Document:

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                                                                EXHIBIT 10.12(k)

                             SUBORDINATION AGREEMENT

                                      AMONG

                                  REGIONS BANK,

                           THE PURCHASERS PARTY HERETO

                                      AND

                                 CITIZENS, INC.

                           DATED AS OF JULY ___, 2004

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      SUBORDINATION AGREEMENT dated as of July __, 2004, among REGIONS BANK (the
"Bank"), each of the purchasers identified on the signature pages hereto (the
"Purchasers") and CITIZENS, INC., a Colorado corporation ("Citizens").

                              Preliminary Statement

      A. The Bank has provided financing to Citizens, pursuant to a Loan
Agreement dated as of March 22, 2004 (such agreement, together with all
amendments, modifications, supplements and amendments and restatements, the
"Loan Agreement").

      B. Pursuant to the Amendment to State Series of Series A-1 Senior
Convertible Stock and Series A-2 Senior Convertible Preferred Stock (the
"Certificate of Designations"), Citizens has authorized the issuance of two
series of preferred stock designated as the Series A-1 Preferred Stock (as
defined in the Certificate of Designations) and the Series A-2 Preferred Stock
(as defined in the Certificate of Designations). The Series A-1 Preferred Stock
and the Series A-2 Preferred Stock are collectively referred to herein as the
"Preferred Stock". Citizens and the Purchasers have entered into a Securities
Purchase Agreement dated as of ___________, 2004 (the "Securities Purchase
Agreement"), whereby Citizens has agreed to sell and the Purchasers have agreed
to purchase (i) certain initial units consisting of Series A-1 Preferred Stock
and a warrant for shares of Common Stock (as defined in the Certificate of
Designations) and (ii) a unit warrant exercisable for additional units of Series
A-2 Preferred Stock and a warrant for shares of Common Stock (such Preferred
Stock, and the Certificate of Designations and other agreements governing the
rights of holders thereof, together with all amendments and restatements of the
same, the "Citizens Equity Agreements").

      C. The Purchasers are entering into this Agreement with the Bank relating
to amounts that may become due from time to time to the Purchasers from Citizens
under the Citizens Equity Agreements or in respect of any stock or other equity
interest of Citizens.

                                   AGREEMENT:

      NOW, THEREFORE, for good and valuable consideration and in consideration
of the agreement of the parties set forth herein, the parties hereto agree as
follows:

      1. All obligations of Citizens howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing or
due or to become due, are called "Liabilities". All Liabilities to the Bank
under, or in connection with, the Loan Agreement are called "Senior
Liabilities"; and all Liabilities to the Purchasers under, or, in connection
with, the Citizens Equity Agreements are called "Junior Liabilities"; it being
expressly understood and agreed that the term "Senior Liabilities," as used
herein, shall include, without limitation, any and all interest accruing on any
of the Senior Liabilities after the commencement of any proceedings referred to
in Section 3, notwithstanding any provision or, rule of law which might restrict
the rights of the Bank, as against Citizens or anyone else, to collect such
interest. Senior Liabilities shall not include any amount by which the principal
of the Revolving Loans (as that term is defined in the Loan Agreement and used
herein) and the principal of any term loan under the Loan Agreement (if any)
exceeds in the aggregate $30,000,000. All amounts due or payable to the Bank
pursuant to this Agreement shall be applied first to all amounts constituting
Senior

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Liabilities until all Senior Liabilities are finally paid in full in cash.
Notwithstanding the exclusion of principal of such Revolving Loans and term loan
(if any) in excess of $30,000,000 from Senior Liabilities, the Purchasers shall
comply with this Agreement until all Senior Liabilities are finally paid in full
in cash, all as if no amounts were excluded from Senior Liabilities.

      2. Section 7.22 of the Loan Agreement is modified to provide that any
payment in respect of Junior Liabilities other than in Common Stock shall not
constitute a Default (as defined in the Loan Agreement) unless such payment is
made in violation of this Agreement. Payments in respect of Junior Liabilities
in Common Stock are and will be permitted and will not constitute a Default
under the Loan Agreement. If at any time a Default (as defined in the Loan
Agreement and as modified herein) under the Loan Agreement has occurred and is
continuing or would result from any payment or distribution made in respect of
the Junior Liabilities, the payment of all Junior Liabilities with consideration
other than Common Stock and/or warrants for Common Stock shall be postponed and
subordinated to the payment in full in cash of all Senior Liabilities or until
such Default is cured, and no payment or other distribution whatsoever in
respect of any Junior Liabilities (other than in Common Stock and/or warrants
for Common Stock) shall be made, nor shall any property or assets of Citizens
shall be applied to the purchase of other acquisition or retirement of any
Junior Liabilities (other than in Common Stock and/or warrants for Common Stock)
until all Senior Liabilities have been paid in full in cash; provided, that (a)
Citizens may pay dividends in Common Stock and/or warrants for Common Stock in
accordance with the terms of the Certificate of Designations as it exists on the
date of this Agreement, and (b) Citizens may issue shares and/or warrants for
Common Stock in exchange for or conversion of Junior Liabilities.

