Patents” means (i) all letters patent of the United States or any other country and all reissues and extensions thereof, and (ii) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof.
    
    “Pledged Equity” means, with respect to each Obligor, (a) one hundred percent (100%) of the issued and outstanding Equity Interests of each Domestic Subsidiary and (b) sixty-five percent (65.0%) of the issued and outstanding Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956–2(c)(2)), and one hundred percent (100%) of the issued and outstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956–2(c)(2)), of each Foreign Subsidiary that is directly owned by such Obligor, including, without limitation, the Equity Interests of the Subsidiaries owned by such Obligor as set forth on Schedule 1 hereto, in each case together with the certificates (or other agreements or instruments), if any, representing such Equity Interests, and all options and other rights, contractual or otherwise, with respect thereto, including, but not limited to, the following:

    (A)    all Equity Interests representing a dividend thereon, or representing a distribution or return of capital upon or in respect thereof, or resulting from a stock split, revision, reclassification or other exchange therefor, and any subscriptions, warrants, rights or options issued to the holder thereof, or otherwise in respect thereof; and

    (B)    in the event of any consolidation or merger involving the issuer thereof and in which such issuer is not the surviving Person, all shares of each class of the Equity Interests of the successor Person formed by or resulting from such consolidation or merger, to the extent that such successor Person is a direct Subsidiary of an Obligor;

    provided that notwithstanding anything to the contrary in the foregoing or in this Agreement, no Equity Interests of any Regulated Subsidiary shall be required to be pledged as Collateral.

        “Trademark License” means any written agreement providing for the grant by or to an Obligor of any right to use any Trademark.

    “Trademarks” means (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, or otherwise and (ii) all renewals thereof.

    “Work” means any work that is subject to copyright protection pursuant to Title 17 of the United States Code.

    2.    Grant of Security Interest in the Collateral.  To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Obligations, each Obligor hereby grants to the Lender, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to all of the 
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following, whether now owned or existing or owned, acquired, or arising hereafter (collectively, the “Collateral”):  (a) all Accounts; (b) all Money; (c) all Chattel Paper; (d) those certain Commercial Tort Claims set forth on Schedule 2 hereto; (e) all Copyrights; (f) all Copyright Licenses; (g) all Deposit Accounts; (h) all Documents; (i) all Equipment; (j) all Fixtures; (k) all General Intangibles; (l) all Goods; (m) all Instruments; (n) all Inventory; (o) all Investment Property; (p) all Letter-of-Credit Rights; (q) all Patents; (r) all Payment Intangibles; (s) all Patent Licenses; (t) all Pledged Equity; (u) all Securities Entitlements; (v) all Software; (w) all Supporting Obligations; (x) all Trademarks; (y) all Trademark Licenses; (z) all books and records related to any of the foregoing; and (aa) all Accessions and all Proceeds of any and all of the foregoing.  As of the Closing Date, the Borrower is the sole Obligor. 

Notwithstanding anything to the contrary contained herein or any of the Credit Documents, the security interests granted under this Agreement shall not extend to (a) any Excluded Property; provided that upon the occurrence of an event or events that result in any such property no longer constituting Excluded Property, a security interest in such property shall be automatically and simultaneously granted hereunder, and such property shall be included as Collateral hereunder, or (b) any personal property of any Regulated Subsidiary.

    The Obligors and the Lender hereby acknowledge and agree that the security interest created hereby in the Collateral (A) constitutes continuing collateral security for all of the Obligations, whether now existing or hereafter arising and (B) is not to be construed as an assignment of any Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks or Trademark Licenses.

    3.    Representations and Warranties.  Each Obligor hereby represents and warrants to the Lender that:

        (a)    Ownership.  Each Obligor is the legal and beneficial owner of its Collateral and has the right to pledge, sell, assign or transfer the same.  There exists no Adverse Claim with respect to the Pledged Equity of such Obligor.  

        (b)    Security Interest/Priority.  This Agreement creates a valid security interest in favor of the Lender in the Collateral of such Obligor and, when properly perfected by filing financing statement(s) in the appropriate filing offices, shall constitute a valid and perfected, first priority security interest in such Collateral (including all uncertificated Pledged Equity consisting of partnership or limited liability company interests that do not constitute Securities), to the extent such security interest can be perfected by filing under the UCC, free and clear of all Liens except for Permitted Liens.  The taking of possession by the Lender of the certificated Securities (if any) constituting the Pledged Equity and all other Instruments constituting Collateral will perfect and establish the first priority of the Lender’s security interest in all the Pledged Equity evidenced by such certificated Securities and such Instruments.  With respect to any Collateral consisting of a Deposit Account, Security Entitlement or held in a Securities Account, upon execution and delivery by the applicable Obligor (if any), the applicable Securities Intermediary and the Lender of an agreement granting control to the Lender over such Collateral, the Lender shall have a valid and perfected, first priority security interest in such Collateral (subject to Permitted Liens).
        (c)    Types of Collateral.  None of the Collateral consists of, or is the Proceeds of, As-Extracted Collateral, Consumer Goods, Farm Products, Manufactured Homes or standing timber.

        (d)    Equipment and Inventory.  With respect to any Equipment and/or Inventory of an Obligor, each such Obligor has exclusive possession and control of such Equipment and 
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Inventory of such Obligor except for (i) Equipment leased by such Obligor as a lessee or (ii) Equipment or Inventory in transit with common carriers.  No Inventory of an Obligor is held by a Person other than an Obligor pursuant to consignment, sale or return, sale on approval or similar arrangement.  

        (e)    Authorization of Pledged Equity.  All Pledged Equity is duly authorized and validly issued, is fully paid and, to the extent applicable, nonassessable and is not subject to the preemptive rights, warrants, options or other rights to purchase of any Person, or equityholder, voting trust or similar agreements outstanding with respect to, or property that is convertible, into, or that requires the issuance and sale of, any of the Pledged Equity, except to the extent expressly permitted under the Credit Documents.  

        (f)    No Other Equity Interests, Instruments, Etc.  As of the Closing Date, (i) no Obligor owns any certificates representing Equity Interests in any Subsidiary that are required to be pledged and delivered to the Lender hereunder other than as set forth on Schedule 1 hereto and (ii) no Obligor holds any Instruments, Documents or Tangible Chattel Paper required to be pledged and delivered to the Lender pursuant to Section 4(a)(i) of this Agreement other than as set forth on Schedule 3 hereto, and all such certificates representing such Equity Interests, Instruments, Documents and Tangible Chattel Paper have been delivered to the Lender.

        (g)    Partnership and Limited Liability Company Interests.  Except as previously disclosed to the Lender, none of the Collateral consisting of an interest in a partnership or a limited liability company (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is a Security governed by Article 8 of the UCC, (iii) is an Investment Company Security, (iv) is held in a Securities Account or (v) constitutes a Security or a Financial Asset.

        (h)    [Reserved]. 

