Exhibit 10.49


Exhibit 10.49



























CREDIT AGREEMENT 




DATED AS OF DECEMBER
31, 2003 




AMONG 




ASCENT FUNDING, INC., 




ASCENT ASSURANCE, INC., 




NATIONALCARE®
MARKETING, INC. 




AND 




THE FROST NATIONAL BANK 




















TABLE OF CONTENTS 





		
		Page
	 
	ARTICLE I  DEFINITIONS; ACCOUNTING TERMS	1
	   Section 1.1    Definitions	1
	   Section 1.2    Accounting Terms	9
	   Section 1.3    Exhibits and Schedules	9
	   Section 1.4    Miscellaneous Terms	9
	 
	ARTICLE II  THE CREDIT	9
	   Section 2.1    The Commitment	9
	   Section 2.2    The Note	10
	   Section 2.3    Procedure for Borrowing	10
	   Section 2.4    Termination or Optional Reduction of Commitment	10
	   Section 2.5    Mandatory Prepayments	10
	   Section 2.6    Optional Prepayments	10
	   Section 2.7    Interest on the Loans	10
	   Section 2.8    Payments Generally	11
	   Section 2.9    Capital Adequacy	11
	   Section 2.10  Payments to be Free of Deductions	11
	   Section 2.11  Computations	12
	   Section 2.12  Extension Request	12
	 
	ARTICLE III  CONDITIONS PRECEDENT	13
	   Section 3.1    Documentary Conditions Precedent	13
	   Section 3.2    Additional Conditions Precedent to Each Loan	15
	   Section 3.3    Additional Condition Precedent to Initial Loan	16
	 
	ARTICLE IV  REPRESENTATIONS AND WARRANTIES	16
	   Section 4.1    Incorporation, Good Standing and Due Qualification	16
	   Section 4.2    Corporate Power and Authority; No Conflicts	16
	   Section 4.3    Legally Enforceable Agreements	17
	   Section 4.4    Litigation	17
	   Section 4.5    Financial Disclosures	17
	   Section 4.6    Material Adverse Effect	18
	   Section 4.7    Taxes	18
	   Section 4.8    Subsidiaries and Ownership of Stock	18
	   Section 4.9    Credit Arrangements	18
	   Section 4.10  Compliance with Laws and Agreements	18
	   Section 4.11  Investment and Holding Company Status	18
	   Section 4.12  Margin Regulations	19
	   Section 4.13  Agent Receivables	19
	   Section 4.14  Disclosure	19
	   Section 4.15  Solvency	19
	   Section 4.16  AAI Agreements	19
	   Section 4.17  Financial Statements	20
	 
	ARTICLE V  AFFIRMATIVE COVENANTS	20
	   Section 5.1    Maintenance of Existence	20
	   Section 5.2    Conduct of Business	20
	   Section 5.3    Maintenance of Properties	20
	   Section 5.4    Maintenance of Records	20
	   Section 5.5    Maintenance of Insurance	20
	   Section 5.6    Compliance With Laws	21
	   Section 5.7    Right of Inspection	21
	   Section 5.8    Reporting Requirements	21
	   Section 5.9    Certificates	24
	   Section 5.10  Communication With Accountants	24
	   Section 5.11  Further Assurances	25
	   Section 5.12  Compliance With Agreements	25
	   Section 5.13  Use of Proceeds	25
	 
	ARTICLE VI  NEGATIVE COVENANTS	25
	   Section 6.1    Debt	25
	   Section 6.2    Guaranties, Etc	26
	   Section 6.3    Liens	26
	   Section 6.4    Investments	26
	   Section 6.5    Mergers and Consolidations and Acquisitions of Assets	26
	   Section 6.6    Sale of Assets	26
	   Section 6.7    Stock	27
	   Section 6.8    Transactions With Affiliates	27
	   Section 6.9    Capital Expenditures	27
	   Section 6.10  Minimum GAAP Net Worth	27
	   Section 6.11  Borrowing Base	27
	   Section 6.12  Receivables Purchase Agreement	27
	 
	ARTICLE VII  EVENTS OF DEFAULT	27
	   Section 7.1    Events of Default	27
	   Section 7.2    Remedies	30
	 
	ARTICLE VIII  MISCELLANEOUS	30
	   Section 8.1    Amendments and Waivers	30
	   Section 8.2    Interest and Charges	31
	   Section 8.3    Expenses, Indemnities	31
	   Section 8.4    Term; Survival	33
	   Section 8.5    Reliance by Lender	33
	   Section 8.6    Assignment; Participations	33
	   Section 8.7    Notices	34
	   Section 8.8    Setoff	34
	   Section 8.9    Jurisdiction; Immunities; Wavier of Jury Trial	34
	   Section 8.10  Table of Contents; Headings35	35
	   Section 8.11  Severability	35
	   Section 8.12  Counterparts	35
	   Section 8.13  Integration	35
	   Section 8.14  GOVERNING LAW	36
	   Section 8.15  Confidentiality	36
	   Section 8.16  Authorization of Third Parties to Deliver Opinions, Etc	36
	   Section 8.17  USA Patriot Act Notice	37
	   Section 8.18  State of Making and Performance	37
	 


	Schedule 4.2 	Authorization
	Schedule 4.4 	Litigation
	Schedule 4.9 	Credit Arrangements
	Schedule 4.16(a)	Equity Agreements
	Schedule 4.16(b) 	Debt Agreements
	Exhibit A 	Form of Note
	Exhibit B 	Form of Agent Contract
	Exhibit C 	Form of Master General Agent Contract
	Exhibit D 	Form of AAI Guaranty
	Exhibit E	Form of NCM Guaranty
	Exhibit F 	Form of Notice of Borrowing
	Exhibit G 	Form of AAI Pledge Agreement
	Exhibit H 	Form of NCM Pledge Agreement
	Exhibit I 	Intercreditor Subordination Agreement
	Exhibit J	Form of Security Agreement
	Exhibit K 	Form of Opinion of General Counsel to Obligor
	Exhibit L	AAI Equity Documents
	Exhibit M 	Form of Borrowing Base Certificate
	Exhibit N 	Form of Receivables Purchase Agreement
	Exhibit O 	Form of Compliance Certificate
	Exhibit P 	Form of Waiver of Jury Trial and Notice of Final Agreement

















        CREDIT
AGREEMENT dated as of December 31, 2003, between ASCENT FUNDING, INC., a Delaware
corporation (the “Borrower”), ASCENT ASSURANCE, INC., a Delaware
corporation (“AAI”), NATIONALCARE® MARKETING, INC., a Delaware
corporation (“NCM”), and THE FROST NATIONAL BANK (the
“Lender”). 



        The
Borrower has requested that the Lender make Loans to it from time to time in an aggregate
principal amount up to but not exceeding $3,000,000 at any one time outstanding, as
provided herein, and the Lender is willing to make such Loans on the terms and conditions
set forth herein. Accordingly, the Borrower and the Lender agree as follows: 




ARTICLE I 




DEFINITIONS; ACCOUNTING
TERMS 



        Section
1.1       Definitions. As used in this Agreement, the following terms have the following
meanings (terms defined in the singular to have a correlative meaning when used in the
plural and vice versa): 



        “AAI
Guaranty” means the Guaranty Agreement between AAI and the Lender substantially
in the form of Exhibit D hereto, duly executed and delivered by AAI, as amended or
supplemented from time to time with the consent of the Lender. 



        “AAI
Pledge Agreement” means an agreement, substantially in the form of Exhibit
G hereto, duly executed and delivered by AAI to the Lender, as amended or supplemented
from time to time with the consent of the Lender. 



        “Affiliate”
means, as to any Person, any other Person which directly or indirectly controls, or is
under common control with, or is controlled by, such Person. As used in this definition,
“control” (including, with its correlative meanings, “controlled by”
and “under common control with”) shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by contract or
otherwise). Notwithstanding the foregoing, no individual shall be deemed to be an
Affiliate of any Person solely by reason of his or her being a director and officer of
such Person. 



        “Agent”
means any Person authorized to market insurance products for an Eligible MGA pursuant to
an Agent Contract, and includes without limitation such Person’s general agents and
other sub-agents with whom said general agents have contracted. 



        “Agent
Contract” means an agreement between an Agent and an Eligible MGA substantially
in the form set forth in Exhibit B. 



        “Agent
Receivable” means, with respect to any Agent, all amounts payable to an Eligible
MGA by such Agent pursuant to its Agent Contract, but only to the extent relating to any
(i) advances of commissions and other amounts paid by the Eligible MGA to such Agent
under the Agent Contract and (ii) interest and/or other finance charges payable to
the Eligible MGA thereon. 



        “Agreement”
means this Credit Agreement, as amended or supplemented from time to time. 



        “Applicable
Law” means (a) in respect of any Person, all provisions of laws applicable
to such Person and its properties, including, without limiting the foregoing, all orders
and decrees of all courts and arbitrators in proceedings or actions to which the Person in
question is a party, and (b) in respect of contracts relating to interest or finance
charges that are made or performed in the State of Texas, “Applicable
Law” means the laws of the United States of America, including without limitation
12 USC §§85 and 86, and any other statute of the United States of America now or
at any time hereafter prescribing the maximum rates of interest on loans and extensions of
credit, and the laws of the State of Texas, and any other statute of the State of Texas
now or at any time hereafter prescribing maximum rates of interest on loans and extensions
of credit. 



        “Applicable
Rate” has the meaning specified in Section 2.7. 



        “Assignee”
has the meaning specified in Section 2.10. 



        “Authorized
Control Level” means “Authorized Control Level” as defined by NAIC from
time to time and as applied in the context of the Risk-Based Capital Guidelines
promulgated by NAIC (or any term substituted therefor by NAIC), calculated as at the last
day of each calendar quarter. 



        “Borrower”
has the meaning specified in the preamble. 



        “Borrowing
Base” means, as of any date of determination, seventy-five percent (75%) of an
amount equal to (a) the difference between (i) total outstanding Agent Receivables,
minus (ii) the amount of the allowance for doubtful accounts with respect to such
Agent Receivables, all as stated on Borrower’s most recent available monthly balance
sheet prepared by the Borrower in accordance with GAAP and as certified in the most recent
Borrowing Base Certificate, plus (b) the amount of any Agent Receivables
purchased by the Borrower since the date of such balance sheet (which, for the avoidance
of doubt, will include any Accounts Receivable being purchased by the Borrower on the date
that such Borrowing Base is being determined) net of an allowance for doubtful accounts
determined in accordance with GAAP and supported by a settlement statement between the
Borrower and NCM, a copy of which is delivered to the Borrower. Each Agent Receivable
included in the Borrowing Base shall have been purchased by Borrower from an Eligible MGA
pursuant to the Receivables Purchase Agreement, shall have been assigned to Borrower
pursuant to the Receivables Purchase Agreement and shall be subject to a perfected, first
priority security interest in favor of the Lender. 



        “Borrowing
Base Certificate” means a borrowing base certificate, substantially in the form
of Exhibit M. 



        “Business
Day” means any day (other than a Saturday, Sunday or legal holiday) on which
commercial banks are not authorized or required to close in Texas. 