      3. In the event of any dissolution, winding up, liquidation,
reorganization or other similar proceeding relating to Citizens or to its
creditors, as such, or to its property (whether voluntary or involuntary,
partial or complete, and whether in bankruptcy, insolvency or receivership, or
upon an assignment for the benefit or creditors, or any other marshalling of the
assets and liabilities of Citizens, or any sale of all or substantially all of
the assets of Citizens, or otherwise), all Senior Liabilities shall first be
paid in full in cash before the Purchasers shall be entitled to receive and to
retain any payment or distribution (other than in Common Stock and/or warrants
for Common Stock) in respect of any of the Junior Liabilities.

      4. In the event that the Purchasers receive any payment or other
distribution of any kind or character from Citizens (other than in Common Stock
and/or warrants for Common Stock) or from any other source whatsoever in respect
of any of the Junior Liabilities, other than as expressly permitted by the terms
of this Agreement, such payment or other distribution shall be received in trust
for the Bank and promptly turned over by the Purchasers to the Bank. Citizens
will cause to be inserted in any certificate, agreement, promissory note or
other instrument, which at any time, evidences any of the Junior Liabilities a
statement to the effect that the payment thereof is subordinated in accordance
with the terms of this Agreement.

      5. All payments and distributions received by the Bank in respect of the
Junior Liabilities, to the extent received in, or converted into cash, may be
applied by the Bank first to the payment of any and all expenses (including
reasonable attorneys' fees and legal expenses) paid or incurred by the Bank in
enforcing this Agreement, or in endeavoring to collect, or realize

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upon any of the Junior Liabilities, or any security therefore, and any balance
thereof shall, solely as among the Purchasers and the Bank, be applied by the
Bank, in such order of application as the Bank may, from time to time, select
toward the payment of the Senior Liabilities remaining unpaid; but, as between
Citizens and its creditors, no such payment or distribution of any kind or
character shall be deemed to be a payment or distribution in respect of the
Senior Liabilities; and, notwithstanding any such payment or distribution
received by the Bank in respect of the Junior Liabilities and so applied by the
Bank toward the payment of the Senior Liabilities, the Purchasers shall be
subrogated to the then existing rights of the Bank, if any, in respect of the
Senior Liabilities only at such time as the Senior Liabilities shall have been
finally paid in full in cash.

      6. Each of the Purchasers hereby waives with respect to the Bank:

            a. notice of acceptance by the Bank of this Agreement;

            b. notice of the existence, or creation of nonpayment of all, or any
of the Senior Liabilities;

            c. notice of any renewal, extension, modification or substitution of
any Senior Liabilities;

            d. demand, presentment for payment, and notice of demand, dishonor,
nonpayment, non-performance or default; and

            e. all diligence in collection, or protection of, or realization
upon, the Senior Liabilities, or any thereof, or any security thereof.

      7. Citizens will promptly provide to each Purchaser:

            a. notice of the existence, or creation of nonpayment of all, or any
of the Senior Liabilities; and

            b. notice of any renewal, extension, modification or substitution of
any Senior Liabilities.

      8. The Purchasers will not, without the prior written consent of the Bank:

            a. transfer or assign any of the Citizens Equity Agreements or any
rights with respect thereto, other than transfers and assignments of Citizens
Equity Agreements in which the transferee has agreed in writing prior to such
transfer or assignment to be bound by the terms of this Agreement;

            b. seek to enforce any lien or security interest securing
performance of any of the Junior Liabilities;

            c. convert or exchange any Junior Liabilities into or for stock or
other equity interests; provided, any or all of the Junior Liabilities may be
converted or exchanged into stock or other equity interests of Citizens if (i)
none of such stock or other equity interest matures or

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can be redeemed for cash prior to final payment in full in cash of all Senior
Liabilities, (ii) the performance of such stock or other equity interest is not
secured by any lien, security interest or collateral and does not benefit from
any guarantee or sinking fund, and (iii) no dividends, other than dividends
payable solely in stock or other equity interests of Citizens, are payable prior
to final payment in full in cash of all Senior Liabilities unless at the time of
payment of any cash dividend and after giving effect thereto no Default (as
defined in the Loan Agreement and as modified herein) has occurred and is
continuing or would result from such payment;

            d. commence, or join with any other creditor in commencing, any
bankruptcy, reorganization or insolvency proceeding with respect to Citizens
unless the Purchasers shall have given the Bank thirty days prior written notice
thereof; or

            e. amend or modify the Citizens Equity Agreements in contravention
of any provisions of this Agreement.