(i)    Consents; Etc.  There are no restrictions in any Organizational Document governing any Pledged Equity or any other document related thereto which would limit or restrict (i) the grant of a Lien pursuant to this Agreement on such Pledged Equity, (ii) the perfection of such Lien or (iii) the exercise of remedies in respect of such perfected Lien in the Pledged Equity as contemplated by this Agreement.  Except for (i) the filing or recording of UCC financing statements, (ii) the filing of appropriate notices with the United States Patent and Trademark Office and the United States Copyright Office, (iii) obtaining control to perfect the Liens created by this Agreement (to the extent required under Section 4(a) hereof), (iv) such actions as may be required by Applicable Law affecting the offering and sale of securities, (v) such actions as may be required by foreign Applicable Law affecting the pledge of the Pledged Equity of Foreign Subsidiaries and (vi) consents, authorizations, filings or other actions which have been obtained or made, no consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority and no consent of any other Person (including, without limitation, any stockholder, member or creditor of such Obligor), is required for (A) the grant by such Obligor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by such Obligor, (B) the perfection of such security interest (to the extent such security interest can be perfected by filing under the UCC, the granting of control (to the extent required under Section 4(a) hereof) or by filing an appropriate notice with the United States Patent and Trademark Office or the United States Copyright Office) or (C) the exercise by the Lender of the rights and remedies provided for in this Agreement.
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        (j)    Commercial Tort Claims.  As of the Closing Date, no Obligor has any Commercial Tort Claims seeking damages in excess of Two Hundred Thousand Dollars ($200,000) in any individual instance, or in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate when taken together with all Commercial Tort Claims of all of the other Obligors, in each case, other than as set forth on Schedule 2 hereto.

        (k)    Copyrights, Patents and Trademarks.

(i)Schedule 3 hereto includes: (A) all registrations or applications for U.S. federal Copyrights, Patents and Trademarks owned by any Obligor in its own name as of the date hereof; and (B) all material or exclusive Copyright Licenses, Patent Licenses and Trademark Licenses to which any Obligor is a party as of the date hereof.
(ii)All registrations and letters pertaining to such Copyrights, Patents and Trademarks have been duly and properly filed in all material respects, and, to the best knowledge of any Authorized Officer of such Obligor, each Copyright, Patent and Trademark of such Obligor is valid, subsisting, unexpired, enforceable, and has not been abandoned.
(iii)Except as set forth on Schedule 3 hereto or agreements enabling use of Trademarks solely to represent a party has performed work for the Obligor, none of such Copyrights, Patents and Trademarks is the subject of any licensing or franchise agreement as of the date hereof.
(iv)Except as could not reasonably be expected to result in a Material Adverse Effect, to the best knowledge of any Authorized Officer of such Obligor, no holding, decision or judgment has been rendered by any Governmental Authority that would limit, cancel, or question the validity of any such Copyright, Patent or Trademark.
(v)No action or proceeding is pending: (A) that is seeking to limit, cancel, or question the validity of any Copyright, Patent or Trademark; and (B) which could reasonably be expected to have a Material Adverse Effect.
    4.    Covenants.  Each Obligor covenants that until such time as the Obligations arising under the Credit Documents have been indefeasibly paid in full and the Commitments have expired or terminated, such Obligor shall:

        (a)    Instruments/Chattel Paper/Pledged Equity/Control. 
            
        (i)    If any amount in excess of Two Hundred Thousand Dollars ($200,000) in any individual instance, or in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate, payable under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Tangible Chattel Paper, or if any property constituting Collateral with a value in excess of One Hundred Thousand Dollars ($100,000) in any individual instance, or in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate, shall be stored or shipped subject to a Document, ensure that such Instrument, Tangible Chattel Paper or Document is either in the possession of such Obligor at all times or, if requested by the Lender to perfect its security interest in such 
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Collateral, is delivered to the Lender duly endorsed in a manner reasonably satisfactory to the Lender.  Such Obligor shall ensure that any Collateral consisting of Tangible Chattel Paper is marked with a legend acceptable to the Lender indicating the Lender’s security interest in such Tangible Chattel Paper.

        (ii)    Deliver to the Lender promptly upon the receipt thereof by or on behalf of an Obligor, all certificates and instruments constituting Pledged Equity.  Prior to delivery to the Lender, all such certificates constituting Pledged Equity shall be held in trust by such Obligor for the benefit of the Lender pursuant hereto.  All such certificates representing Pledged Equity shall be delivered in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment in blank, substantially in the form provided in Exhibit 4(a) hereto.

        (iii)    Execute and deliver all agreements, assignments, instruments or other documents as reasonably requested by the Lender for the purpose of obtaining and maintaining control with respect to any Collateral consisting of (A) Investment Property, (B) Letter-of-Credit Rights, (C) Electronic Chattel Paper and (D) Deposit Accounts or Securities Accounts (other than Excluded Property).

        (b)    Filing of Financing Statements, Notices, etc.  Each Obligor shall execute and deliver to the Lender such agreements, assignments or instruments (including, without limitation, affidavits, notices, reaffirmations and amendments and restatements of existing documents, as the Lender may reasonably request) and do all such other things as the Lender may reasonably deem necessary or appropriate (i) to assure to the Lender its security interests hereunder, including, without limitation, (A) such instruments as the Lender may from time to time reasonably request in order to perfect and maintain the security interests granted hereunder in accordance with the UCC or otherwise in compliance with the requirements of the Applicable Law of the relevant jurisdiction, (B) with regard to Copyrights, a Notice of Grant of Security Interest in Copyrights in the form of Exhibit 4(b)(i), (C) with regard to Patents, a Notice of Grant of Security Interest in Patents for filing with the United States Patent and Trademark Office in the form of Exhibit 4(b)(ii) hereto and (D) with regard to Trademarks, a Notice of Grant of Security Interest in Trademarks for filing with the United States Patent and Trademark Office in the form of Exhibit 4(b)(iii) hereto, (ii) to consummate the transactions contemplated hereby and (iii) to otherwise protect and assure the Lender of its rights and interests hereunder.  Furthermore, each Obligor also hereby irrevocably makes, constitutes and appoints the Lender, its nominee or any other Person whom the Lender may designate, as such Obligor’s attorney in fact with full power and for the limited purpose to sign in the name of such Obligor any financing statements, or amendments and supplements to financing statements, renewal financing statements, notices or any similar documents which in the Lender’s reasonable discretion would be necessary or appropriate in order to perfect and maintain perfection of the security interests granted hereunder, such power, being coupled with an interest, being and remaining irrevocable until such time as the Obligations arising under the Credit Documents have been indefeasibly paid in full and the Commitments have expired or terminated.  Each Obligor hereby agrees that a carbon, photographic or other reproduction of this Agreement or any such financing statement (or amendment thereof or supplement thereto) is sufficient for filing as a financing statement (or amendment thereof or supplement thereto) by the Lender without notice thereof to such Obligor wherever the Lender may in its sole discretion desire to file the same.

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        (c)    Collateral Held by Warehouseman, Bailee, etc.  If any Collateral with a value in excess of Two Hundred Thousand Dollars ($200,000) is at any time in the possession or control of a warehouseman, bailee or any agent or processor of such Obligor and the Lender so requests, (i) notify such Person in writing of the Lender’s security interest therein, (ii) instruct such Person to hold all such Collateral for the Lender’s account and subject to the Lender’s instructions and (iii) use commercially reasonable efforts to obtain a written acknowledgment from such Person that it is holding such Collateral for the benefit of the Lender.