        “CSFB”
means Credit Suisse First Boston Management LLC, a Delaware limited liability company. 



        “Capital
Expenditures” means, for any period, the Dollar amount of gross expenditures
(including payments in respect of Capital Lease Obligations) made for fixed assets, real
property, plant and equipment, and all renewals, improvements and replacements thereto
(but not repairs thereof) incurred during such period, all as determined in accordance
with GAAP. 



        “Capital
Lease Obligation” means the obligation of the lessee under a capital lease
determined in accordance with GAAP. The amount of a Capital Lease Obligation at any date
is the amount at which the lessee’s liability under the related Capital Lease would
be required to be shown on its balance sheet at such date in accordance with GAAP. 



        “Change
in Control” means, with respect to the Borrower, the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder as in effect on the date hereof) other than the Guarantors
or a Subsidiary of the Guarantors, of shares representing more than 50% of the aggregate
ordinary voting power for the election of directors of the issued and outstanding capital
stock of the Borrower. 



        “Closing
Date” means the date of the initial Loan hereunder. 



        “Code”
means the Internal Revenue Code of 1986, as amended from time to time. 




        “Commitment”
means $3,000,000.00. 



        “Commitment
Period” means the period from and including the date hereof to but not including
the Maturity Date or such earlier date as the commitment shall terminate as provided
herein. 



        “Compliance
Certificate” means a compliance certificate, substantially in the form of
Exhibit O. 



        “Debt”
means, with respect to any Person: (a) indebtedness of such Person for borrowed money; (b)
indebtedness for the deferred purchase price of Property or services (except trade
payables and accrued expenses, incurred in the ordinary course of business); (c) the face
amount of any outstanding letters of credit issued for the account of such Person; (d)
obligations arising under acceptance facilities; (e) guaranties, endorsements (other than
for collection in the ordinary course of business) and other contingent obligations to
purchase or to provide funds for payment of the obligations of another Person, to supply
funds to invest in any Person to cause such Person to maintain a minimum working capital
or net worth or otherwise assure the creditors of such Person against loss; (f)
obligations secured by any Lien on Property of such Person; and (g) Capital Lease
Obligations. 



        “Debtor
Relief Laws” means applicable bankruptcy, reorganization, moratorium, or similar
Laws, or principles of equity affecting the enforcement of creditors’ rights
generally. 



        “Default”
means any event which with the giving of notice or lapse of time, or both, would become an
Event of Default. 



        “Default
Rate” has the meaning specified in Section 2.7. 



        “Dollars”
and the sign “$” mean lawful money of the United States of America. 



        “Eligible
MGA” means NCM. 



        “Environmental
Laws” means any and all present and future Federal, state and local laws, rules
or regulations, and any orders or decrees, in each case as now or hereafter in effect,
relating to the regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of Hazardous Materials into the
indoor or outdoor environment, including, without limitation, ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport or
handling of hazardous substances or wastes. 



        “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time to time,
and the regulations promulgated and rulings issued thereunder. 



        “Event
of Default” has the meaning given such term in Section 7.1. 



        “Financing
Statements” means the UCC-1 financing statements authorized for filing by the
relevant debtor in connection with a security interest granted to the Lender pursuant to a
Loan Document. 



        “FLICA”
means Freedom Life Insurance Company of America, a Texas corporation. 



        “Funding
Date” means the date on which any Loan is made pursuant to this Agreement. 



        “GAAP”
means generally accepted accounting principles in the United States of America as in
effect from time to time, applied on a basis consistent with those used in the preparation
of the financial statements referred to in Section 4.5 (except for changes
concurred in by the Borrower’s independent public accountants). 



        “GAAP
Net Worth” means the sum of (a) the capital stock and additional paid-in capital
of the Borrower on a consolidated basis, plus (without duplication) (b) the amount of
retained earnings (or, in the case of a deficit, minus the deficit), minus (c) treasury
stock, plus or minus (d) any other account which is customarily added or deducted in
determining stockholders’ equity (without giving effect to any increase or decrease
to net worth attributable to unrealized investment gains and losses pursuant to the
application of SFAS No. 115 and 130 and similar accounting standards), all of which shall
be determined in accordance with GAAP. 



        “Guarantors”
means AAI and NCM. 



        “Highest
Lawful Rate” means at the particular time in question the maximum rate of
interest which, under Applicable Law, Lender is then permitted to charge on the
Obligations. If the maximum rate of interest which, under Applicable Law, Lender is
permitted to charge on the Obligations shall change after the date hereof, the Highest
Lawful Rate shall be automatically increased or decreased, as the case may be, from time
to time as of the effective time of each change in the Highest Lawful Rate without notice
to Borrower. For purposes of determining the Highest Lawful Rate under Applicable Law, the
indicated rate ceiling shall be the lesser of (a)(i) the “weekly
ceiling”, as that expression is defined in Section 303.003 of the Texas
Finance Code, as amended, or (ii) if available in accordance with the terms thereof
and at Lender’s option after notice to Borrower and otherwise in accordance with the
terms of Section 303.103 of the Texas Finance Code, as amended, the
“annualized ceiling” and (b)(i) if the amount outstanding under this
Agreement is less than $250,000, twenty-four percent (24%), or (ii) if the amount
under this Agreement is equal to or greater than $250,000, twenty-eight percent (28%) per
annum. 



        “Insurance
Affiliate” means FLICA and NFL. 



        “Insurance Commissioner”
means with respect to any Insurance Affiliate, the head of any insurance regulatory
authority and/or, if the context so requires, such insurance regulatory authority in the
relevant place of domicile or place where licensed to do business of such Insurance
Affiliate at the relevant time. 



        “Intercreditor
Subordination Agreement” has the meaning specified in Section 3.1(k). 



        “Investment”
in any Person means (a) the acquisition (whether for cash, property, services or
securities or by merger or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of such Person and (b) any
advance, loan or other extension of credit to, such Person and (without duplication) any
amount committed to be advanced, lent or extended to such Person. 



        “Lender”
has the meaning specified in the preamble. 



        “Lien”
means any lien (statutory or otherwise), security interest, mortgage, deed of trust,
priority, pledge, charge, conditional sale, title retention agreement, financing lease or
other encumbrance or similar right of others, or any agreement to give any of the
foregoing. 



        “Loan”
or “Loans” has the meaning specified in Section 2.1. 



        “Loan
Documents” means this Agreement, the Note, the AAI Guaranty, the NCM Guaranty,
the Security Agreement, the AAI Pledge Agreement, the NCM Pledge Agreement, the
Intercreditor Subordination Agreement, and any other documents, agreements, reports, and
instruments now or hereafter executed in connection herewith or contemplated hereby. 



        “Master
General Agent” means NCM and any other Agent that has entered into a Master
General Agent Contract with NFL or FLICA. 



        “Master
General Agent Contract” means any master general agency agreement, substantially
in the form set forth in Exhibit C. 



        “Maturity
Date” means January 15, 2005 or such other date as may be determined from time to
time by written agreement between the Borrower and Lender. 



        “Materially
Adverse Effect” means any material adverse effect upon the business, assets,
liabilities, financial condition, results of operations or, as far as can be reasonably
foreseen, prospects of the Borrower and its Subsidiaries taken as a whole, or the
Guarantors and their Subsidiaries, taken as a whole, or upon the ability of any Obligor to
perform in all material respects its obligations under this Agreement or any other Loan
Document, as applicable, resulting from any act, omission, situation, status, event, or
undertaking, either singly or taken together. 



        “Maximum
Amount” means the maximum amount of interest (including amounts deemed interest)
which, under Applicable Law, Lender is permitted to charge on the Obligations. 



        “NAIC”
means the National Association of Insurance Commissioners or any successor organization
thereto. 



        “NCM
Guaranty” means the Guaranty Agreement between NCM and the Lender, substantially
in the form of Exhibit E hereto, duly executed and delivered by NCM, as amended or
supplemented from time to time with the consent of the Lender. 



        “NCM
Pledge Agreement” means an agreement, substantially in the form of Exhibit
H hereto, duly executed and delivered by NCM to the Lender, as amended or supplemented
from time to time with the consent of the Lender. 



        “NFL”
means National Foundation Life Insurance Company, a Texas corporation. 



        “Note”
means a promissory note of the Borrower, in the form of Exhibit A hereto,
evidencing the Loans made by the Lender hereunder. 



        “Notice
of Borrowing” means the certificate, in the form of Exhibit F hereto, to
be delivered by the Borrower to the Lender pursuant to Sections 2.3 and
3.2(f) and shall include any accompanying certifications or documents. 



        “Obligations”
means all indebtedness, obligations and liabilities of the Borrower and Guarantors to the
Lender under the Loan Documents. Without limiting the generality of the foregoing,
“Obligations” includes all amounts which would be owed by the Borrower, any
Guarantor and any other Person (other than the Lender) to Lender under any Loan Document,
but for the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower, any Guarantor or
any other Person (including all such amounts which would become due or would be secured
but for the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding of the Borrower, any Guarantor or any other Person under
any Debtor Relief Law). 



        “Obligor”
means each of Borrower, AAI and NCM. 



        “Permitted
Investments” means (a) direct obligations of the United States of America, or of
any agency thereof, or obligations guaranteed as to principal and interest by the United
States of America, or of any agency thereof, in either case maturing not more than ninety
(90) days from the date of acquisition thereof; (b) certificates of deposit issued by or
other overnight deposits with any bank or trust company organized under the laws of the
United States of America or any state thereof and having capital, surplus and undivided
profits of at least $500,000,000 and having long term unsecured and unguaranteed debt
rated “BBB+” or better or “Baa1” or better by Standard &
Poor’s Ratings Group, a division of McGraw Hill, Inc. or Moody’s Investors
Service, Inc., respectively, maturing not more than ninety (90) days from the date of
acquisition thereof; (c) commercial paper rated A-1 or better or P-1 by Standard &
Poor’s Ratings Group, a Division of McGraw Hill, Inc., or Moody’s Investors
Service, Inc., respectively, maturing not more than ninety (90) days from the date of
acquisition thereof; (d) repurchase agreements and reverse repurchase agreements with any
bank having combined capital and surplus in an amount of not less than $500,000,000, or
any primary dealer of United States government securities in each case, having long term
unsecured and unguaranteed debt rated “BBB+” or better or “Baa1" or
better by Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc. or
Moody’s Investors Service, Inc., respectively, relating to marketable direct
obligations issued or unconditionally guaranteed or insured by the United States of
America or any agency or instrumentality thereof and backed by the full faith and credit
of the United States of America, in each case maturing within sixty (60) days from the
date of acquisition thereof; in each case so long as the same (x) provide for the payment
of principal and interest (and not principal alone or interest alone) and (y) are not
subject to any contingency regarding the payment of principal or interest; (e) long-term
debt rated “BBB+” or better or “Baa1” or better by Standard &
Poor’s Rating Group, a division of McGraw Hill, Inc. or Moody’s Investors
Services, Inc., respectively; and (f) Agent Receivables purchased from an Eligible MGA. 



        “Permitted
Liens” has the meaning specified in Section 6.3. 



        “Person”
means an individual, partnership, corporation, limited liability company, business trust,
joint stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature. 