      9.  This Agreement shall, in all respects, be a continuing agreement and
shall remain in full force and effect (notwithstanding, without limitation, the
dissolution of any of the undersigned or that, at any time, or from time to
time, all Senior Liabilities may have been paid in full) until all Senior
Liabilities shall have been finally paid in full in cash and the Revolving
Commitment (as defined in the Loan Agreement and used herein) and term
commitment (if any) each under the Loan Agreement shall have terminated.

      10. The Bank may, from time to time, at its sole discretion and without
notice to the Purchasers, take any or all of the following actions:

            a. retain or obtain a security interest in any property to secure
any of the Senior Liabilities;

            b. retain or obtain the primary or secondary obligation of any other
obligor or obligors with respect to any of the Senior Liabilities;

            c. provide for a term loan to Citizens, provided that the
outstandings under such term loan together with the Revolving Loans shall not,
in the aggregate, exceed $30,000,000;

            d. extend or renew for one or more periods (whether or not longer
than the original period), alter or exchange any of the Senior Liabilities, or
release or compromise any obligation of any nature of any obligor with respect
to any of the Senior Liabilities;

            e. release its security interest in, or surrender, release or permit
any substitution or exchange for, all or any part of any property securing any
of the Senior Liabilities, or extend or renew for one or more periods (whether
or not longer than the original period) or release, compromise, alter or
exchange any obligation of any nature of any obligor with respect to any such
property; and

            f. amend or restate in whole or in part any of the Loan Agreement;
provided that such an amendment or restatement shall not contravene any
provision of this Agreement.

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      11. The Bank may, from time to time, without notice to the Purchasers,
assign or transfer its interest in any or all of the Senior Liabilities;
provided, however, prior to any such assignment or transfer, such assignee or
transferee shall agree to be bound by the terms of this Agreement.
Notwithstanding any such assignment or transfer or any subsequent assignment or
transfer thereof, such Senior Liabilities shall be and remain Senior Liabilities
for the purposes of this Agreement, and every immediate and successive assignee
or transferee of any of the Senior Liabilities or of any interest therein shall,
to the extent of the interest of such assignee or transferee in the Senior
Liabilities, be entitled to the benefits, and be subject to the obligations, of
this Agreement to the same extent as the applicable assignor or transferor.

      12. The Bank shall not be prejudiced in its rights under this Agreement by
any act or failure to act of Citizens or the Purchasers, or any noncompliance of
Citizens or the Purchasers with any agreement or obligation, regardless of any
knowledge thereof which the Bank may have, or with which the Bank may be
charged; and, no action of the Bank permitted hereunder shall, in any way,
affect or impair the rights of the Bank and the obligations of the Purchasers or
Citizens this Agreement.

      13. No delay on the part of the Bank in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Bank, of any right or remedy, shall preclude other or further exercise
thereof or the exercise of any other right or remedy; nor shall any modification
or waiver of any provision of this Agreement be binding upon the Bank except as
expressly set forth in writing duly signed and delivered on behalf of the Bank.

      14. The Purchasers represent and warrant to the Bank that:

            a. the execution, delivery and performance by the Purchasers of this
Agreement has been duly authorized by all necessary corporate, partnership
and/or limited liability company action; and

            b. this Agreement is a legal, valid and binding obligation of the
Purchasers enforceable against the Purchasers in accordance with its terms,
except to the extent such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

      15. The Bank represents and warrants to the Purchasers that:

            a. the execution, delivery and performance by the Bank of this
Agreement has been duly authorized by all necessary legal action; and

            b. this Agreement is a legal, valid and binding obligation of the
Bank enforceable against the Bank in accordance with its terms, except to the
extent such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

      16. Citizens represents and warrants to the Bank that:

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            a. Bank has been provided with a complete and correct copy of the
Certificate of Designations of Citizens, as filed with the Colorado Secretary of
State on ______________, 2004.

            b. the execution, delivery and performance by Citizens of this
Agreement has been duly authorized by all necessary corporate action.

      17. This Agreement shall be binding upon the parties hereto and upon their
successors and assigns; and all references herein to Citizens, the Bank and the
Purchasers, respectively, shall be deemed to include any successor or assign to
such entity.