        (d)    Commercial Tort Claims.  Promptly (i) forward to the Lender an updated Schedule 2 listing any and all Commercial Tort Claims by or in favor of such Obligor seeking damages in excess of Two Hundred Thousand Dollars ($200,000) in any individual instance, or in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate when taken together with all Commercial Tort Claims of all of the other Obligors, in each case, which are not subject to a Lien in favor of the Lender and (ii) execute and deliver such statements, documents and notices and do and cause to be done all such things as may be reasonably required by the Lender, or required by Applicable Law to create, preserve, perfect and maintain the Lender’s security interest in any Commercial Tort Claims initiated by or in favor of any Obligor.

        (e)    Books and Records.  Mark its books and records (and shall cause the issuer of the Pledged Equity of such Obligor to mark its books and records) to reflect the security interest granted pursuant to this Agreement.  

(f)    Nature of Collateral.  At all times, maintain the Collateral as personal property and not affix any material portion of the Collateral to any real property in a manner which would change its nature from personal property to real property or a Fixture to real property, unless the Lender shall have a perfected Lien on such Fixture or real property.

(g)    Issuance or Acquisition of Equity Interests in Partnership or Limited Liability Company.  Not without executing and delivering, or causing to be executed and delivered, to the Lender such agreements, documents and instruments as the Lender may reasonably require, issue or acquire any Pledged Equity consisting of an interest in a partnership or a limited liability company that (i) is dealt in or traded on a securities exchange or in a securities market, (ii) by its terms expressly provides that it is a Security governed by Article 8 of the UCC, (iii) is an Investment Company Security, (iv) is held in a Securities Account or (v) constitutes a Security or a Financial Asset.

    5.    Authorization to File Financing Statements.  Each Obligor hereby authorizes the Lender to prepare and file such financing statements (including, without limitation, continuation statements) or amendments thereof or supplements thereto or other instruments as the Lender may from time to time deem necessary or appropriate in order to perfect and maintain the security interests granted hereunder in accordance with the UCC (including, without limitation, authorization to describe the Collateral as “all personal property”, and/or “all assets”, in each case, “whether now owned or hereafter acquired”, or words of similar meaning).  

    6.    Advances.  After the occurrence and during the continuance of a Default or an Event of Default, the Lender may, at its sole option and in its sole discretion, perform the any of the covenants and/or agreements contained herein or in any other Collateral Document that any Obligor has failed to timely perform, and, in so doing, may expend such sums as the Lender may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any insurance premiums, the payment 
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of any taxes, payments to obtain the release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures which the Lender may make for the protection of the security hereof or which may be compelled to make by operation of any Applicable Law.  All such sums and amounts so expended shall be repayable by the Obligors on a joint and several basis promptly upon timely notice thereof and demand therefor, shall constitute additional Obligations and shall bear interest from the date said amounts are expended at the Default Rate.  No such performance of any covenant or agreement by the Lender on behalf of any Obligor, and no such advance or expenditure therefor, shall relieve the Obligors of any Default or Event of Default.  The Lender may make any payment hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by an Obligor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP.

    7.    Remedies.

(a)    General Remedies.  Upon the occurrence of an Event of Default and during continuation thereof, the Lender shall have, in addition to the rights and remedies provided herein, in the Credit Documents, in any other documents relating to the Obligations, or by any Applicable Law (including, but not limited to, levy of attachment, garnishment and the rights and remedies set forth in the UCC of the jurisdiction applicable to the affected Collateral), the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the rights and remedies are asserted and regardless of whether the UCC applies to the affected Collateral), and further, the Lender may, with or without judicial process or the aid and assistance of others (in each case of clauses (i) through (v), inclusive, hereof, subject to any and all mandatory legal requirements to the extent not waived), (i) enter on any premises on which any of the Collateral may be located and, without resistance or interference by the Obligors, take possession of the Collateral, (ii) dispose of any Collateral on any such premises, (iii) require the Obligors to assemble and make available to the Lender at the expense of the Obligors any Collateral at any place and time designated by the Lender which is reasonably convenient to both parties, (iv) remove any Collateral from any such premises for the purpose of effecting sale or other disposition thereof, and/or (v) without demand and without advertisement, notice, hearing or process of law, all of which each of the Obligors hereby waives to the fullest extent permitted by Applicable Law, at any place and time or times, sell and deliver any or all Collateral held by or for it at public or private sale (which in the case of a private sale of Pledged Equity, shall be to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such securities for their own account, for investment and not with a view to the distribution or resale thereof), at any exchange or broker’s board or elsewhere, by one or more contracts, in one or more parcels, for Money, upon credit or otherwise, at such prices and upon such terms as the Lender deems advisable, in its sole discretion.  Each Obligor acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sale shall be deemed to have been made in a commercially reasonable manner and, in the case of a sale of Pledged Equity, that the Lender shall have no obligation to delay sale of any such securities for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act of 1933.  Neither the Lender’s compliance with any Applicable Law nor its disclaimer of warranties relating to the Collateral shall be considered to adversely affect the commercial reasonableness of any sale.  To the extent the rights of notice cannot be legally waived hereunder, each Obligor agrees that any requirement of reasonable notice shall be met if such notice, specifying the place of any public sale or the time after which any private sale is to be made, is personally served on or mailed, postage prepaid, to the Obligors in accordance with the notice 
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provisions of Section 10.1 of the Credit Agreement at least ten (10) days before the time of sale or other event giving rise to the requirement of such notice.  The Lender may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  Each Obligor further acknowledges and agrees that any offer to sell any Pledged Equity which has been (A) publicly advertised on a bona fide basis in a newspaper or other publication of general circulation in the financial community of New York, New York (to the extent that such offer may be advertised without prior registration under the Securities Act of 1933), or (B) made privately in the manner described above shall be deemed to involve a “public sale” under the UCC, notwithstanding that such sale may not constitute a “public offering” under the Securities Act of 1933, and the Lender may, in such event, bid for the purchase of such securities.  The Lender shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given.  To the extent permitted by Applicable Law, any holder of Obligations may be a purchaser at any such sale.  To the extent permitted by Applicable Law, each of the Obligors hereby waives all of its rights of redemption with respect to any such sale.  Subject to the provisions of any Applicable Law, the Lender may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, to the extent permitted by Applicable Law, be made at the time and place to which the sale was postponed, or the Lender may further postpone such sale by announcement made at such time and place.