        “Prime
Rate” means for any day a per annum rate of interest equal to the “prime
rate,” as published in the “Money Rates” column of The Wall Street
Journal, Central Edition, from time to time, or if for any reason such rate is no
longer available, the rate established by Lender as its prime rate. The Prime Rate shall
change effective as of the date of any change as published in The Wall Street
Journal, Central Edition, or as established by Lender, as appropriate. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate actually
charged to another customer. 



        “Property”
means any interest of any kind in property or assets, whether real, personal or mixed, and
whether tangible or intangible. 



        “Receivables
Purchase Agreement” means the Third Amended and Restated Receivables Purchase and
Sale Agreement dated as of the Closing Date by and between the Borrower and NCM, a copy of
which is attached as Exhibit N hereto, as amended from time to time in accordance
with the Loan Documents. 



        “Reportable
Event” means any of the events set forth in Section 4043(c) of ERISA as to which
events the Pension Benefit Guaranty Corporation by regulation has not waived the
requirement of Section 4043(a) of ERISA that it be notified within thirty (30) days of the
occurrence of such event, provided that a failure to meet the minimum funding
standard of Section 412 of the Code or Section 302 of ERISA shall be a Reportable Event
regardless of any waivers given under Section 412(d) of the Code. 



        “Risk-Based
Capital” means for each Insurance Affiliate, the ratio (expressed as a
percentage), calculated as at the last day of each calendar quarter, of the Total Adjusted
Capital of such Insurance Affiliate to the Authorized Control Level of such Insurance
Affiliate. 



        “SAP”
means the statutory accounting and reporting practices prescribed by the insurance laws or
Insurance Commissioner (or other similar governmental authority) with respect to each
Insurance Affiliate. 



        “Security
Agreement” means the Security Agreement in the form of Exhibit J hereto,
duly executed and delivered by the Borrower and the Lender, as amended or supplemented
from time to time with the consent of the Lender. 



        “Senior
Officer” means the (a) Chief Executive Officer, (b) President, (c) Secretary or
(d) Chief Financial Officer of the Borrower or Guarantors, as applicable. 


        “SFAS No. 115” means  Statement of Financial  Accounting  Standards No. 115,  Accounting  for Certain  Investments in Debt and
Equity Securities, issued by the Financial Accounting Standards Board in May, 1993.



        “Solvent”
means, with respect to any Person, that on such date (a) such Person is not
“insolvent” (as that term is defined in Section 101 of the Bankruptcy Reform Act
of 1978, as amended form time to time and any successor statute), (b) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature, and (c) such
Person is not engaged in business or a transaction, and is not about to engage in business
or a transaction, for which such Person’s Property would constitute an unreasonably
small capital. For purposes of determining whether AAI is Solvent, the Series B
Convertible Participating Preferred Stock of AAI, without giving effect to any amendment
or addition to or restatement of the Certificate of Designation of such stock or any
rights of such stock or any holder of such stock after the Closing Date, shall be deemed
to be equity of AAI. 



        “Subordinated
Debt” means any unsecured Debt for money borrowed by the Borrower in an amount
satisfactory to the Lender and which is subordinated to the Obligations under terms
satisfactory in form and substance to the Lender in its sole judgment, as evidenced by the
Lender’s written consent thereto given prior to the creation of such Debt. 



        “Subsidiary”
means with respect to any Person, any corporation, limited liability company, partnership
or joint venture whether now existing or hereafter organized or acquired: (a) in the case
of a corporation, of which a majority of the securities having ordinary voting power for
the election of directors (other than securities having such power only by reason of the
happening of a contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person, (b) in the case of a partnership or joint venture, in which
such Person is a general partner or joint venturer or of which a majority of the
partnership or other ownership interests are at the time owned by such Person and/or one
or more of its Subsidiaries, or (c) in the case of a limited liability company or other
entity, of which a majority of the member interests or other securities having ordinary
voting power are at the time owned by such Person and/or one or more of its Subsidiaries. 



        “Total
Adjusted Capital” means “Total Adjusted Capital” as defined by NAIC
from time to time and as applied in the context of the Risk-Based Capital Guidelines
promulgated by NAIC (or any term substituted therefor by NAIC), calculated as at the last
day of each calendar quarter. 



        “Waiver
of Jury Trial and Notice of Final Agreement” means the Waiver of Jury Trial and
Notice of Final Agreement, substantially in the form of Exhibit P. 



        Section
1.2       Accounting Terms. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP or SAP, as the context requires, applied on a consistent
basis, and all financial data required to be delivered hereunder shall be prepared in
accordance with GAAP or SAP, as the context requires, applied on a consistent basis;
except as otherwise specifically prescribed herein. In the event that GAAP or SAP, as the
context requires, changes during the term of this Agreement such that the financial
covenants contained in Articles V and VI would then be calculated in a
different manner or with different components (a) the Borrower and the Lender agree to
enter into good faith negotiations to amend this Agreement in such respects as are
necessary to conform those covenants as criteria for evaluating the Borrower’s
financial condition to substantially the same criteria as were effective prior to such
change in GAAP or SAP and (b) the Borrower shall be deemed to be in compliance with the
financial covenants contained in such Sections during the sixty (60) days following any
such change in GAAP if and to the extent that the Borrower would have been in compliance
therewith under GAAP as in effect immediately prior to such change; provided,
however, that if an amendment shall not be agreed upon within sixty (60) days or
such longer period as shall be agreed to by the Lender, for purposes of determining
compliance with such covenants until such amendment shall be agreed upon, such terms shall
be construed in accordance with GAAP as in effect immediately prior to such change in
GAAP. 



        Section
1.3       Exhibits and Schedules. All Exhibits and Schedules to this Agreement, either as
originally existing or as the same may from time to time be supplemented, modified or
amended, are incorporated herein by this reference. A matter disclosed on any Schedule
shall be deemed disclosed on all applicable Schedules. 



        Section
1.4       Miscellaneous Terms. Masculine terms also apply to females; feminine terms also
apply to males. The term “including” is by way of example and not limitation. 




ARTICLE II 




THE CREDIT 



        Section
2.1       The Commitment. Subject to the terms and conditions of this Agreement, the
Lender agrees to make loans to the Borrower (each hereinafter being referred to as a
“Loan” and collectively as the “Loans”) from time to
time during the Commitment Period, in an aggregate principal amount not to exceed at any
one time outstanding the lesser of (a) the Borrowing Base and (b) the
Commitment. During the Commitment Period and subject to the foregoing limitations, the
Borrower may borrow, repay and reborrow Loans, all in accordance with the terms and
conditions of this Agreement. 



        Section
2.2       The Note. The Loans of the Lender shall be evidenced by a single promissory
note in favor of the Lender in the form of Exhibit A, dated the Closing Date, and
duly completed and executed by the Borrower. 



        Section
2.3       Procedure for Borrowing. To request a Loan, the Borrower shall deliver to the
Lender a Notice of Borrowing, substantially in the form of Exhibit F hereto, at
least two (2) Business Days before the requested date of such Loan. The Lender will make
the proceeds of each Loan available to the Borrower by crediting the amount thereof in
immediately available funds to the account of the Borrower maintained with the Lender by
12:00 noon Central Time on the Business Day requested for such Loan. 


        Section
2.4       Termination or Optional Reduction of Commitment.



          		                (a)     
               The Commitment shall terminate on the Maturity Date and any Loans then
               outstanding (together with any accrued and unpaid interest thereon) shall be due
               and payable on such date. 



               



          		                (b)     
               The Borrower shall have the right, upon prior written notice of at least five
               (5) Business Days to the Lender, to terminate or, from time to time, to reduce
               the Commitment, provided that (i) any such reduction of the Commitment
               shall be accompanied by the prepayment of the Note, together with accrued
               interest thereon to the date of such prepayment, to the extent, if any, that the
               aggregate unpaid principal amount thereof then outstanding exceeds the
               Commitment as then reduced and (ii) any such termination of the Commitment shall
               be accompanied by prepayment in full of the unpaid principal amount of the Note,
               together with accrued interest thereon to the date of such. Any such partial
               reduction of the Commitment shall be in an aggregate principal amount of
               $500,000 or any whole multiple of $100,000 in excess thereof and shall reduce
               permanently the Commitment then in effect hereunder. 



               



        Section
2.5       Mandatory Prepayments. If as of the end of any month the aggregate principal
amount of the Loan exceeds the Borrowing Base, the Borrower shall pay to the Lender,
without premium or penalty an amount equal to such excess, accompanied by the payment of
accrued interest on such amount to the date thereof. Such payment shall be made on or
before the date the Borrower is required to deliver the monthly Borrowing Base Certificate
pursuant to Section 5.8(k). 



        Section
2.6       Optional Prepayments. The Borrower may, upon at least one (1) Business
Day’s notice to the Lender, prepay any outstanding Loan, without premium or penalty,
in whole at any time or from time to time in part by paying the principal amount being
prepaid together with accrued interest thereon to the date of prepayment. Each partial
prepayment of any Loan shall be in a minimum amount of $100,000 or any whole multiple of
$100,000 in excess thereof. 



        Section
2.7       Interest on the Loans. The Loans shall bear interest on the total outstanding
principal amount thereof, for each day from the date such Loan is made until it is repaid
or becomes due, at a rate per annum equal to the lesser of (a) a rate equal to the Prime
Rate, plus one-half percent (.5%) per annum, with said rate to be adjusted to reflect any
change in said Prime Rate at the time of any such change (“Applicable
Rate”), and (b) the Highest Lawful Rate. Interest shall be payable monthly in
arrears on the first day of each calendar month, commencing January 1, 2004. Such interest
shall accrue (to the extent permitted by Applicable Law) from and including any Funding
Date to but excluding the date of any repayment thereof and shall be computed on the basis
of a fraction, the numerator of which is the actual number of days elapsed from the date
of Borrowing and the denominator of which is three hundred sixty (360). If an Event of
Default exists, unpaid principal and, to the extent not prohibited by Applicable Law,
accrued unpaid interest on Loans shall bear interest for each day until paid at a
percentage per annum equal to the lesser of (i) the Applicable Rate plus five percent
(5%), and (ii) the Highest Lawful Rate (the “Default Rate”). 



        Section
2.8       Payments Generally. All payments under this Agreement shall be made in Dollars
in immediately available funds not later than 2:00 p.m. Central Time on the due date (each
such payment made after such time on such due date to be deemed to have been made on the
next succeeding Business Day) to the Lender at 100 West Houston Street, San Antonio, Texas
78205, or at such other address as Lender may hereafter designate by notice to the
Borrower. The Borrower shall, at the time of making each payment under this Agreement,
specify to the Lender the principal or other amount payable by the Borrower under this
Agreement to which such payment is to be applied (and in the event that it fails to so
specify, or if a Default or Event of Default has occurred and is continuing, the Lender
may apply (subject to Applicable Laws) such payment as it may elect in its sole
discretion). If the due date of any payment under this Agreement would otherwise fall on a
day which is not a Business Day, such date shall be extended to the next succeeding
Business Day and such extension of time shall in such case be included in the computation
of such payment. 




        Section
2.9       Capital Adequacy. 