      18. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by facsimile), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand, or, in the case of notice by mail, when received,
or, in the case of facsimile notice, when received, addressed as follows or, in
any case, to such other address as may be hereafter notified by the respective
parties hereto.

                                              If to the Bank:

                                              Regions Bank
                                              4314 West Braker Lane, Suite 100
                                              Austin, Texas 78759
                                              Attn: Todd A. Self
                                              Telecopy: (512) 372-2301

                                              With a copy to:

                                              Winstead Sechrest & Minick P.C.
                                              1201 Elm Street, Suite 5400
                                              Dallas, Texas 75202
                                              Attn: James R. Littlejohn
                                              Telecopy: (214) 745-5390

                                              If to a Purchaser:

                                              Mainfield Enterprises, Inc.
                                              c/o Sage Enterprises Growth, Inc.
                                              660 Madison Avenue, 18th Floor
                                              New York, New York 10021
                                              Facsimile No.: (212) 651-9010
                                              Telephone No.: (212) 651-9005
                                              Attn: Mor Sagi

                                              With a copy to:

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                                          Proskauer Rose LLP
                                          1585 Broadway
                                          New York, New York 10036-8299
                                          Facsimile No.: (212) 969-2900
                                          Telephone No.: (212) 969-3000
                                          Attn: Adam J. Kansler, Esq

                                          If to a Purchaser:

                                          Portside Growth and Opportunity Fund
                                          c/o Ramius Capital Group, LLC
                                          666 Third Avenue, 26th Floor
                                          New York, NY 10017
                                          Facsimile No.: (212) 845-7995
                                          Telephone No.: (212) 845-7964
                                          Attn: Roger Anscher

                                          If to a Purchaser:

                                          Smithfield Fiduciary LLC
                                          c/o Highbridge Capital Management, LLC
                                          9 West 57th Street, 27th Floor
                                          New York, New York 10019
                                          Attn: Ari J. Storch/Adam J. Chill
                                          Facsimile No.: (212) 751-0755
                                          Telephone No.: (212) 287-4720

                                          If to a Purchaser:

                                          Steelhead Investments Ltd.
                                          c/o HBK Investments L.P.
                                          300 Crescent Court, Suite 700
                                          Dallas, Texas 75201
                                          Facsimile No.: 214-758-1207
                                          Telephone No.: 214-758-6107
                                          Attn: General Counsel

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                                          If to Citizens:

                                          Citizens, Inc.
                                          400 East Anderson Lane
                                          Austin, Texas 78752
                                          Attn: Mark A. Oliver, President
                                          Telecopy: (512) 836-9334

                                          with a copy to:

                                          Jones & Keller, P.C.
                                          1625 Broadway, 16th Floor
                                          Denver, Colorado 80202
                                          Attn: Reid A. Godbolt
                                          Telecopy: (303) 573-8133

      19. Citizens shall promptly provide Bank with a copy of all Citizens
Equity Agreements.

      20. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE. WHEREVER POSSIBLE, EACH PROVISION OF THIS AGREEMENT
SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT SHALL BE PROHIBITED BY OR
INVALID UNDER SUCH LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT OF
SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH
PROVISION OR THE REMAINING PROVISIONS OF THIS AGREEMENT.

      21. THE PURCHASERS (AND, BY ACCEPTING THE BENEFITS HEREOF, THE BANK)
EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, OR, UNDER ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED, OR WHICH MAY, IN THE FUTURE, BE
DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

      THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
REGARDING THE SUBJECT MATTER OF THIS AGREEMENT AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR,

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CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                               [SIGNATURES FOLLOW]

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      IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.

                                          REGIONS BANK

                                          By:___________________________________
                                              Name:_____________________________
                                              Title:____________________________

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                                          CITIZENS, INC.

                                          By:___________________________________
                                              Name:_____________________________
                                              Title:____________________________

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                                          MAINFIELD ENTERPRISES, INC.

                                          By:___________________________________
                                              Name:_____________________________
                                              Title:____________________________

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                                          PORTSIDE GROWTH AND OPPORTUNITY FUND

                                          By:___________________________________
                                              Name:_____________________________
                                              Title:____________________________

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                                          SMITHFIELD FIDUCIARY LLC

                                          By:___________________________________
                                              Name:_____________________________
                                              Title:____________________________

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                                          STEELHEAD INVESTMENTS LTD.