(b)    Remedies relating to Accounts.  Upon the occurrence of an Event of Default and during continuation thereof, whether or not the Lender has exercised any or all of its rights and remedies hereunder, (i) each Obligor will promptly upon request of the Lender instruct all account debtors to remit all payments in respect of Accounts to a mailing location selected by the Lender and (ii) the Lender shall have the right to enforce any Obligor’s rights against its customers and account debtors, and the Lender or its designee may notify any Obligor’s customers and account debtors that the Accounts of such Obligor have been assigned to the Lender or of the Lender’s security interest therein, and may (either in its own name or in the name of an Obligor or both) demand, collect (including without limitation by way of a lockbox arrangement), receive, take receipt for, sell, sue for, compound, settle, compromise and give acquittance for any and all amounts due or to become due on any Account, and, in the Lender’s discretion, file any claim or take any other action or proceeding to protect and realize upon the security interest of the Lender in the Accounts.  Each Obligor acknowledges and agrees that the Proceeds of its Accounts remitted to or on behalf of the Lender in accordance with the provisions hereof shall be solely for the Lender’s own convenience and that such Obligor shall not have any right, title or interest in such Accounts or in any such other amounts except as expressly provided herein.  The Lender shall not have any liability or responsibility to any Obligor for acceptance of a check, draft or other order for payment of money bearing the legend “payment in full” or words of similar import or any other restrictive legend or endorsement or be responsible for determining the correctness of any remittance.  Furthermore, during the continuation of an Event of Default, (i) the Lender shall have the right, but not the obligation, to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable, and the Obligors shall furnish all such assistance and information as the Lender may require in connection with such test verifications, (ii) upon the Lender’s request and at the expense of the Obligors, the Obligors shall cause independent public accountants or others satisfactory to the Lender to furnish to the Lender reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts and (iii) the Lender in its own name or in the name of others may communicate with account debtors on the Accounts to verify with them to the Lender’s satisfaction the existence, amount and terms of any Accounts.

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(c)    Deposit Accounts.  Upon the occurrence of an Event of Default and during continuation thereof, the Lender may: (i) prevent withdrawals or other dispositions of funds in Deposit Accounts that are maintained with the Lender; and (ii) exercise control pursuant to any control agreement governing any Deposit Account or Securities Account not maintained with the Lender.

(d)    Access.  In addition to the rights and remedies hereunder, upon the occurrence of an Event of Default and during the continuance thereof, the Lender shall have the right to enter and remain upon the various premises of the Obligors without cost or charge to the Lender, and use the same, together with materials, supplies, books and records of the Obligors for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise.  In addition, upon the occurrence of an Event of Default and the continuation thereof, the Lender may remove Collateral, or any part thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral.

(e)    Nonexclusive Nature of Remedies.  Failure by the Lender to exercise any right, remedy or option under this Agreement, any other Credit Document, any other document relating to the Obligations, or as provided by any Applicable Law, or any delay by the Lender in exercising the same, shall not operate as a waiver of any such right, remedy or option.  No waiver hereunder shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of the Lender shall only be granted as provided herein.  To the extent permitted by Applicable Law, neither the Lender, nor any party acting as attorney for the Lender, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder.  The rights and remedies of the Lender under this Agreement shall be cumulative and not exclusive of any other right or remedy which the Lender may have.

(f)    Retention of Collateral.  In addition to the rights and remedies hereunder, the Lender may, in compliance with Sections 9-620 and 9-621 of the UCC or otherwise in compliance with the requirements of any Applicable Law of the relevant jurisdiction, accept or retain the Collateral in satisfaction of the Obligations.  Unless and until the Lender shall have provided such notices, however, the Lender shall not be deemed to have retained any Collateral in satisfaction of any Obligations for any reason.

(g)    Deficiency.  In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Lender is legally entitled, the Obligors shall be jointly and severally liable for the deficiency, together with interest thereon at the Default Rate, together with the costs of collection and the fees, charges and disbursements of counsel.  Any surplus remaining after the full payment and satisfaction of the Obligations shall be returned to the Obligors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto.  

    8.    Rights of the Lender.

(a)    Power of Attorney.  In addition to other powers of attorney contained herein, each Obligor hereby designates and appoints the Lender and each of its designees or agents, as attorney-in-fact of such Obligor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuance of an Event of Default and during the continuation thereof:

10

(i)    to demand, collect, settle, compromise, adjust, give discharges and releases, all as the Lender may reasonably determine;

(ii)    to commence and prosecute any actions at any court for the purposes of collecting any Collateral and enforcing any other right in respect thereof;

(iii)    to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release as the Lender may deem reasonably appropriate;

(iv)    to receive, open and dispose of mail addressed to an Obligor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to the Collateral of such Obligor on behalf of and in the name of such Obligor, or securing, or relating to such Collateral;

(v)    to sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any Collateral or the goods or services which have given rise thereto, as fully and completely as though the Lender were the absolute owner thereof for all purposes;

(vi)    to adjust and settle claims under any insurance policy relating thereto;

(vii)    to execute and deliver all assignments, conveyances, statements, financing statements, renewal financing statements, security agreements, affidavits, notices and other agreements, instruments and documents that the Lender may determine necessary in order to perfect and maintain the security interests and Liens in the Collateral granted in this Agreement and in order to fully consummate all of the transactions contemplated therein;

(viii)    to institute any foreclosure proceedings with respect to the Collateral that the Lender may deem appropriate; 

(ix)    to sign and endorse any drafts, assignments, proxies, stock powers, verifications, notices and other documents relating to the Collateral;

(x)    to exchange any of the Pledged Equity or other property upon any merger, consolidation, reorganization, recapitalization or other readjustment of the issuer thereof and, in connection therewith, deposit any of the Pledged Equity with any committee, depository, transfer agent, registrar or other designated agency upon such terms as the Lender may reasonably deem appropriate;

(xi)    to vote for a shareholder resolution, or to sign an instrument in writing, sanctioning the transfer of any or all of the Pledged Equity into the name of the Lender or into the name of any transferee to whom the Pledged Equity or any part thereof may be sold pursuant to Section 7 hereof; 

(xii)    to pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral;

11

(xiii)    to direct any parties liable for any payment in connection with any of the Collateral to make payment of any and all monies due and to become due thereunder directly to the Lender or as the Lender shall direct;

(xiv)    to receive payment of and receipt for any and all monies, claims, and other amounts due and to become due at any time in respect of or arising out of any Collateral; and

(xv)    do and perform all such other lawful acts and things as the Lender may reasonably deem to be necessary, proper or convenient in connection with the Collateral.

This power of attorney is a power coupled with an interest and shall be irrevocable until such time as the Obligations arising under the Credit Documents have been paid in full (other than contingent indemnity obligations for which no claim has been made) and the Commitments have expired or terminated.  The Lender shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Lender in this Agreement, and shall not be liable for any failure to do so or any delay in doing so.  The Lender shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willful misconduct.  This power of attorney is conferred on the Lender solely to protect, preserve and realize upon its security interest in the Collateral.

(b)    Assignment by the Lender.  The Lender may from time to time assign the Obligations to a successor Lender appointed in accordance with the Credit Agreement, and such successor shall be entitled to all of the rights and remedies of the Lender under this Agreement in relation thereto.

(c)    The Lender’s Duty of Care.  Other than the exercise of reasonable care to assure the safe custody of the Collateral when being held by the Lender pursuant to the terms hereof, the Lender shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that the Obligors shall be responsible for preservation of all rights in the Collateral, and the Lender shall be relieved of all responsibility for the Collateral upon surrendering it or tendering the surrender of it to the Obligors.  The Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Lender accords its own property, which shall be no less than the treatment employed by a reasonable and prudent agent in the industry, it being understood that the Lender shall not have responsibility for taking any necessary steps to preserve rights against any parties with respect to any of the Collateral.  In the event of a public or private sale of Collateral pursuant to Section 7 hereof, the Lender shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Lender has or is deemed to have knowledge of such matters, or (ii) taking any steps to clean, repair or otherwise prepare the Collateral for sale.
        