          		                (a)     
               If the Lender determines that compliance with any law or regulation enacted or
               introduced after the date hereof or any guideline or request of any central bank
               or other governmental authority adopted or made after the date hereof (whether
               or not having the force of law) affects or would affect the amount of capital
               required or expected to be maintained by the Lender or any corporation
               controlling the Lender and that the amount of such capital is increased by or
               based upon the existence of the Lender’s commitment to lend hereunder and
               other commitments of this type, or the Loans, then, the Borrower shall, within
               thirty (30) days after delivery by the Lender to the Borrower of a
               certificate as to such required compliance, pay to the Lender the amount
               required to compensate the Lender therefor (a certificate of the Lender as to
               such amount to be conclusive and binding on the Borrower in the absence of
               manifest error). 



               



          		                (b)     
               The Lender shall notify the Borrower of any event occurring after the date
               hereof entitling the Lender to any compensation under paragraph (a) above as
               promptly as practicable, but in any event within thirty (30) days after the
               Lender obtains actual knowledge thereof; provided that if the Lender
               fails to give such notice within thirty (30) days after it obtains actual
               knowledge of such an event, the Lender shall, with respect to compensation
               payable pursuant to this Section in respect of any costs resulting from such
               event, only be entitled to payment under this Section for costs incurred from
               and after the date thirty (30) days prior to the date that the Lender does give
               such notice. 



               



        Section
2.10     Payments to be Free of Deductions. All payments by the Borrower under this
Agreement shall be made without setoff or counterclaim and free and clear of, and without
deduction for, any taxes (other than any taxes imposed on or measured by the gross income
or profits of the Lender), levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any country or any political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon the Borrower with respect to any
amount payable by it hereunder, it will pay (subject to Applicable Law) to the Lender, on
the date on which such amount becomes due and payable hereunder and in Dollars, such
additional amount as shall be necessary to enable the Lender to receive the same net
amount which it would have received on such due date had no such obligation been imposed
upon the Borrower. If the Lender is at any time, or any permitted assignee of the Lender
hereunder (an “Assignee”), is organized under the laws of any
jurisdiction other than the United States or any state or other political subdivision
thereof, the Lender or the Assignee shall deliver to the Borrower on the date it becomes a
party to this Agreement, and at such other times as may be necessary in the determination
of the Borrower in its reasonable discretion, such certificates, documents or other
evidence, properly completed and duly executed by the Lender or the Assignee (including,
without limitation, Internal Revenue Service Form 1001 or Form 4224 or any other
certificate or statement of exemption required by Treasury Regulations Section 1.1441-4(a)
or Section 1.1441-6(c) or any successor thereto) to establish that the Lender or the
Assignee is not subject to deduction or withholding of United States Federal Income Tax
under Section 1441 or 1442 of the Internal Revenue Code or otherwise (or under any
comparable provisions of any successor statute) with respect to any payments to the Lender
or the Assignee of principal, interest, fees or other amounts payable hereunder. Borrower
shall not be required to pay any additional amount to the Lender or any Assignee under
this Section if the Lender or such Assignee shall have failed to satisfy the requirements
of the immediately preceding sentence; provided that if the Lender or any Assignee
shall have satisfied such requirements on the date it became a party to this Agreement,
nothing in this Section shall relieve Borrower of its obligation to pay any additional
amounts pursuant to this Section in the event that, as a result of any change in
applicable law, the Lender or such Assignee is no longer properly entitled to deliver
certificates, documents or other evidence at a subsequent date establishing the fact that
the Lender or the Assignee is not subject to withholding as described in the immediately
preceding sentence. 



        Section
2.11     Computations. All computations of interest and like payments hereunder on the
Loans shall, in the absence of clearly demonstrable error, be considered correct and
binding on the Borrower and the Lender. 



        Section
2.12     Extension Request. The Borrower may, by written notice received by the Lender
not less than 90 days prior to the Maturity Date, request that the Lender extend the
Maturity Date to a date not more than two years after the Maturity Date. The Lender will
notify the Borrower not less than sixty days prior to the Maturity Date if the Lender will
permit such extension and the terms and conditions upon which the Lender will permit such
extension. Any decision to extend the Maturity Date shall be in the sole discretion of the
Lender. Any failure of the Lender to notify the Borrower of the Lender’s decision
with respect to any request by the Borrower to extend the Maturity Date shall be deemed to
be the decision by the Lender not to extend the Maturity Date 




ARTICLE III 




CONDITIONS PRECEDENT 



        Section
3.1       Documentary Conditions Precedent. The obligation of the Lender to make the
initial Loan under this Agreement is subject to the condition precedent that the Borrower
shall have delivered to the Lender, on or prior to the Closing Date, the following, in
form and substance reasonably satisfactory to the Lender: 



          		                (a)     
               the Note for the account of the Lender duly executed by the Borrower in the
               principal amount of the Commitment; 



               



          		                (b)     
               the Security Agreement duly executed by Borrower; 



               



          		                (c)     
               the AAI Guaranty duly executed by Guarantor; 



               



          		                (d)     
               the NCM Guaranty duly executed by NCM; 



               



          		                (e)     
               the AAI Pledge Agreement duly executed by AAI; 



               



          		                (f)     
               the NCM Pledge Agreement duly executed by NCM; 



               



          		                (g)     
               the stock certificates representing all of the authorized, issued and
               outstanding capital stock of FLICA, NFL and the Borrower, as applicable (with
               undated stock powers signed in blank); 



               



          		                (h)     
               the Receivables Purchase Agreement duly executed and delivered by the Borrower
               and NCM; 



               



          		                (i)     
               the Financing Statements; 



               



          		                (j)     
               confirmations of pledge executed by AAI, NCM, FLICA, NFL and Borrower; 



               



          		                (k)     
               an intercreditor subordination agreement among the Lender, CSFB and AAI and its
               Subsidiaries (the “Intercreditor  Subordination
               Agreement”), substantially in the form attached as Exhibit I
               hereto; 



               



          		                (l)     
               a certificate of the Secretary or Assistant Secretary of the Borrower, dated the
               Closing Date, attesting on behalf of the Borrower to all corporate action taken
               by the Borrower, including resolutions of its Board of Directors authorizing the
               execution, delivery and performance of this Agreement, the Security Agreement,
               the Note, the Receivables Purchase Agreements and each other document to be
               delivered by the Borrower pursuant to this Agreement, and attesting to the names
               and true signatures of the officers of the Borrower authorized to sign this
               Agreement, the Security Agreement, the Receivables Purchase Agreement, the Note,
               and the other documents to be delivered by the Borrower under this Agreement and
               to the completeness and correctness of the attached Articles of Incorporation
               and Bylaws of the Borrower; 



               



          		                (m)     
               a certificate of the Secretary or Assistant Secretary of AAI, dated the Closing
               Date, attesting on behalf of AAI to all corporate action taken by AAI, including
               resolutions of its Board of Directors authorizing the execution, delivery and
               performance of the AAI Guaranty and the AAI Pledge Agreement and each other
               document to be delivered by AAI hereunder, and attesting to the names and true
               signatures of the officers of AAI authorized to sign the AAI Guaranty, the AAI
               Pledge Agreement and the other documents to be delivered by AAI hereunder and to
               the completeness and correctness of the attached Articles of Incorporation and
               Bylaws of AAI; 



               



          		                (n)     
               a certificate of the Secretary or Assistant Secretary of each Eligible MGA,
               dated the Closing Date, attesting on behalf of such Eligible MGA to all
               corporate action taken by such Eligible MGA, including resolutions of its Board
               of Directors authorizing the execution, delivery and performance of the
               Receivables Purchase Agreement and each other document to be delivered by the
               Eligible MGA hereunder, and attesting to the names and true signatures of the
               officers of the Eligible MGA authorized to sign the Receivables Purchase
               Agreement and the other documents to be delivered by the Eligible MGA hereunder
               and to the completeness and correctness of the attached Articles of
               Incorporation and Bylaws of such MGA; 



               



          		                (o)     
               a certificate of good standing for the Borrower as of a recent date by the
               Secretary of State of its jurisdiction of incorporation and each state where the
               Borrower, by the nature of its business, is required to qualify to do business,
               except where the failure to be so qualified could not reasonably be expected to
               have a Materially Adverse Effect; 



               



          		                (p)     
               a certificate of good standing for AAI as of a recent date by the Secretary of
               State of its jurisdiction of incorporation and each state where AAI, by the
               nature of its business, is required to qualify to do business, except where the
               failure to be so qualified could not reasonably be expected to have a Materially
               Adverse Effect; 



               



          		                (q)     
               a certificate of good standing for each Eligible MGA as of a recent date by the
               Secretary of State of each jurisdiction of incorporation and each state where
               each Eligible MGA, by the nature of its business, is required to qualify to do
               business, except where the failure to be so qualified could not reasonably be
               expected to have a Materially Adverse Effect; 



               



          		                (r)     
               a certificate of authority from each Insurance Commissioner certifying that each
               of FLICA and NFL are duly licensed and in good standing with the applicable
               Insurance Commissioner, except where any such failure could not reasonably be
               expect to have a Materially Adverse Effect; 



               



          		                (s)     
               a favorable opinion of general counsel to the Obligors and the Insurance
               Affiliate dated the Closing Date, in substantially the form set forth in
               Exhibit K hereto; 



               



          		                (t)     
               a Master General Agent Contract for each Master General Agent, attached to a
               certificate of a Senior Officer of the Eligible MGA party thereto certifying
               that such Master General Agent Contract is a true, correct and complete copy,
               including all amendments and supplements thereto, and is in full force and
               effect on the Closing Date; 



               



          		                (u)     
               all corporate and legal proceedings and all instruments and agreements in
               connection with the transactions contemplated by this Agreement, the Security
               Agreement, the AAI Pledge Agreement, the AAI Guaranty, the NCM Guaranty, the NCM
               Pledge Agreement, the Receivables Purchase Agreement and the other Loan
               Documents shall be reasonably satisfactory in form and substance to the Lender
               and the Lender shall have received any and all other information and documents
               with respect to each Obligor and the Insurance Affiliate, which it may
               reasonably request; 



               



          		                (v)     
               searches of the Uniform Commercial Code, tax lien, real property and other
               records as Lender may require; 



               



          		                (w)     
               a Compliance Certificate, dated the Closing Date, confirming compliance with the
               covenants set forth in Sections 6.1, 6.4, 6.8, 6.9,
               6,10, and 6.12; 



               



          		                (x)     
               a copy of the executed agreement between CSFB and AAI waiving any default under
               any agreement between CSFB and AAI resulting from the execution, delivery and
               performance of the Loan Documents; and 



               



          		                (y)     
               the Waiver of Jury Trial and Notice of Final Agreement executed by all parties
               thereto. 