                                          By: HBK Investments L.P.
                                          Title: Investment Advisor

                                          By:___________________________________
                                              Name:_____________________________
                                              Title: Authorized Signatory<PAGE>
                                                                EXHIBIT 10.12(l)

                        NON-EXCLUSIVE FINDER'S AGREEMENT

This Finder's Agreement (this "Agreement") is made as of September 29, 2003,
between Citizen's, Inc. a Colorado Corporation (the "Company"), and The Shemano
Group, Inc., a California corporation (the "Finder"). The Finder and the Company
agree:

         1.       ENGAGEMENT OF FINDER: The Company hereby engages the Finder,
                  and the Finder hereby accepts such engagement, to act as the
                  Company's finder with respect to sales by the Company in a
                  private placement transaction (the "Offering") of up to $50
                  million aggregate principal amount of Equity, Equity-Related
                  or Debt Securities (the "Securities") of the Company to the
                  investors.

         2.       OFFERING PROCEDURES: The Finder will introduce the Company to
                  investors who the Finder represents and warrants are
                  "accredited investors," as that term is defined in Rule 501 of
                  Regulation D promulgated under the Securities Act of 1933, as
                  amended (the "1933 Act"), with whom the Finder has a
                  pre-existing substantive relationship.

         3.       FINDER'S COMPENSATION: In consideration for the services
                  rendered by the Finder hereunder, the Company shall pay to the
                  Finder, or cause the Finder to be paid, compensation as
                  provided in this section within 3 business days of the
                  Company's receipt of funds from the Offerees.

                  (a)      CASH COMPENSATION: The Company shall pay to the
                           Finder cash compensation equal to seven percent (7%)
                           of the gross Offering funds received in the Offering.

                  (b)      WARRANTS: The Finder shall receive five percent (5%)
                           warrant compensation. The warrant's strike shall
                           equal the strike, expiration and registration rights
                           of that of the investor in the respective offering.
                           The equity interests will be priced on the same terms
                           as the investors. The Shares shall be subject to
                           equitable adjustment for stock splits, stock
                           dividends and similar events. The shares shall have
                           "piggyback" registration rights.

                           For purposes of determining the Finder's compensation
                           under this Section 3, the gross offering funds
                           received in the Offering(s) shall include any amounts
                           paid to the Company by investors in respect to an
                           exercise or conversion of any of the Securities.

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         4.       CERTAIN MATTERS RELATING TO FINDER'S DUTIES:

                  (a)      The Finder's responsibilities shall be limited to
                           introducing potential investors to the Company, and
                           the Finder shall not have authority to offer or sell
                           the Securities to any potential investor. Finder
                           shall not use any general solicitation or general
                           advertising within the meaning of the applicable
                           securities laws in connection with any offering. The
                           Finder shall have no responsibility to participate or
                           assist in any negotiations between any potential
                           investor and the Company. The Finder will have no
                           responsibility to act, and the parties contemplate
                           that the Finder will not act, as a broker or dealer
                           with respect to the offer or sale of the Securities.
                           Further, the finder shall have no responsibility for
                           fulfilling any SEC reporting or filing requirements
                           as relates to the Company provided however, Finder
                           agrees to provide Company with reasonable assistance
                           related to any registration, qualification or other
                           requirements of applicable securities laws and other
                           regulatory matters.

                  (b)      The Finder agrees to introduce the Company to
                           Offerees only in states in which the Finder has been
                           advised by the Company that offers and sales of
                           Securities can be legally made by the Company.

                  (c)      The Finder shall perform its duties under this
                           Agreement in a manner consistent with the
                           instructions of the Company. Such performance shall
                           include, but not be limited to, the delivery to each
                           Offeree a current copy of the Private Placement
                           Memorandum, Subscription Agreement and any Offering
                           Questionnaire and/or similar documents provided to
                           the Finder by the Company, as such documents may be
                           amended from time to time by the Company and
                           delivered to the Finder. The Finder shall
                           consecutively number each copy of the Private
                           Placement Memorandum (which will include the first
                           letter of the Finder's name or other identifying mark
                           sufficient to designate an Offeree introduced by the
                           Finder); keep a log of when and to whom each copy of
                           the Private Placement Memorandum is given, with the
                           Private Placement Memorandum numbers; maintain a copy
                           of any written information the Finder obtains
                           regarding the suitability of each Offeree; and only
                           use the Private Placement Memorandum in introducing
                           Offerees to the Company. The Finder shall provide
                           this log and all such written information to the
                           Company at any time and promptly upon request of the
                           Company at the termination of this Agreement.

                  (d)      The Finder is and will hereafter act as an
                           independent contractor and not as an employee of the
                           Company and nothing in this Agreement shall be

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                           interpreted or construed to create any employment,
                           partnership, joint venture, or other relationship
                           between the Finder and the Company. The Finder will
                           not hold itself out as having, and will not state to
                           any person that the Finder has, any relationship with
                           the Company other than as an independent contractor.
                           The Finder shall have no right or power to find or
                           create any liability or obligation for or in the name
                           of the Company or to sign any documents on behalf of
                           the Company.