(d)    Liability with Respect to Accounts.  Anything herein to the contrary notwithstanding, each of the Obligors shall remain liable under each of the Accounts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account.  Neither the Lender nor any holder of Obligations shall have any obligation or liability under any Account (or 
12

any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Lender or any holder of Obligations of any payment relating to such Account pursuant hereto, nor shall the Lender or any holder of Obligations be obligated in any manner to perform any of the obligations of an Obligor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.
    
    (e)    Voting and Payment Rights in Respect of the Pledged Equity.

(i)    So long as no Event of Default shall exist, each Obligor may (A) exercise any and all voting and other consensual rights pertaining to the Pledged Equity of such Obligor or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement and (B) receive and retain any and all dividends (other than stock dividends and other dividends constituting Collateral which are addressed hereinabove), principal or interest paid in respect of the Pledged Equity to the extent they are allowed under the Credit Agreement; and

(ii)    During the continuance of an Event of Default, (A) all rights of an Obligor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to clause (i)(A) above shall cease and all such rights shall thereupon become vested in the Lender which shall then have the sole right to exercise such voting and other consensual rights, (B) all rights of an Obligor to receive the dividends, principal and interest payments which it would otherwise be authorized to receive and retain pursuant to clause (i)(B) above shall cease and all such rights shall thereupon be vested in the Lender which shall then have the sole right to receive and hold as Collateral such dividends, principal and interest payments, and (C) all dividends, principal and interest payments which are received by an Obligor contrary to the provisions of clause (ii)(B) above shall be received in trust for the benefit of the Lender, shall be segregated from other property or funds of such Obligor, and shall be forthwith paid over to the Lender as Collateral in the exact form received, to be held by the Lender as Collateral and as further collateral security for the Obligations.

(f)    Releases of Collateral.  (i) If any Collateral shall be sold, transferred or otherwise disposed of by any Obligor in a transaction permitted by the Credit Agreement, then the Lender, at the request and sole expense of such Obligor, shall promptly execute and deliver to such Obligor all releases and other documents, and take such other action, reasonably necessary for the release of the Liens created hereby or by any other Collateral Document on such Collateral.  (ii) The Lender may release any of the Pledged Equity pledged under this Agreement or may substitute any of the Pledged Equity for other Pledged Equity without altering, varying or diminishing in any way the force, effect, Lien, pledge or security interest of this Agreement as to any Pledged Equity not expressly released or substituted, and this Agreement shall continue as a first priority Lien on all Pledged Equity not expressly released or substituted.

    9.    Application of Proceeds.  Upon the acceleration of the Obligations pursuant to Section 9.2 of the Credit Agreement, any payments in respect of the Obligations and any proceeds of the 
13

Collateral, when received by the Lender or any holder of the Obligations in Money, will be applied in reduction of the Obligations in the order set forth in Section 9.3 of the Credit Agreement.
    
    10.    Continuing Agreement.  

(a)    This Agreement shall remain in full force and effect until such time as the Obligations arising under the Credit Documents have been paid in full and the Commitments have expired or been terminated, at which time this Agreement shall be automatically terminated and the Lender shall, upon the request and at the expense of the Obligors, forthwith release all of its Liens and security interests hereunder and shall execute and deliver all UCC termination statements and/or other documents reasonably requested by the Obligors evidencing such termination.

(b)    This Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Obligations is rescinded or must otherwise be restored or returned by the Lender or any holder of the Obligations as a preference, fraudulent conveyance or otherwise under any Debtor Relief Law, all as though such payment had not been made; provided that in the event payment of all or any part of the Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including without limitation any reasonable legal fees and disbursements) incurred by the Lender or any holder of the Obligations in defending and enforcing such reinstatement shall be deemed to be included as a part of the Obligations.

    11.    Amendments; Waivers; Modifications, etc.  This Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated except as set forth in Section 10.4 of the Credit Agreement; provided that any update or revision to Schedule 2 hereof delivered by any Obligor shall not constitute an amendment for purposes of this Section 11 or Section 10.4 of the Credit Agreement.

    12.    Successors in Interest.  This Agreement shall be binding upon each Obligor, its successors and assigns and shall inure, together with the rights and remedies of the Lender hereunder, to the benefit of the Lender and its successors and permitted assigns.

    13.    Notices.  All notices required or permitted to be given under this Agreement shall be in conformance with Section 10.1 of the Credit Agreement.

    14.    Counterparts.  This Agreement may be executed in any number of counterparts (and by different parties hereto in different counterparts), each of which where so executed and delivered shall constitute an original, but all of which when taken together shall constitute one and the same instrument.  It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means (e.g. “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart of this Agreement.

    15.    Headings.  The headings of the sections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

    16.    Governing Law; Submission to Jurisdiction; Venue; WAIVER OF JURY TRIAL.  This Agreement shall be governed by, and construed in accordance with, the law of the State of New York.  The terms of Sections 10.10(b) through (d) and 10.11 of the Credit Agreement with respect to governing 
14

law, submission to jurisdiction, venue and waiver of jury trial are incorporated herein by reference, mutatis mutandis, and the parties hereto agree to such terms.

    17.    Severability.  If any provision of this Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions.

    18.    Entirety.  This Agreement, the other Credit Documents and the other documents relating to the Obligations represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, and any contemporaneous oral agreements and understandings, if any, including any commitment letters or correspondence relating to the Credit Documents, any other documents relating to the Obligations, or the transactions contemplated herein and therein.

    19.    Other Security.  To the extent that any of the Obligations are now or hereafter secured by property other than the Collateral (including, without limitation, real property and Securities owned by an Obligor), or by a guarantee, endorsement or property of any other Person, then the Lender shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence of any Event of Default and during the continuation thereof, and the Lender shall have the right, in its sole discretion, to determine which rights, security, Liens, security interests or remedies the Lender shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or the Obligations or any of the rights of the Lender under this Agreement, under any other of the Credit Documents or under any other document relating to the Obligations.

    20.    Joinder.  At any time after the date of this Agreement, one or more additional Persons may become party hereto by executing and delivering to the Lender a Guarantor Joinder Agreement.  Immediately upon such execution and delivery of such Guarantor Joinder Agreement (and without any further action), each such additional Person will become a party to this Agreement as an “Obligor” and have all of the rights and obligations of an Obligor hereunder and this Agreement and the schedules hereto shall be deemed amended by such Guarantor Joinder Agreement.

21.    Consent of Issuers of Pledged Equity.  Each issuer of Pledged Equity party to this Agreement hereby acknowledges, consents and agrees to the grant of the security interests in such Pledged Equity by the applicable Obligors pursuant to this Agreement, together with all rights accompanying such security interest as provided by this Agreement and any Applicable Law, notwithstanding any anti-assignment provisions in any Organizational Document of such issuer.

[SIGNATURE PAGES FOLLOW]
15

Each of the parties hereto has caused a counterpart of this Pledge and Security Agreement to be duly executed and delivered as of the date first above written.

OBLIGORS:     CITIZENS, INC.,
a Colorado corporation

By:        
Name:
Title:

PLEDGE AND SECURITY AGREEMENT
CITIZENS, INC.
CHAR1\1799363v4

Accepted and agreed to as of the date first above written.