               



        Section
3.2       Additional Conditions Precedent to Each Loan. The obligation of the Lender to
make each Loan hereunder, unless waived by the Lender, shall be subject to the further
conditions precedent that on the date of such Loan: 



          		                (a)     
               the representations and warranties contained in each Loan Document shall be true
               and correct in all material respects on and as of the date of such Loan (both
               before and after giving effect to the making of and application of proceeds of
               such Loan) as though made on and as of such date (or, if such representation or
               warranty is expressly stated to have been made as of a specific date, as of such
               specific date); 



               



          		                (b)     
               to the extent that Agent Receivables are being purchased from an Eligible MGA
               with the proceeds of such Loan, the representations and warranties of such
               Eligible MGA contained in the Receivables Purchase Agreement are true and
               correct in all material respects on and as of the date of such Loan as though
               made on and as of such date (or, if such representation or warranty is expressly
               stated to have been made as of a specific date, as of such specific date); 



               



          		                (c)     
               each Obligor has complied in all material respects with all conditions contained
               in the Loan Documents to which it is a party or it or its property is subject,
               and such Obligor has performed in all material respects all agreements contained
               in the Loan Documents to which it is a party or it or its property is subject
               that are required to be performed by such Obligor; 



               



          		                (d)     
               there does not exist any Default or Event of Default; 



               



          		                (e)     
               since the date of the last Loan under this Agreement (or if no Loan has
               occurred, since September 30, 2003), there has occurred no event that could
               reasonably be expected to have a Materially Adverse Effect; and 



               



          		                (f)     
               the Lender shall have received a duly executed Notice of Borrowing in the form
               of Exhibit F and a duly executed Borrowing Base Certificate in the form
               of Exhibit M. 



               



        Section
3.3       Additional Condition Precedent to Initial Loan. The obligation of the Lender to
make the initial Loan hereunder, unless waived by the Lender, shall be subject to the
further condition precedent that on the date of such Loan the Lender’s counsel shall
receive reimbursement for its reasonable fees and expenses rendered through the date of
such Loan; provided, Borrower shall not be liable for such fees and expenses
related to the negotiation and preparation of the Loan Documents in an aggregate amount
greater than $60,000. 




ARTICLE IV 




REPRESENTATIONS AND
WARRANTIES 



        The
Borrower, AAI and NCM hereby represent and warrant, as to itself and its Subsidiaries, as
applicable, the following: 



        Section
4.1       Incorporation, Good Standing and Due Qualification. Each Obligor and each of
its Subsidiaries is duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has the corporate or other
power, authority, licenses and permits to own its assets and to transact the business in
which it is now engaged, and is duly qualified as a foreign corporation (or other entity)
and in good standing under the laws of each other jurisdiction in which such qualification
is required, except where the failure to be so qualified could not reasonably be expected
to have a Materially Adverse Effect. Each Obligor has all requisite corporate or other
power and authority to execute and deliver and to perform all of its obligations under the
Loan Documents to which it is a party or it or its property is subject. 



        Section
4.2       Corporate Power and Authority; No Conflicts. The execution, delivery and
performance by each Obligor of the Loan Documents to which it is a party or it or its
property is subject have been duly authorized by all necessary corporate or other action
and do not and will not (a) violate any provisions of its certificate of incorporation or
by-laws (or comparable charter or governance documents); violate any provision of, or,
except as described on Schedule 4.2, require any filing, registration, consent or
approval under, any material law, rule, regulation (including without limitation,
Regulations T, U and X of the Board of Governors of the Federal Reserve System, as amended
from time to time), order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to and binding upon such Obligor or any
Subsidiary of such Obligor; (c) except as described on Schedule 4.2, result in
a breach of, or constitute a Default or Event of Default or require any consent under, any
indenture, mortgage or loan or credit agreement or any other material agreement, lease or
instrument to which such Obligor or any Subsidiary of such Obligor is a party or by which
it or its Properties may be bound; or (d) except for Liens created by the Loan Documents,
result in, or require, the creation or imposition of any Lien upon or with respect to any
of the Properties now owned or hereafter acquired by such Obligor or any of its
Subsidiaries. 



        Section
4.3       Legally Enforceable Agreements. Each Loan Document constitutes the legal, valid
and binding obligations of the Obligor a party thereto enforceable against such Obligor in
accordance with its respective terms, except to the extent that such enforcement of
remedies 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). 



        Section
4.4       Litigation. Except as disclosed on Schedule 4.4, there are no actions,
suits or proceedings or investigations (other than routine examinations performed by
insurance regulatory authorities) pending or, to the knowledge of the Borrower, threatened
against or affecting, any Obligor or any Subsidiary of any Obligor, or any of their
respective Property before any court, governmental agency or arbitrator, which, in any one
case or in the aggregate, could reasonably be expected to have a Materially Adverse
Effect. 




        Section
4.5       Financial Disclosures. 



          		                (a)     
               The Borrower has heretofore furnished to the Lender (i) its audited consolidated
               balance sheet and statements of income, stockholders’ equity and cash flows
               as of and for the fiscal year ended December 31, 2002, with the unqualified
               opinion thereon of Ernst & Young LLP and (ii) its unaudited
               consolidated balance sheet and statements of income, stockholders’ equity
               and cash flows as of and for the quarterly period ended September 30, 2003. Such
               financial statements present fairly and accurately the consolidated financial
               position and consolidated results of operations and cash flows of the Borrower
               as of such date and for such period in accordance with GAAP. 



               



          		                (b)     
               AAI has heretofore furnished to the Lender (i) the audited consolidated balance
               sheet and statements of income, stockholders’ equity and cash flows for AAI
               as of and for the fiscal year ended December 31, 2002, with the unqualified
               opinion thereon of Ernst & Young LLP and (ii) the unaudited
               consolidated balance sheet and statements of income, stockholders’ equity
               and cash flows for AAI as of and for the quarterly period ended September 30,
               2003. Such financial statements present fairly and accurately the consolidated
               financial position and consolidated results of operations and cash flows of AAI
               as of such date and for such period in accordance with GAAP. 



               



          		                (c)     
               AAI has heretofore furnished to the Lender (i) the audited consolidated balance
               sheet and statements of income, stockholders’ equity and cash flows of each
               of FLICA and NFL as of and for the fiscal year ended December 31, 2002, with the
               unqualified opinion thereon of Ernst & Young LLP and (ii) the unaudited
               consolidated balance sheet and statements of income, stockholders’ equity
               and cash flows of each of FLICA and NFL, respectively, as of and for the
               quarterly period ended September 30, 2003. Such financial statements present
               fairly and accurately the consolidated financial position and consolidated
               results of operations and cash flows of each of FLICA and NFL as of such date
               and for such period in accordance with SAP. 



               



        Section
4.6       Material Adverse Effect. From September 30, 2003 to the date of this Agreement,
no event or circumstance has occurred that has had or could reasonably be expected to have
a Materially Adverse Effect. 



        Section
4.7       Taxes. Each Obligor and each of its Subsidiaries has filed (or had filed on its
behalf) all federal and all other material tax returns required to be filed, has paid all
due and payable taxes, assessments and governmental charges and levies, including interest
and penalties, shown to be due in such returns or imposed upon it or upon its Properties,
and has made adequate provision for the payment of such taxes, assessments and other
charges accruing but not yet due and payable, except with respect to taxes which are being
contested in good faith by such Obligor or Subsidiary and for which such Person has
established and maintains adequate reserves for payment. To the best knowledge of such
Obligor or Subsidiary, there is no tax assessment contemplated or proposed by any
governmental agency against such Obligor or Subsidiary that could reasonably be expected
to have a Materially Adverse Effect, other than, as of each date subsequent to the Closing
Date, such contemplated or proposed tax assessments with respect to which (a) such Obligor
or Subsidiary has promptly notified Lender in writing of its knowledge and (b) such
Obligor or Subsidiary has in good faith commenced, or intends to commence within the time
period permitted by the applicable law or regulation, and thereafter diligently pursued or
will pursue, as the case may be, appropriate proceedings in opposition to such assessment.
Neither any Obligor nor any of its Subsidiaries has entered into an agreement or waiver or
been requested to enter into an agreement or waiver extending any statute of limitations
relating to the payment or collection of taxes of such Obligor or Subsidiary, or is aware
of any circumstances that would cause the taxable years or other taxable periods of such
Obligor or Subsidiary not to be subject to the normally applicable statute of limitations. 


        Section
4.8        Subsidiaries and Ownership of Stock. The Borrower has no Subsidiaries.



        Section
4.9       Credit Arrangements. Schedule 4.9 is a complete and correct list, as of
the date hereof, of all credit agreements, indentures, guaranties, Capital Lease
Obligations, mortgages, and other material instruments, agreements and arrangements
presently in effect providing for or relating to extensions of credit (including
agreements and arrangements for the issuance of letters of credit or for acceptance
financing) in respect of which each Obligor and each of its Subsidiaries is in any manner
directly or contingently obligated, other than trade payables in the ordinary course of
business; and the maximum principal or face amounts of the credit in question, which are
outstanding and which can be outstanding, are therein set forth and are correctly stated
as of the date hereof, and all Liens given or agreed to be given as security therefor are
therein set forth and are correctly described or indicated in such Schedule. 



        Section
4.10     Compliance with Laws and Agreements. Each Obligor and each of its Subsidiaries
is in compliance with all applicable laws (including without limitation Environmental
Laws, tax laws and ERISA), regulations and orders of any governmental authority and all
indentures, agreements and other instruments to which any of them is a party, except where
the failure to do so, individually or in the aggregate, could not reasonably be expected
to result in a Materially Adverse Effect. 



        Section
4.11     Investment and Holding Company Status. The Borrower is not an “investment
company” as defined in, or subject to regulation under, the Investment Company Act of
1940, as amended, or (b) a “holding company” as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935, as amended. 



        Section
4.12     Margin Regulations. The Borrower is not engaged principally, or as one of its
important activities, in the business of buying or carrying margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System, and
no part of the proceeds of any Loan will be used for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any such margin stock. 



        Section
4.13     Agent Receivables. All Agent Receivables and all books, records and documents
relating thereto are and will be genuine and in all respects what they purport to be; the
amount of each Agent Receivable shown on the books and records of the Borrower (as
adjusted on the books and records of the Borrower, from time to time, to reflect payments
received by the Borrower with respect to such Agent Receivable) represented as owing or to
be owing at maturity by each Agent is and will, be the correct amount actually owing or to
be owing by such Agent at maturity. Neither Borrower nor NCM has knowledge of any fact
which would impair the validity or collectibility of aggregate Agent Receivables, net of
the allowance for doubtful accounts established by Borrower in accordance with GAAP,
except to the extent that such impairment could not reasonably be expected to have a
Materially Adverse Effect. 



        Section
4.14     Disclosure. Neither this Agreement nor any other document or financial
information furnished to the Lender (since the delivery to the Lender of the
Borrower’s financial statements of Borrower’s fiscal year ended December 31,
2001) by or on behalf of any Obligor in connection herewith contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact known to any
Obligor and not known to the public generally which materially adversely affects its
assets or in the future may (so far as such Obligor can now reasonably foresee) result in
a Material Adverse Effect, which has not been set forth in this Agreement or in the
documents, certificates and statements furnished to Lender by or on behalf of such Obligor
prior to the date hereof in connection with the transactions contemplated hereby. 


        Section
4.15       Solvency.  Each Obligor and each Insurance  Affiliate is, and AAI and its  Subsidiaries on a consolidated  basis are, Solvent.




        Section
4.16     AAI Agreements. 