         4.       RIGHT OF FIRST REFUSAL. In consideration for The Shemano Group
                  to act as the finder in connection with the proposed offering,
                  the Company hereby grants The Shemano Group a right of first
                  refusal to serve as the Company's financial advisor and
                  investment banker in connection with any non-acquisition
                  related offering of common stock for a period of 1 year from
                  the closing of the transaction. In the event the company
                  advises The Shemano Group that it desires to effect any
                  non-acquisition related offering of common stock, the Company
                  and The Shemano Group will negotiate in good faith the terms
                  of The Shemano Groups engagement in a separate agreement which
                  would set forth, among other matters, compensation for The
                  Shemano Group based upon customary fees for the services
                  provided.

         5.       TERMINATION OF AGREEMENT. Either party may terminate this
                  Agreement by notifying the other party in writing upon a
                  material breach by that other party, unless such breach is
                  curable and is in fact cured within 15 days after such notice.
                  This Agreement will terminate upon completion or termination
                  of the Offering. The Company may terminate this Agreement
                  following ninety (90) days after the date hereof upon written
                  notice. Notwithstanding the foregoing, all provisions of this
                  Agreement other than section 1, 2 and 4 shall survive the
                  termination of this Agreement with respect to Offerees who the
                  Finder introduces to the Company prior to any termination with
                  respect to the Offering. The Finder shall be entitled to
                  compensation under section 3 based on investments made by such
                  Offerees prior to the termination of this Agreement or at any
                  time within one year thereafter.

         7.       INDEMNIFICATION. The Company and the Finder each shall
                  indemnify and defend the other and the other's affiliates,
                  directors, officers, employees, agents, consultants,
                  attorneys, accountants and other representatives (each an
                  "Indemnified Person" in this subsection (a)) and shall hold
                  each Indemnified Person harmless, to the fullest extent
                  permitted by law, from and against any and all claims,
                  liabilities, losses, damages and expenses (including
                  reasonable attorney's fees and costs), as they are incurred,
                  in connection with the Offering, resulting from the
                  indemnifying party's negligence, bad faith or willful
                  misconduct in connection with the Offering, any violation by
                  the indemnifying party (not caused by an Indemnified Person)
                  of Federal or state securities laws in connection with the
                  Offering, or any breach by the indemnifying party of this
                  Agreement. In case any litigation or proceeding shall be
                  brought against any Indemnified Person under this section, the
                  indemnifying party shall be entitled to assume the defense of
                  such litigation or proceeding with counsel of the indemnifying
                  party's choice at its expense (in which case the indemnifying

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                  party shall not be responsible for the fees and expenses of
                  any separate counsel retained by such Indemnified Person,
                  except in the limited circumstances described below in this
                  section); provided, however, that such counsel shall be
                  reasonably satisfactory to the Indemnified Person.
                  Notwithstanding the indemnifying party's election to assume
                  the defense of such litigation or proceeding (a) such
                  Indemnified Person shall have the right to employ separate
                  counsel and to participate in the defense of such litigation
                  or proceeding, and (b) the indemnifying party shall bear the
                  reasonable fees, costs and expenses of separate counsel if
                  (but only if) the use of counsel selected by the indemnifying
                  party to represent such Indemnified Person would present such
                  counsel with a conflict of interest under applicable laws or
                  rules of professional conduct.

         8.       CONFIDENTIALITY OF OFFEREE INFORMATION. The Company
                  acknowledges that the identity of the Offerees, and all
                  confidential information about Offerees received by the
                  Company from an Offeree or the Finder, is confidential
                  information of the Finder and may not be shared with any other
                  person without the consent of the Finder.

         9.       NOTICES. Any notice, consent, authorization or other
                  communication to be given hereunder shall be in writing and
                  shall be deemed duly given and received when delivered
                  personally, when transmitted by fax, three days after being
                  mailed by first class mail, or one day after being sent by a
                  nationally recognized overnight delivery service, charges and
                  postage prepaid, properly addressed to the party to receive
                  such notice, at the following address or fax number for such
                  party (or at such other address or fax number as shall
                  hereafter be specified by such party by like notice):

                  (a)      If to the Company, to:

                           Mark A. Oliver
                           President
                           400 East Anderson Lane
                           Austin, TX 78752
                           Phone: (512) 837-7100
                           Fax: (512) 836-9334
                           E-mail: corporate@citizensinc.com

                  (b)      If to the Finder, to:

                           Bill Corbett
                           CEO
                           The Shemano Group, Inc.
                           601 California Street, Suite 1150
                           San Francisco, Calif. 94108
                           Phone: (415) 274-3200
                           Fax: (415) 274-3238
                           E-mail: bcorbett@shemano.com

                                     Page 4
<PAGE>

         10.      COMPANY TO CONTROL TRANSACTIONS. The prices, terms and
                  conditions under which the Company shall offer or sell any
                  Securities shall be determined by the Company in its sole
                  discretion. The Company shall have the authority to control
                  all discussions and negotiations regarding any proposed or
                  actual offering or sale of Securities. Nothing in this
                  Agreement shall obligate the Company to actually offer or sell
                  any Securities or consummate any transaction. The Company may
                  terminate any negotiations or discussions at any time and
                  reserves the right not to proceed with any offering or sale of
                  Securities. Compensation pursuant to this Agreement shall only
                  be paid to the Finder in the event of an actual Closing of the
                  Offering to an Offeree introduced by Finder.

         11.      CONFIDENTIALITY OF COMPANY INFORMATION. The Finder, and its
                  officers, directors, employees and agents shall maintain in
                  strict confidence and not copy, disclose or transfer to any
                  other party (1) all confidential business and financial
                  information regarding the Company and its affiliates,
                  including without limitation, projections, business plans,
                  marketing plans, product development plans, pricing, costs,
                  customer, vendor and supplier lists and identification,
                  channels of distribution, and terms of identification of
                  proposed or actual contracts and (2) all confidential
                  technology of the Company. In furtherance of the foregoing,
                  the Finder agrees that it shall not transfer, transmit,
                  distribute, download or communicate, in any electronic,
                  digitized or other form or media, any of the confidential
                  technology of the Company. The foregoing is not intended to
                  preclude the Finder from utilizing, subject to the terms and
                  conditions of this Agreement, the Private Placement Memorandum
                  and/or other documents prepared or approved by the Company for
                  use in the Offering.

                  All communications regarding any possible transactions,
                  requests for due diligence or other information, requests for
                  facility tours, product demonstrations or management meetings,
                  will be submitted or directed to the Company, and the Finder
                  shall not contact any employees, customers, suppliers or
                  contractors of the Company or its affiliates without express
                  permission. Nothing in this Agreement shall constitute a grant
                  of authority to the Finder or any representatives thereof to
                  remove, examine or copy any particular document or types of
                  information regarding the Company, and the Company shall
                  retain control over the particular documents or items to be
                  provided, examined or copied. If the Offering is not
                  consummated, or if at any time the Company so requests, the
                  Finder and its representatives will return to the Company all
                  copies of information regarding the Company in their
                  possession.

                  The provisions of this Section shall survive any termination
                  of this Agreement.

                                     Page 5
<PAGE>

         12.      PRESS RELEASES, ETC. The Company shall control all press
                  releases or announcements to the public, the media or the
                  industry regarding any offering, placement, transaction or
                  business relationship involving the Company or its affiliates.
                  Except for communication to Offerees in furtherance of this
                  Agreement and the provision of the Private Placement
                  Memorandum, the Finder will not disclose the fact that
                  discussions or negotiations are taking place concerning a
                  possible transaction involving the Company, or the status or
                  terms and conditions thereof.

         13.      DUE DILIGENCE: Neither the Company, nor any of its directors,
                  officers or shareholders, should, in any way rely on the
                  Finder to perform any due diligence with respect to the
                  Company. It is expressly understood and agreed that to the
                  extent due diligence is conducted; it will be conducted by the
                  investors.

         14.      EXPENSES, ETC. The compensation described in Section 3 of this
                  Agreement shall be the Finder's sole compensation for all of
                  its services and efforts to the Company and its affiliates, in
                  connection with any offering or placement of Securities.
                  However, while the Finder shall pay all of its own costs and
                  expenses exceeding two thousand ($2,000) in carrying out its
                  activities hereunder; the Company will reimburse the Finder
                  for the first $2,000 of aforementioned expenses after they
                  have been incurred by the Finder, and simply accounted for to
                  the Company. The Finder shall be exclusively responsible for
                  any compensation, fees, commissions or payments of its
                  employees, agents representatives, co-finders or other persons
                  or entities utilized by it in connection with its activities
                  on behalf of the Company, and the Finder will indemnify and
                  hold harmless the Company and its affiliates from the claims
                  of any such persons or entities.

         15.      COMPLIANCE WITH LAWS. The Finder represents and warrants that
                  it is a duly registered broker/dealer and in good standing
                  with the SEC, NASD and the State of California and has and
                  shall maintain such registrations as well as all other
                  necessary licenses and permits to conduct its activities under
                  this Agreement, which it shall conduct in compliance with
                  applicable federal and state laws relating to a private
                  placement under Regulation D of the 1933 Act. The Finder
                  represents that it is not a party to any other agreement which
                  would conflict with or interfere with the terms and conditions
                  of this Agreement.