REGIONS BANK, as Lender

By:                    
Name:
Title:

PLEDGE AND SECURITY AGREEMENT
CITIZENS, INC.
CHAR1\1799363v4

SCHEDULE 1

PLEDGED EQUITY

None.    
CHAR1\1799363v4

SCHEDULE 2

COMMERCIAL TORT CLAIMS

On November 7, 2018, the Borrower and certain of its Subsidiaries filed a lawsuit (case number D-1-GN-18-006739) in the District Court of Travis County, Texas (the “District Court”) against (i) Randall Riley (“Riley”), a former Borrower executive and son of Borrower’s founder Harold E. Riley, (ii) Citizens American Life, LLC and Citizens American Life, Inc. (collectively, “CALI”), copycat companies formed by Riley and (iii) Alexis Enrique Delgado, Carlos Nalsen Landa, Enrique Pinzon Ruiz, Johan Emilio Mikuski Silva and Esperanza Peralta de Delgado (collectively, the “Los Raudales Defendants,” and together with Riley and CALI, collectively the “Defendants”), former independent consultants of Borrower, for unfair competition, misappropriation of Borrower’s trade secrets, tortious interference with Borrower’s existing contracts with its independent consultants and, with respect to the Los Raudales Defendants, breach of their independent consultant contracts with Borrower.  The lawsuit sought (i) a declaration that Borrower had grounds to terminate the Los Raudales Defendants for cause under their independent consultant contracts with Borrower and that the Los Raudales Defendants are not entitled to future commissions under such contracts, (ii) injunctive relief, (iii) damages and (iv) attorneys’ fees and costs.
CHAR1\1799363v4

SCHEDULE 3

INSTRUMENTS; DOCUMENTS; TANGIBLE CHATTEL PAPER

None.
CHAR1\1799363v4

SCHEDULE 4

U.S. COPYRIGHTS, PATENTS AND TRADEMARKS

Citizens, Inc.
(Colorado Corporation)

U.S. Trademark

Trademark Registration

									
	Mark	Reg. No.	Reg. Date
	X and Design	5457773	05/01/2018

Copyright License(s):

None.

Patent License(s):

None.

Trademark License(s):

None.

CHAR1\1799363v4

EXHIBIT 4(a)

IRREVOCABLE STOCK POWER

    FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to _______________ the following equity interests of _____________________, a ____________:
    
            No. of Shares                Certificate No.

and irrevocably appoints __________________________________ its agent and attorney-in-fact to transfer all or any part of such equity interests and to take all necessary and appropriate action to effect any such transfer.  The agent and attorney-in-fact may substitute and appoint one or more persons to act for him.

                        _______________________________

                        By:                    
                        Name:
                        Title:
CHAR1\1799363v4

EXHIBIT 4(b)(i)

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

COPYRIGHTS

United States Copyright Office

Ladies and Gentlemen:

    Please be advised that pursuant to the Pledge and Security Agreement dated as of May 5, 2021 (as the same may be amended, modified, extended or restated from time to time, the “Agreement”) by and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Regions Bank, as Lender (the “Lender”), the undersigned Obligor has granted a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to the copyrights and copyright applications set forth on Schedule 1 hereto to the Lender.

    The undersigned Obligor and the Lender hereby acknowledge and agree that the security interest in the foregoing copyrights and copyright applications (i) may only be terminated in accordance with the terms of the Agreement and (ii) is not to be construed as an assignment of any copyright or copyright application.

                        Very truly yours,

                        __________________________________
                        [Obligor]

                        By:                    
                        Name:
                        Title:

Acknowledged and Accepted:

REGIONS BANK, as Lender

By:                    
Name:
Title:
CHAR1\1799363v4

EXHIBIT 4(b)(ii)

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

PATENTS

United States Patent and Trademark Office
 
Ladies and Gentlemen:

    Please be advised that pursuant to the Pledge and Security Agreement dated as of May 5, 2021 (as the same may be amended, modified, extended or restated from time to time, the “Agreement”) by and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Regions Bank, as Lender (the “Lender”), the undersigned Obligor has granted a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to the patents and patent applications set forth on Schedule 1 hereto to the Lender.

    The undersigned Obligor and the Lender hereby acknowledge and agree that the security interest in the foregoing patents and patent applications (i) may only be terminated in accordance with the terms of the Agreement and (ii) is not to be construed as an assignment of any patent or patent application.

                        Very truly yours,

                        __________________________________
                        [Obligor]

                        By:                    
                        Name:
                        Title:

Acknowledged and Accepted:

REGIONS BANK, as Lender

By:                    
Name:
Title:
CHAR1\1799363v4

EXHIBIT 4(b)(iii)

NOTICE

OF

GRANT OF SECURITY INTEREST

IN

TRADEMARKS

United States Patent and Trademark Office
 
Ladies and Gentlemen:

    Please be advised that pursuant to the Pledge and Security Agreement dated as of May 5, 2021 (as the same may be amended, modified, extended or restated from time to time, the “Agreement”) by and among the Obligors party thereto (each an “Obligor” and collectively, the “Obligors”) and Regions Bank, as Lender (the “Lender”), the undersigned Obligor has granted a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to the trademarks and trademark applications set forth on Schedule 1 hereto to the Lender.

    The undersigned Obligor and the Lender hereby acknowledge and agree that the security interest in the foregoing trademarks and trademark applications (i) may only be terminated in accordance with the terms of the Agreement and (ii) is not to be construed as an assignment of any trademark or trademark application.

                        Very truly yours,

                        __________________________________
                        [Obligor]

                        By:                    
                        Name:
                        Title:

Acknowledged and Accepted:

REGIONS BANK, as Lender

By:                    
Name:
Title:
CHAR1\1799363v4Document

EXHIBIT 10.3

SEPARATION AND RELEASE AGREEMENT

    This Separation and Release Agreement (“Agreement”) is made between James A. Eliasberg (“Employee”) and Citizens, Inc. (“Citizens”). 

WHEREAS, the parties are entering into this Agreement to outline the terms of Employee’s separation from Citizens, which includes Employee providing a general waiver and release of claims against Citizens in exchange for certain benefits as outlined in this Agreement.    
THEREFORE, in consideration of the mutual covenants contained in this Agreement, Employee and Citizens agree as follows:
1.CONSIDERATION – In consideration for Employee’s agreement to all of the terms, conditions and promises in this Agreement, Citizens agrees to pay Employee the total sum of One Hundred Seventy-Five Thousand Dollars and Zero Cents ($175,000.00) (the “Severance Payment”), representing six (6) months of Employee’s current monthly compensation, less any applicable federal, state and local taxes, and will be reported to Employee on Internal Revenue Service Form W-2.  Citizens agrees to deliver the Severance Payment to Employee within twenty one (21) business days of the delivery to Gerald Shields of (a) this Agreement, executed with Employee’s original signature and provided Employee does not revoke this Agreement pursuant to Paragraph 7 herein.  

Additionally, in consideration for signing this Agreement, Citizens will reimburse Employee for six (6) months of COBRA continuation payments under Citizens’ group health plan. In the event Employee obtains new employment that includes health insurance benefits, COBRA payments will cease as of the date Employee becomes eligible for coverage under the new employer’s plan(s). Employee agrees to promptly provide Citizens notice of any new employment and the date on which he will become eligible for health insurance benefits.