          		                (a)     
               Attached as Schedule 4.16(a) is a complete and correct list of all
               documents and agreements effective as of the Closing Date related to all capital
               stock and other equity interest (including rights to acquire capital stock and
               other equity interest) of AAI; 



               



          		                (b)     
               Attached as Exhibit L1 is a complete and correct copy of each document
               and agreement described on Schedule 4.16(a); 



               



          		                (c)     
               No document or agreement described on Schedule 4.16(a) has been amended
               or restated, unless the amendment or restatement is attached as Exhibit
               L1; 



               



          		                (d)     
               Attached as Schedule 4.16(b) is a complete and correct list of all
               documents and agreements effective as of the Closing Date related to all Debt of
               AAI; 



               



          		                (e)     
               Attached as Exhibit L2 is a complete and correct copy of each document
               and agreement described on Schedule 4.16(b); 



               



          		                (f)     
               No document or agreement described on Schedule 4.16(b) has been amended
               or restated, unless the amendment or restatement is attached as Exhibit
               L2; and 



               



          		                (g)     
               No default or event of default exists with respect to an document or agreement
               described on Schedule 4.16(a) or 4.16(b) or attached as Exhibit
               L1 or L2. 



               



        Section
4.17     Financial Statements. A copy of the most recent financial statements required
by Sections 5.8(a), (b), (c), (d), and (e), and the
opinion of the auditors delivered with respect to such financial statements have been
delivered to Lender. 




ARTICLE V 




AFFIRMATIVE COVENANTS 



        During
the term of this Agreement, and until performance, payment and/or satisfaction in full of
the Obligations and the termination of the Lender’s obligation to extend credit to
the Borrower, each of the Borrower, AAI and NCM covenants and agrees that, as to itself,
it shall, and shall cause each of its Subsidiaries that is an Obligor or an Insurance
Affiliate to, unless the Lender otherwise consents in writing: 



        Section
5.1       Maintenance of Existence. Preserve and maintain its corporate existence and
good standing in the jurisdiction of its incorporation, qualify and remain qualified as a
foreign corporation in each jurisdiction in which such qualification is required from time
to time, and maintain all licenses required to conduct its business, except where failure
to be so qualified would not have a Materially Adverse Effect. 


        Section
5.2        Conduct of  Business.  Continue to engage in a business of the same  general  type as  conducted by it on the date of this Agreement. 



        Section
5.3       Maintenance of Properties. Preserve and maintain its property in good repair,
working order and condition and from time to time make all needful and proper repairs,
renewals, replacements, additions, betterments and improvements thereto, except in each
case where the failure to do so, individually or in the aggregate, could not reasonably be
expected to have a Materially Adverse Effect. 



        Section
5.4       Maintenance of Records. Keep accurate and complete records and books of
account, in which complete entries will be made in accordance with GAAP or SAP, as
appropriate, reflecting all financial transactions of such Obligor or Insurance Affiliate. 



        Section
5.5       Maintenance of Insurance. Maintain professional liability insurance or
indemnity coverage which is prudent and commercially reasonable with financially sound and
reputable insurance companies, and with respect to property and risks of a character
usually maintained by corporations engaged in the same or similar business similarly
situated, against loss, damage and liability of the kinds and in the amounts customarily
maintained by such corporations; provided that such insurance may be obtained from
Affiliates of the Borrower. 



        Section
5.6       Compliance With Laws. Comply in all respects with all applicable laws, rules,
regulations and orders, except where the failure to so comply could not reasonably be
expected to have a Materially Adverse Effect. Such compliance shall include, without
limitation, paying all taxes, assessments and governmental charges imposed upon it or upon
its Property (and all penalties and other costs, if any, related thereto), unless
contested in good faith by appropriate proceedings and for which adequate reserves have
been set aside. 



        Section
5.7       Right of Inspection. From time to time upon prior notice and in accordance with
customary standards and practices within the banking industry (including, without
limitation, upon any Event of Default or whenever the Lender may have reasonable cause to
believe that an Event of Default has occurred and is continuing), each Obligor and
Insurance Affiliate shall permit the Lender or any agent or representative thereof, to
examine and make copies and abstracts from the records and books of account of, and visit
the Properties of, such Obligor or Insurance Affiliate to discuss the affairs, finances
and accounts of such Obligor or Insurance Affiliate and with its officers and directors
and such Obligor’s or Insurance Affiliate’s independent accountants, and to make
such verification concerning such Obligor or Insurance Affiliate as may be reasonable
under the circumstances, and upon request, furnish promptly to the Lender true copies of
all financial information made available to Senior Officers of such Obligor or Insurance
Affiliate; provided, that the Lender shall use reasonable efforts to not materially
interfere with the business of such Obligor or Insurance Affiliate and shall treat all
information obtained pursuant to this Section, in accordance with Section 8.15. 


        Section
5.8        Reporting Requirements.  The Borrower, AAI, NCM, as appropriate, shall furnish to the Lender:



          		                (a)     
               Annual GAAP Statements of Borrower and AAI. Within 105 days following the
               end of the Borrower’s and AAI’s respective fiscal years, copies of the
               audited financial statements of the Borrower and AAI, respectively, including
               the balance sheet of the Borrower and AAI, respectively, as at the close of such
               fiscal year; the statement of operations and statements of stockholders’
               equity and cash flows, in each case of the Borrower and AAI, respectively, for
               such fiscal year, in each case setting forth in comparative form the figures for
               the preceding fiscal year and prepared in accordance with GAAP, all in
               reasonable detail and accompanied by an opinion of Ernst & Young LLP or
               other firm of independent public accountants selected by the Borrower and AAI,
               respectively, and reasonably acceptable to the Lender, to the effect that the
               financial statements have been prepared in accordance with GAAP (except for
               changes in application in which such accountants concur) and present fairly in
               all material respects in accordance with GAAP the financial condition of the
               Borrower and AAI, respectively, as of the end of such fiscal year and the
               results of its operations for the fiscal year then ended and that the
               examination of such independent public accountants in connection with such
               financial statements has been made in accordance with generally accepted
               auditing standards and, accordingly, included such tests of the accounting
               records and such other auditing procedures as were considered necessary under
               the circumstances. 



               



          		                (b)     
               Annual SAP Statements of Insurance Affiliates. Within ninety days
               following the end of each Insurance Affiliate’s fiscal year, copies of the
               audited financial statements of such Insurance Affiliate, including the balance
               sheet of such Insurance Affiliate as at the close of such fiscal year, the
               statement of operations and statement of shareholders’ equity and cash
               flows, in each case of such Insurance Affiliate for such fiscal year, in each
               case setting forth in comparative form the figures for the preceding fiscal year
               and prepared in accordance with SAP, all in reasonable detail and accompanied by
               an opinion of Ernst & Young or other firm of independent public accountants,
               selected by such Insurance Affiliate and reasonably acceptable to the Lender, to
               the effect that the financial statements have been prepared in accordance with
               SAP (except for changes in application in which such accountants can occur) and
               present fairly in all material respects in accordance with SAP, the financial
               condition of such Insurance Affiliate as of the end of such fiscal year and the
               result of its operations for the fiscal year then ended, and that the
               examination of such independent public accountants in connection with such
               financial statements have been made in accordance with generally accepted
               auditing standards, and, accordingly, including such tests as to the accounting
               records and such other auditing procedures as were considered necessary under
               the circumstances. 



               



          		                (c)     
               Quarterly GAAP Statements of Borrower, AAI and NCM. As soon as available,
               and in any event within fifty days after the end of each quarterly fiscal period
               of the Borrower, AAI and NCM, respectively, copies of the unaudited balance
               sheet of the Borrower, AAI and NCM at the end of such fiscal quarter, and the
               unaudited statement of operations and statements of stockholders’ equity
               and cash flows of the Borrower, AAI and NCM, respectively, for such fiscal
               quarter and the portion of such fiscal year ended with such fiscal quarter, in
               each case setting forth in comparative form the figures for the preceding fiscal
               year and prepared in accordance with GAAP all in reasonable detail and certified
               by a Senior Officer of such company as presenting fairly in accordance with GAAP
               the financial condition of the Borrower, AAI and NCM, respectively, as of the
               end of such period and the results of operations for such period, subject only
               to normal year-end accruals and audit adjustments and the absence of footnotes. 



               



          		                (d)     
               Actuarial Opinion of Insurance Affiliates. With respect to each Insurance
               Affiliate, as soon as available and in any event within (i) seventy-five days
               after the close of each fiscal year of such Insurance Affiliate, a copy of the
               “Statement of Actuarial Opinion”, and (ii) seventy-five days after the
               close of each fiscal year of such Insurance Affiliate, a copy of the
               “Management Discussion and Analysis” for such Insurance Affiliate,
               each prepared in accordance with SAP for such fiscal year and as filed with the
               applicable Insurance Regulator in compliance with the requirements thereof (or a
               report containing equivalent information for such Insurance Affiliate if such
               Insurance Affiliate is not so required to file the foregoing with the applicable
               Insurance Regulator). 



               



          		                (e)     
               Convention Statements. With respect to each Insurance Affiliate, within
               fifteen days after the first to occur of (i) the required filing date (as
               established by law or the applicable Insurance Commissioner), and (ii) the
               date on which actually filed, annual financial statements prepared in the form
               of convention blanks prescribed by NAIC, as filed with each Insurance
               Commissioner. 



               



          		                (f)     
               Quarterly Regulatory Statements. As soon as available, and in any event
               within sixty days after the end of each quarterly fiscal period of each life
               insurance company owned by AAI, the quarterly financial statements for such
               insurance company in the form of the quarterly financial statements prescribed
               by NAIC. 



               



          		                (g)     
               Management Letters. Promptly upon receipt thereof, copies of any reports
               or management letters relating to the internal financial controls and procedures
               delivered to any Obligor or Insurance Affiliate by any independent certified
               public accountant in connection with examination of the financial statements of
               such Obligor or Insurance Affiliate. 



               



          		                (h)     
               Notice of Litigation. Promptly after the commencement thereof, notice of
               any action, suit and proceeding before any court or governmental department,
               commission, board, bureau, agency or instrumentality, domestic or foreign,
               against any Obligor or Insurance Affiliate, (A) which, if determined adversely
               to such Obligor or Insurance Affiliate, could reasonably be expected to have a
               Materially Adverse Effect, or (B) commenced by any creditor or lessor under any
               written credit or lease agreement with respect to borrowed money or material
               lease which asserts a default thereunder on the part of such Obligor or
               Insurance Affiliate. 



               



          		                (i)     
               Notices of Default. As soon as practicable and in any event within ten
               days after the occurrence of each Default or Event of Default, a written notice
               setting forth the details of such Default or Event of Default and the action
               which is proposed to be taken by the Borrower or other Obligor with respect
               thereto. 