         16.      ASSIGNMENT PROHIBITED. No assignment of this Agreement shall
                  be made the prior written consent of the other party.

         17.      AMENDMENTS. Neither party may amend this Agreement or rescind
                  any of its existing provisions without the prior written
                  consent of the other party.

         18.      GOVERNING LAW. This Agreement shall be deemed to have been
                  made in the State of California and shall be construed, and
                  the rights and liabilities determined, in accordance with the
                  law of the State of California, without regard to the
                  conflicts of laws rules of such jurisdiction.

                                     Page 6
<PAGE>

         19.      WAIVER. Neither Finder's nor the Company's failure to insist
                  at any time upon strict compliance with this Agreement or any
                  of its terms nor any continued course of such conduct on their
                  part shall constitute or be considered a waiver by Finder or
                  the Company of any of their respective rights or privileges
                  under this Agreement.

         20.      SEVERABILITY. If any provision herein is or should become
                  inconsistent with any present or future law, rule or
                  regulation of any sovereign government or regulatory body
                  having jurisdiction over the subject matter of this Agreement,
                  such provision shall be deemed to be rescinded or modified in
                  accordance with such law, rule or regulation. In all other
                  respects, this Agreement shall continue to remain in full
                  force and effect.

          21.     COUNTERPARTS. This Agreement may be executed in one or more
                  counterparts, each as all of the signatories hereto have
                  signed a counterpart of this Agreement. All counterparts so
                  executed shall constitute one Agreement binding on all of the
                  parties hereto, notwithstanding that all of the parties are
                  not signatory to the same counterpart. Each of the parties
                  hereto shall sign a sufficient number of counterparts so that
                  each party will receive a fully executed original of this of
                  which shall be deemed an original, and will become effective
                  and binding upon the parties at such time Agreement.

             22.  ENTIRE AGREEMENT. This Agreement and all other agreements and
                  documents referred herein constitutes the entire agreement
                  between the Company and the Finder. No other agreements,
                  covenants, representations or warranties, express or implied,
                  oral or written, have been made by any party hereto to any
                  other party concerning the subject matter hereof. All prior
                  and contemporaneous conversations, negotiations, possible and
                  alleged agreements, representations, covenants and warranties
                  concerning the subject matter hereof are merged herein. This
                  is an integrated Agreement.

         23.      ARBITRATION. The parties agree that this Agreement and all
                  controversies that may arise between the Finder and the
                  Company, whether occurring prior, on or subsequent to the date
                  of this Agreement, will be determined by arbitration. The
                  parties understand that:

                  (a)      Arbitration is final and binding on the parties.

                  (b)      The parties are waiving their right to seek remedies
                           in court, including the right to a jury trial.

                  (c)      Pre-arbitration discovery is generally more limited
                           than and different from court proceedings.

                  (d)      The arbitrators' award is not required to include
                           factual findings or legal reasoning and any party's
                           right to appeal or to seek modification or rulings by
                           the arbitrators is strictly limited.

                                     Page 7
<PAGE>

                  (e)      The panel of arbitrators will typically include a
                           minority of arbitrators who were or are affiliated
                           with the securities industry.

         The parties agree that any arbitration under this Agreement will be
held at the facilities of and before an Arbitration Panel appointed by the
National Association of Securities Dealers, Inc. ("NASD"), or if the NASD
refuses to accept jurisdiction, then before JAMS/ENDISPUTE in San Francisco,
California. The award of the arbitrators, or of the majority of them, will be
final, and judgments upon the award may be entered in any court, state or
federal, having jurisdiction. The parties hereby submit themselves and their
personal representatives to the jurisdiction of any state or federal court for
the purpose of such arbitration and entering such judgment.

         Any forbearance to enforce an agreement to arbitrate will not
constitute a waiver of any rights under this Agreement except to the extent
stated herein.

         THIS AGREEMENT IS GOVERNED BY A PRE-DISPUTE ARBITRATION CLAUSE
CONTAINED IN PARAGRAPH 23 OF THIS AGREEMENT

                                   THE SHEMANO GROUP, INC. (the "Finder")

                                   By: Bill Corbett
                                       ----------------------------------
                                       Bill Corbett
                                       Title: CEO

                                   CITIZENS, INC.  (the "Company")

                                   By: Mark A. Oliver
                                       ---------------------------------
                                       Mark A. Oliver
                                       Title: President

                                     Page 8

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