Upon the expiration of the 7-day revocation period set forth in Paragraph 7, Citizens shall deem all grants of restricted stock units (“RSU”) to Employee, outstanding as of the Separation Date, immediately vested to the benefit of Employee. 

2.VOLUNTARY RESIGNATION - In consideration for the Severance Payment described in Paragraph 1, Employee agrees that by signing and returning this Separation and Release Agreement in accordance with the time frames set forth above, he will have resigned his employment with Citizens effective April 30, 2021 (the “Separation Date”).

3.TAX LIABILITY - Employee agrees that he shall be liable for the payment of all federal and state taxes that may be due as the result of the consideration described above, and that the payments are made in connection with Employee’s separation of employment, and Employee represents that he shall pay such taxes at the time and in the amount required by law.  In addition, Employee agrees fully to defend, indemnify and hold Citizens, and each of its divisions, affiliates, parents, subsidiaries and operating companies, and the respective officers, directors, employees, agents and affiliates of each of them, harmless from any liability for payment of taxes, penalties, withholding obligations and interest that are required of his by any government agency at any time as the result of the payment of the consideration set forth herein. In addition, Employee agrees fully to defend, indemnify and hold Citizens, and each of its divisions, affiliates, parents, subsidiaries and operating companies, and the respective officers, directors, employees, agents and affiliates of each of them, harmless from and against any taxes, penalties, withholding obligations, interest, costs and expenses, including reasonable attorneys’ fees, incurred as a result of the IRS or any state or local taxing authority making a claim with respect to the Severance Payment. 

4.COVENANT NOT TO SUE – For the purpose of giving a full and complete General Release, Employee covenants and agrees that he has no pending claims or charges against the Released Parties (as defined in Paragraph 6 herein) that have not already disclosed.  If Employee has any pending claims in a federal, state or local court, or in an arbitral forum, Employee agrees to promptly file all appropriate papers requesting withdrawal and dismissal of such claims with prejudice. If Employee has any pending complaints with any federal, state or local agencies, Employee agrees to promptly submit all appropriate papers requesting withdrawal and dismissal of such complaints.  

    Employee further agrees not to sue any of the Released Parties or become a party to a lawsuit on the basis of any claims of any type to date that arise out of any aspect of his employment or separation of employment, including but not limited to any claims or rights arising out of the “Executive Change in Leadership Agreement” executed by Employee and Citizens on April 13, 2020.  Employee understands that this is an affirmative promise not to sue any of the Released Parties, which is in addition to his General Release of claims in this Agreement.   

    Nothing in this Agreement prevents Employee from bringing an action challenging the validity of this Agreement. If a federal, state or local government agency commences an investigation on Employee’s behalf, Employee specifically waives and releases his right, if any, to recover any monetary or other benefits of any sort whatsoever arising from any such investigation, nor will Employee seek reinstatement to his former position with Citizens

    If Employee breaches this Agreement by suing any of the Released Parties in violation of this Covenant Not to Sue, Employee understands that (i) the Released 
2

Parties will be entitled to apply for and receive an injunction to restrain any violation of this Paragraph, and (ii) Employee will be required to pay the Released Parties’ legal costs and expenses, including reasonable attorney fees, associated with defending against the lawsuit and enforcing the terms of this Agreement.

5.SUFFICIENCY OF CONSIDERATION - Employee agrees that the Severance Payment is good, sufficient and valuable consideration for the general release and the other promises and terms in this Agreement. Employee understands and agrees that he is not eligible for or entitled to any payments or remuneration, including but not limited to entitlement to any additional compensation, benefits, bonus, incentive compensation or RSU from Citizens or any of its subsidiaries, except as provided in this Agreement. Employee further agrees that the Severance Payment is good, sufficient and valuable consideration that represents a full accord and satisfaction of any obligations Citizens may have, or had, pursuant to the Executive Change in Leadership Agreement executed by  Employee and Citizens.  

6.RELEASE - Employee hereby releases and forever discharges Citizens, Inc. and each of its divisions, affiliates, parents, subsidiaries and operating companies, and the respective current and former officers, directors, employees, agents, representatives, shareholders and affiliates of each of them (collectively, the “Released Parties”), from any and all causes of action, lawsuits, proceedings, complaints, charges, debts, contracts, judgments, damages, claims, and attorneys’ fees against the Released Parties, whether known or unknown, which Employee ever had, now has or which Employee or Employee’s heirs, executors, administrators, successors or assigns may have prior to the date this Agreement is signed by Employee, due to any matter whatsoever relating to Employee’s employment, compensation, including entitlement to any bonus, incentive compensation or RSU, benefits and/or termination of Employee’s employment with Citizens or any of its parents or subsidiaries.  The Released Claims include, but are not limited to, any claim that any of the Released Parties violated Chapters 21 and 451 of the Texas Labor Code, the National Labor Relations Act, Title VII of the Civil Rights Act of 1964, the Family and Medical Leave Act, Sections 1981 through 1988 of Title 42 of the United States Code, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act, the Immigration Reform Control Act, the Americans with Disabilities Act, and/or the Occupational Safety and Health Act; any claim that any of the Released Parties violated any other federal, state or local statute, law, regulation or ordinance; any claim of unlawful discrimination, harassment or retaliation of any kind; any public policy, contract, tort, or common law claim, specifically including, but not limited to, any and all claims under or related to the Executive Change in Leadership Agreement executed by Employee including, but not limited to, claims for compensation, COBRA benefits, restricted stock units (“RSU”); any claim concerning stock, stock options, or a stock or stock option agreement; and any claim for costs, fees, or other expenses including attorneys’ fees incurred in connection with those matters. This Agreement shall not be deemed to release any claims to enforce either of the parties’ obligations under this Agreement; any claims that may arise after the date this 
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Agreement is signed; or any claim that by law may not be released by private agreement.  

7.OLDER WORKERS BENEFIT PROTECTION ACT – Employee understands and agrees that with respect to any possible claim arising under the Age Discrimination in Employment Act of 1967 (“ADEA”) he:

(a) had the opportunity to consider this Agreement a full twenty-one (21) days before executing it, but have waived the twenty-one (21) day period;

(b) carefully read and fully understands all of the provisions of this Agreement;

(c) is, through this Agreement, releasing Citizens from any and all claims; 

(d) knowingly and voluntarily agree to all of the terms set forth in this Agreement;

(e) knowingly and voluntarily intend to be legally bound by it; 

(f) was advised and hereby is advised in writing to consider the terms of this Agreement and to consult with attorney of his choice prior to executing this Agreement; 

(g) had the opportunity for a full seven (7) days following the execution of this Agreement to revoke this Agreement only as it relates to claims arising under the ADEA and has been, and hereby is, advised in writing that this Agreement only as it relates to claims arising under the ADEA shall not become effective or enforceable until the revocation period has expired. Any notice of revocation on Employee’s part should be made in writing and directed to Kim Miers, Littler Mendelson, P.C., 100 Congress Avenue, Suite 1400, Austin Texas 78701, kmiers@littler.com; and 

(h) understands that rights or claims under the ADEA that may arise due to acts or omissions that occur after the date this Agreement is executed are not waived.