               



          		                (j)     
               Other Filings. Promptly upon the filing thereof and at any time upon the
               reasonable request of the Lender, permit the Lender the opportunity to review
               copies of all reports, including annual reports, and notices which any Obligor
               or Insurance Affiliate files with or receives from the Pension Benefit Guaranty
               Corporation or the U.S. Department of Labor under ERISA; and as soon as
               practicable and in any event within fifteen days after such Obligor or Insurance
               Affiliate knows or has reason to know that any Reportable Event or prohibited
               transaction has occurred with respect to any employee benefit plan or that the
               Pension Benefit Guaranty Corporation or such Obligor or Insurance Affiliate has
               instituted or will institute proceedings under Title IV of ERISA to terminate
               any employee benefit plan, such Obligor or Insurance Affiliate will deliver to
               the Lender a certificate of a Senior Officer of such Obligor or Insurance
               Affiliate setting forth details as to such Reportable Event or prohibited
               transaction or employee benefit plan termination and the action such Obligor
               proposes to take with respect thereto. 



               



          		                (k)     
               Borrowing Base Certificate. Within twenty days following the end of each
               month, a Borrowing Base Certificate dated as of the end of such month. 



               



          		                (l)     
               Tax Shelter Regulations. If the Borrower determines to treat the Loans as
               a “reportable transaction” (within the meaning of Treasury Regulation
               Section 1.6011-4), Borrower will promptly notify the Lender thereof. If the
               Borrower so notifies the Lender, the Borrower acknowledges that the Lender may
               treat the Loans as part of a transaction that is subject to Treasury Regulation
               Section 301.6112-1, and the Lender will maintain the lists and other records
               required by such Treasury Regulation. 



               



          		                (m)     
               Additional Information. Such additional information as the Lender may
               reasonably request concerning each Obligor and Insurance Affiliate and for that
               purpose all pertinent books, documents and vouchers relating to its business,
               affairs and Properties, including investments as shall from time to time be
               designated by the Lender. 



               




        Section
5.9       Certificates. 



          		                (a)     
               Officer’s Certificate. Simultaneously with each delivery of
               financial statements and information pursuant to Sections  5.8(a),
               (b), (c) and (d), the Borrower, AAI and NCM shall deliver
               to the Lender: 



               



          		            (i)       
               a certificate of the Chief Financial Officer of the respective Person which will
               certify on behalf of such Person that such officer has reviewed the Agreement
               and the other Loan Documents and the condition and transactions of such Person
               for the period covered by such financial statements, and state that to the best
               of his or her knowledge such Person has observed or performed in all material
               respects all of its covenants and other agreements, and satisfied every
               condition, contained in this Agreement and the other Loan Documents to which it
               is a party or is subject, and that no Default or Event of Default has occurred
               and is continuing or, if a Default or Event of Default has occurred and is
               continuing, a statement as to the nature thereof and the action which is
               proposed to be taken with respect thereto, and 



               



          		            (ii)       
               a Compliance Certificate for the period covered by the financial statements then
               being delivered; provided, none of Borrower, AAI or NCM are required to
               deliver a Compliance Certificate with the financial information required by
               Section 5.8(d). 



               



          		                (b)     
               Accountant’s Certificate. Simultaneously with each delivery of
               financial statements pursuant to Sections 5.8(a) and (b), the
               Borrower will deliver to the Lender a certificate of the independent certified
               public accountants who certify such statements, stating whether, in the course
               of their audit of the financial statements, they obtained any knowledge of a
               condition or event which constitutes a Default or Event of Default and the
               nature thereof. 



               



        Section
5.10     Communication With Accountants. Each Obligor authorizes Lender to communicate
directly with its independent certified public accountants and authorizes those
accountants to disclose to Lender any and all financial statements and other supporting
financial documents and schedules relating to such Obligor and its Subsidiaries (including
each Insurance Affiliate). If an Event of Default does not exist, the Lender will use
reasonable efforts to advise such Obligor of any such communications. At or before the
initial Closing Date, each Obligor shall deliver a letter addressed to such accountants
instructing them to comply with the provisions of this Section 5.10 and indicating
that a primary intent of such Obligor is for the financial statements prepared by such
accountants to benefit or influence Lender and that Lender will rely upon such financial
statements. 



        Section
5.11     Further Assurances. Each Obligor shall take all such further actions and
execute and file or record, at its own cost and expense, all such further documents and
instruments as the Lender may at any time reasonably determine may be necessary or
advisable; and shall do, execute, acknowledge, deliver, record, file, and register any and
all such further acts, deeds, conveyances, estoppel certificates, transfers, certificates,
assurances and other instruments as the Lender may reasonably require from time to time in
order to carry out more effectively the purposes of the Loan Documents. 



        Section
5.12     Compliance With Agreements. Promptly and fully comply with all contractual
obligations under all agreements, mortgages, indentures, leases and/or instruments (other
than the Loan Documents) to which any one or more of the Obligors or Insurance Affiliate
is a party, whether such agreements, mortgages, indentures, leases or instruments are with
the Lender or another Person, except where such failure to so comply would not have a
Materially Adverse Effect. 



        Section
5.13     Use of Proceeds. Use proceeds of the Loans solely to (a) with respect to
advances made by AAI to the Borrower and which are outstanding on the Closing Date, repay
such advances and pay dividends to AAI, in an aggregate amount not to exceed $1,400,000;
provided, that, subject to the other provisions of this Agreement and the other
Loan Documents, this clause (a) shall not limit the Borrower’s ability to pay
dividends after the Closing Date, (b) provide working capital to Borrower for purchasing
Agent Receivables from time to time, (c) repay Loans made hereunder, (d) pay to the Lender
interest accrued on the Loans made hereunder, (e) pay costs, expenses and charges
described in Section 8.3(a) and other Obligations, (f) pay other operating expenses
of the Borrower incurred in the ordinary course of business and (g) pay reasonable costs,
expenses and charges of outside legal counsel to the Borrower, AAI and each Eligible MGA
incurred in connection with the preparation, negotiation and regulatory approval of the
Loan Documents. 




ARTICLE VI 




NEGATIVE COVENANTS 



        During
the term of this Agreement, and until performance, payment and/or satisfaction in full of
the Obligations and the termination of the Lender’s obligation to extend credit to
the Borrower, the Borrower covenants and agrees that Borrower shall not, unless the Lender
otherwise consents in writing: 


        Section
6.1        Debt.  Create, incur, assume or suffer to exist any Debt, except:



                            (a)       
          Debt of the Borrower under this Agreement and the Note; 



                            (b)       
          Debt permitted under Section 6.2; and 



                            (c)       
          Subordinated Debt of the Borrower. 



        Section
6.2       Guaranties, Etc. Assume, guarantee, endorse or otherwise be or become directly
or contingently responsible or liable (including, but not limited to, an agreement to
purchase any obligation, or to supply or advance any funds, or an agreement to cause such
Person to maintain a minimum working capital or net worth or otherwise to assure the
creditors of any Person against loss) for the obligations of any Person, except guaranties
by endorsement of negotiable instruments for deposit or collection or similar transactions
in the ordinary course of business. 



        Section
6.3       Liens. Create, incur, assume or suffer to exist any Lien, upon or with respect
to any of its Properties, now owned or hereafter acquired, except (the following being
referred to herein as “Permitted Liens”): 



          		                (a)     
               Liens for taxes or assessments or other government charges or levies if not yet
               due and payable or if due and payable, if they are being contested in good faith
               by appropriate proceedings and for which appropriate reserves are maintained; 



               



          		                (b)     
               Liens imposed by law, such as mechanic’s, materialmen’s,
               landlord’s, warehousemen’s and carrier’s Liens, and other similar
               Liens, securing obligations incurred in the ordinary course of business which
               are not past due for more than forty-five (45) days, or which are being
               contested in good faith by appropriate proceedings and for which appropriate
               reserves have been established; 



               



          		                (c)     
               Liens or deposits under workers’ compensation, unemployment insurance,
               social security or similar legislation (other than ERISA); 



               



          		                (d)     
               judgment and other similar Liens arising in connection with court proceedings;
               provided that the execution or other enforcement of such Liens is
               effectively stayed and the claims secured thereby are being actively contested
               in good faith and by appropriate proceedings; 



               



          		                (e)     
               easements, rights-of-way, restrictions and other similar encumbrances which, in
               the aggregate, do not materially interfere with the occupation, use and
               enjoyment by the Borrower of its Property or assets encumbered thereby in the
               normal course of its business or materially impair the value of the Property
               subject thereto; and 



               



          		                (f)     
               Liens created pursuant to the Loan Documents. 



               


        Section
6.4       Investments.  The Borrower will not make any Investment in any other Person, except for Permitted Investments.



        Section
6.5       Mergers and Consolidations and Acquisitions of Assets. Merge or consolidate
with any Person (whether or not Borrower is the surviving entity), or acquire all or
substantially all of the assets or any of the capital stock of any Person. 



        Section
6.6       Sale of Assets. Sell, lease or otherwise dispose of any material assets, except
in the ordinary course of business and except for dividends not representing a return of
capital paid by the Borrower on shares of its capital stock; provided, no Default
or Event of Default shall exist either prior to or after giving effect to any such
dividend. 


        Section
6.7      Stock.  Issue any additional shares of the Borrower's capital stock to any Person.



        Section
6.8       Transactions With Affiliates. Enter into any transaction of any kind with any
Affiliate of the Borrower, or any Person that owns or holds 5% or more of the outstanding
common stock of the Borrower, other than (a) the Receivables Purchase
Agreement, (b) agreements related to the providing to the Borrower of any management,
operations, accounting or similar services so long as payment to or for the benefit of (by
payment of cash or transfer of other property, incurrence of Debt, or otherwise) and fees
and costs payable to or for the benefit of AAI or any of its Subsidiaries do not exceed
$2,000 per month, (c) intercompany advances made by the Borrower to NCM from time to time,
and (d) transactions with AAI and Affiliates of AAI on terms at least as favorable to the
Borrower as would be the case in an arm’s length transaction between unrelated
parties of equal bargaining power. 


        Section
6.9      Capital Expenditures.  Make or permit to be made, or commit to make any Capital Expenditure.



        Section
6.10     Minimum GAAP Net Worth. At any time, permit GAAP Net Worth of the Borrower to
be less than $3,500,000. 



        Section
6.11     Borrowing Base. At any time that the principal amount of the Loans outstanding
under this Agreement exceeds the Borrowing Base, fail to comply with the provisions of
Section 2.5. 


        Section
6.12     Receivables Purchase Agreement.  Amend, modify or waive any material provision of the Receivables Purchase Agreement.