8.NO FAIR LABOR STANDARDS ACT OR FAMILY AND MEDICAL LEAVE ACT CLAIMS - Employee acknowledges that Citizens has provided him with any leave to which he may be or have been entitled under the Family and Medical Leave Act. Employee represents that he is not aware of any facts that would support a claim he may have against any of the Released Parties for any violation of the Family and Medical Leave Act.  Employee further represents that he is not aware of any facts that would support a claim he may have against any of the Released Parties for any other violation of the Fair Labor Standards Act. 

9.NO FUTURE EMPLOYMENT - Employee hereby acknowledges, understands and agrees that he will not be considered for employment by Citizens or any of its parents, subsidiaries, divisions or sister corporations in the future.  Employee hereby 
4

covenants that he shall not apply for or otherwise seek employment with Citizens or any of its parents, subsidiaries, divisions or sister corporations.  Employee further agrees that, in the event he is employed by any company that is acquired by Citizens or any of its parents, subsidiaries, divisions or affiliate corporations, he shall resign from said employment immediately upon the acquisition, and that should Employee fail or refuse to do so, Citizens may terminate his employment and Employee shall have no recourse against Citizens or its parents, subsidiaries, divisions or affiliate corporations. 

10.COOPERATION – Employee agrees that, upon Citizen’s reasonable and good faith request, Employee will provide reasonable information in response to Citizen’s inquiries after the Separation Date and otherwise cooperate in any investigation, defense or prosecution of any potential or actual claims made by or against a third party, or of other business-related matters. Employee expressly agrees to cooperate in ongoing and future litigation and other legal disputes in which Employee provided services, legal counsel, or factual information while still employed at Citizens, and/or in which Employee’s factual knowledge acquired while still employed is the subject of the litigation or dispute.  Employee further agrees that he will take no actions detrimental to the sale, or otherwise interfere with the sale of the Lake Buchanan property located 18617 E. State Highway 29, Buchanan Dam, Texas 78609.  

11.CONFIDENTIALITY – Employee agrees to keep all of the terms and conditions of this Agreement strictly confidential.  Employee represents that he has not disclosed and agrees that he will not disclose the existence of this Agreement or any of the terms or conditions of this Agreement to anyone other than his attorney, his spouse and his tax or financial advisor, or as may be required pursuant to legal process.  Employee further agrees to take reasonable steps to ensure that any information concerning this Agreement which is disclosed to legal counsel, his spouse and his tax or financial advisor will not be disclosed to any other third party, including but not limited to informing such persons that the terms and conditions of this Agreement are strictly confidential and that they may not be disclosed or discussed with anyone else.    
 
12.NON-DISPARAGEMENT - Employee agrees to refrain from making any statements that are calculated to damage or have the effect of damaging the business or reputation of Citizens and/or any current or former officer, director or employee of Citizens.  

13.NEUTRAL REFERENCE - In the event that Employee seeks to provide verification of his employment with Citizens to a potential or future employer, Citizens agrees that it will provide a neutral reference including only the dates of employment and last position held with Citizen. 

14.INJUNCTIVE RELIEF - Without limiting the remedies available to Citizens, Employee acknowledges that a breach of any of the covenants contained in any of the sections above labeled Confidentiality and Non-Disparagement may result in 
5

irreparable injury to Citizens for which there is no adequate remedy at law, that monetary relief will be inadequate, and that, in the event of such a breach or threat thereof, Citizens shall be entitled to obtain, in addition to any other relief that may be available, a temporary restraining order and/or a preliminary or permanent injunction, restraining Employee from engaging in activities prohibited by any of the covenants contained herein, as well as such other relief as may be required specifically to enforce any of the covenants contained herein, without the payment of any bond.

15.NON-ADMISSION OF WRONGDOING – Employee agrees that this Agreement does not constitute an admission by Citizens of any liability, guilt or violation by Citizens of any federal, state or local law, ordinance or regulation, or of any violation of any policy or procedure, or of any liability or wrongdoing whatsoever.  Neither this Agreement nor anything in this Agreement shall be construed to be or shall be admissible in any proceeding as evidence of liability or wrongdoing by Citizens or any of its parents, subsidiaries, divisions, affiliated corporations, trustees, directors, officers, shareholders, agents, attorneys, insurers, or employees. This Agreement may be introduced, however, in any proceeding to enforce the Agreement.  Such introduction shall be pursuant to an order protecting its confidentiality. 

16.WAIVER OF DAMAGES - Nothing in this Agreement, including but not limited to the release of claims, covenant not to sue, waiver of future employment or confidentiality provision, is intended to or shall interfere with Employee’s right to file a charge or complaint with, or from participating in an investigation or proceeding conducted by, the Securities and Exchange Commission, the National Labor Relations Board, the EEOC or any other federal, state or local agency enforcing any employment law; nor is it intended to and shall not interfere with Employee’s exercising rights under those agencies.  Employee retains the right to participate in any such action, and retains the right to communicate with the EEOC and any other federal, state, or local agency enforcing discrimination laws and such communication shall not be limited by any provision in this Agreement. Employee shall not, however, be entitled to receive any relief, recovery or monies in connection with any Released Claim brought against any of the Released Parties, regardless of who filed or initiated any such complaint, charge or proceeding.

17.GOVERNING LAW - This Agreement shall be governed by and conformed in accordance with the laws of the state of Texas without regard to its conflict of laws provision. 

18.COUNTERPARTS - This Agreement may be executed in counterparts and each counterpart will be deemed an original.  Signatures exchanged by facsimile or in .pdf format shall be considered the same as an original.  

19.REPRESENTATION BY COUNSEL; UNDERSTANDING OF AGREEMENT - Employee represents that he has carefully read and fully understands all of the provisions of this Agreement and further represents that he enters into this 
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Agreement voluntarily and without duress, pressure or coercion from any person.  Employee acknowledges that he is not under the influence of alcohol or other impairing substance, nor is he suffering from mental incapacity that would hinder his ability to understand the terms of this Agreement.  

20.SEVERABILITY - Should any term or provision of this Agreement be declared illegal, invalid or unenforceable by any court of competent jurisdiction and if such provision cannot be modified to be enforceable, such provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect. The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties.

21.ENTIRE AGREEMENT - This Agreement sets forth the entire agreement between the parties hereto and fully supersedes any and all prior and/or supplemental understandings, whether written or oral, between the parties concerning the subject matter of this Agreement and concerning indemnity agreements between Employee and Citizens, including, but not limited to, the Executive Change in Leadership Agreement executed by Employee and Citizens and any indemnity agreements between Employee and Citizens. Employee acknowledges that he has not relied on any representations, promises, or agreements of any kind made to his in connection with his decision to accept the terms of this Agreement, except for the representations, promises and agreements herein. Any modification to this Agreement must be in writing and signed by Employee and Citizens’ authorized representative. 

    IN WITNESS WHEREOF, the parties knowingly and voluntarily executed this Separation and Release Agreement as of the date set forth below.

						
	 

____________________________
James A. Eliasberg
    DATE: _____________________
	CITIZENS, INC.

BY:  ___________________________
        
DATE:  _______________________    __  

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