ARTICLE VII 




EVENTS OF DEFAULT 


        Section
7.1       Events of Default.  Any of the following events shall be an "Event of Default":



          		                (a)     
               the Borrower shall fail to pay any principal amount when due, whether at stated
               maturity, by acceleration, by notice of prepayment or otherwise, or Borrower
               shall fail to pay any premium or interest, or any fees or other amounts payable
               hereunder, within five days after the date due; 



               



          		                (b)     
               any Obligor shall fail to perform or observe any term, covenant, or agreement on
               its part to be performed or observed in Article VI or Sections
               5.1, 5.7, 5.8, 5.9, or 5.13; 



               



          		                (c)     
               the representations and warranties made by any Obligor in any Loan Document, or
               which is contained in any certificate, document, financial or other written
               statement furnished at any time under or in connection with any Loan Document
               shall prove to have been incorrect in any material respect on or as of the date
               made; 



               



          		                (d)     
               the representations and warranties made by CSFB in the Intercreditor
               Subordination Agreement, or which is contained in any certificate, document,
               financial or other written statement furnished by CSFB at any time under or in
               connection therewith shall prove to have been incorrect in any material respect
               on or as of the date made; 



               



          		                (e)     
               any Obligor shall fail to perform or observe any term, covenant, or agreement on
               its part to be performed or observed in any Loan Document (other than any
               failure to perform or observe as described in Sections 7.1(a) or
               (b)) and such failure shall continue unremedied for thirty (30) days; 



               



          		                (f)     
               CSFB shall fail to perform or observe any term, covenant, or agreement on its
               part to be performed or observed by CSFB in the Intercreditor Subordination
               Agreement or any other agreement related thereto; 



               



          		                (g)     
               any default by any Eligible MGA under the Receivables Purchase Agreement that
               has, or could reasonably be expected to have, a Materially Adverse Effect; 



               



          		                (h)     
               any material provision of the Receivables Purchase Agreement shall at any time
               for any reason have ceased to be valid and binding on any Eligible MGA or shall
               be declared to be null and void by any court or other Person having
               jurisdiction; 



               



          		                (i)     
               any default by any Agent under any Agent Contract that has, or could reasonably
               be expected to have, a Materially Adverse Effect; 



               



          		                (j)     
               any material provision of any Agent Contract shall at any time for any reason
               have ceased to be valid and binding on the Agent party thereto or any Agent
               Contract shall be declared to be null and void by any court or other Person
               having jurisdiction or the Agent party thereto shall deny that it has any or
               further liability or obligation under the Agent Contract, if the occurrence of
               such event has, or could reasonably be expected to have a Materially Adverse
               Effect; 



               



          		                (k)     
               if any Obligor or any Insurance Affiliate shall (i) fail to pay any
               indebtedness, including but not limited to indebtedness for borrowed money
               (other than the payment Obligations described in (a) above), of such Person, as
               the case may be, or any interest or premium thereon, when due (whether by
               scheduled maturity, required prepayment, acceleration, demand or otherwise and
               after giving effect to any grace period provided); or (ii) fail to perform or
               observe any term, covenant or condition on its part to be performed or observed
               under any agreement or instrument relating to any such indebtedness, when
               required to be performed or observed and such failure continues after any
               applicable notice and grace period, if the effect of such failure to perform or
               observe is to accelerate, or to permit the acceleration of the maturity of such
               indebtedness, or (iii) any such indebtedness shall be declared to be due and
               payable, or required to be prepaid (other than by a regularly scheduled required
               prepayment), prior to the stated maturity thereof; provided,
               however, that it shall not be a Default or Event of Default under this
               Section 7.1(k) unless the aggregate principal amount of indebtedness
               described in clauses (i) through (iii) above shall exceed $100,000; 



               



          		                (l)     
               any Obligor or any Insurance Affiliate (i) shall generally not, or be unable to,
               or shall admit in writing its inability to, pay its debts as such debts become
               due; or (ii) shall make an assignment for the benefit of creditors or petition
               or apply to any tribunal for the appointment of a custodian, receiver or trustee
               for it or a substantial part of its assets; or (iii) shall commence any
               proceeding under any bankruptcy, reorganization, arrangement, readjustment of
               debt, dissolution or liquidation law or statute of any jurisdiction, whether now
               or hereafter in effect; or (iv) shall have had any such petition or application
               filed or any such proceeding shall have been commenced against it in which an
               adjudication or appointment is made or order for relief is entered; or (v) shall
               be the subject of any proceeding under which all or substantially all of its
               assets may be subject to seizure, forfeiture or divestiture (other than a
               proceeding in respect of a Lien permitted under this Agreement); or (vi) by any
               act or omission shall indicate its consent to, approval of or acquiescence in
               any such petition, application or proceeding or order for relief or the
               appointment of a custodian, receiver or trustee for all or any substantial part
               of its Property; or (vii) shall suffer any such custodianship, receivership or
               trusteeship to continue undischarged for a period of sixty consecutive days or
               more; or (viii) shall enter into any transaction with the intent to hinder,
               delay or defraud any creditor; 



               



          		                (m)     
               AAI or any holder of capital stock or other equity interest of AAI elects to
               convert any of such capital stock or other equity interest into debt of AAI or
               any distribution representing a return of capital is declared or made with
               respect to any capital stock or other equity interest of AAI; 



               



          		                (n)     
               (i) any Insurance Commissioner shall apply for an order pursuant to any section
               of the applicable insurance code, directing the rehabilitation, conservation or
               liquidation of any Insurance Affiliate, and any such application shall not be
               dismissed or otherwise terminated during a period of thirty consecutive days, or
               a court of competent jurisdiction shall enter an order granting the relief
               sought; or (ii) any Insurance Commissioner shall file a complaint or petition
               pursuant any applicable insurance code seeking the dissolution of any Insurance
               Affiliate, and such complaint or petition is not dismissed or otherwise
               terminated for a period of thirty consecutive days, or a court of competent
               jurisdiction shall order the dissolution of any Insurance Affiliate; 



               



          		                (o)     
               one or more judgments, decrees or orders for the payment of money in excess of
               $100,000 in the aggregate shall have been rendered against any Obligor or any
               Insurance Affiliate (excluding judgments which are covered by insurance other
               than self-insurance) and such judgments, decrees or orders shall continue
               unsatisfied and in effect for a period of sixty consecutive days without being
               vacated, discharged, satisfied or stayed or bonded pending appeal; 



               



          		                (p)     
               any material provision of any Loan Document shall at any time for any reason
               have ceased to be valid and binding on any party thereto (other than the Lender)
               or shall be declared to be null and void by any court or other Person having
               jurisdiction; 



               



          		                (q)     
               the validity or enforceability of any Loan Document shall be contested by any
               party thereto (other than the Lender) or any party thereto (other than the
               Lender), shall deny it has any further liability or obligation thereunder; 



               



          		                (r)     
               FLICA or NFL shall issue additional capital stock to any Person; 



               



          		                (s)     
               Any Insurance Affiliate makes any Investment in any Person, except Permitted
               Investments; 



               



          		                (t)     
               Risk-Based Capital for either of FLICA or NFL is less than 225% at any time; 



               



          		                (u)     
               a Change in Control shall have occurred; 



               



          		                (v)     
               any person holding the office of president, chief financial officer or chief
               operating officer of Borrower or AAI exercising the authority assigned to such
               office on the Closing Date shall at any time after the Closing Date either not
               hold such office or exercise the authority assigned to such office on the
               Closing Date and a replacement (reasonably acceptable to the Lender in its
               discretion) for such person is not exercising the authority assigned to such
               person or office within 120 days after such person ceased to hold such office or
               exercise such authority; or 



               



          		                (w)     
               if any opinion with respect to the financial statements of the Borrower, AAI or
               any Insurance Affiliate (including any opinion delivered in connection with any
               financial statement described in Section 5.8(a) and (b)) of the
               independent public accounts is not unqualified or contains any going concern
               “emphasis” or similar emphasis. 



               



        Section
7.2       Remedies. Without limiting any other rights or remedies of the Lender provided
for elsewhere in the Loan Documents, or by applicable law, or in equity, or otherwise, if
any Event of Default shall occur and be continuing, the Lender may by notice to the
Borrower, (a) declare the Commitment to be terminated, whereupon the same shall forthwith
terminate, (b) declare all amounts owing under this Agreement and the Note (whether or not
such Obligations be contingent or unmatured) to be forthwith due and payable, whereupon
all such amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly waived by
the Borrower; provided that, in the case of an Event of Default referred to in
Section 7.1(l) with respect to the Borrower, the Commitment shall be immediately
terminated, and all such amounts shall be immediately due and payable without notice,
presentment, demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Borrower. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law. 




ARTICLE VIII 




MISCELLANEOUS 



        Section
8.1       Amendments and Waivers. No amendment or waiver of any provision of any Loan
Document nor consent to any departure by any Obligor a party thereto therefrom, shall in
any event be effective unless the same shall be in writing and signed by the Lender and
such Obligor, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of the
Lender to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise of any
other right. 



        Section
8.2       Interest and Charges. It is not the intention of any parties to this Agreement
to make an agreement in violation of the Laws of any applicable jurisdiction relating to
usury. Regardless of any provision in any Loan Documents, Lender shall never be entitled
to receive, collect or apply, as interest on the Obligations, any amount in excess of the
Maximum Amount. If Lender or participant ever receives, collects or applies, as interest,
any such excess, such amount which would be excessive interest shall be deemed a partial
repayment of principal by the Borrower. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Maximum Amount, Borrower and Lender
shall, to the maximum extent permitted under Applicable Law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effect thereof, and (c) amortize, prorate,
allocate and spread in equal parts, the total amount of interest throughout the entire
contemplated term of the Obligations so that the interest rate is uniform throughout the
entire term of the Obligations; provided, however, that if the Obligations
are paid and performed in full prior to the end of the full contemplated term thereof, and
if the interest received for the actual period of existence thereof exceeds the Maximum
Amount, Lender shall refund to Borrower the amount of such excess or credit the amount of
such excess against the total principal amount of the Obligations owing, and, in such
event, Lender shall not be subject to any penalties provided by any laws for contracting
for, charging or receiving interest in excess of the Maximum Amount. This Section
8.2 shall control every other provision of all agreements pertaining to the
transactions contemplated by or contained in the Loan Documents. 




        Section
8.3      Expenses, Indemnities. 



          		                (a)     
               Unless otherwise agreed in writing, the Borrower shall promptly reimburse the
               Lender for all reasonable costs, expenses and charges (including without
               limitation reasonable fees and charges of its attorneys and auditors) actually
               incurred by the Lender in connection with the preparation and negotiation of the
               Loan Documents. Such reimbursement obligation will not exceed $60,000 without
               the Borrower’s consent. The Borrower shall promptly reimburse the Lender
               for all reasonable costs, expenses and charges (including without limitation,
               reasonable fees and charges of external legal counsel for the Lender) actually
               incurred by the Lender in connection with the performance, modification and
               amendment of the Loan Documents. The Borrower shall promptly reimburse all
               reasonable costs and expenses (including reasonable counsel fees and expenses),
               if any, incurred by the Lender in connection with the enforcement, including
               without limitation the enforcement of judgments (whether through negotiations,
               legal proceedings or otherwise) of the Loan Documents. Until paid, the amount of
               any cost, expense or charge shall constitute, together with all accrued interest
               thereon, part of the Obligations. 



               



          		                (b)     
               THE BORROWER SHALL INDEMNIFY THE LENDER AGAINST ANY AND ALL LOSSES, COSTS OR
               EXPENSES WHICH THE LENDER MAY AT ANY TIME OR  FROM TIME TO TIME SUSTAIN
               OR INCUR AS A CONSEQUENCE OF (i) ANY FAILURE BY THE BORROWER TO PAY,
               PUNCTUALLY ON THE DUE DATE  THEREOF, ANY AMOUNT PAYABLE BY THE BORROWER
               TO THE LENDER HEREUNDER OR (ii) THE ACCELERATION, IN ACCORDANCE WITH THE
               TERMS  OF THIS AGREEMENT, OF THE TIME OF PAYMENT OF ANY OF THE
               OBLIGATIONS. SUCH LOSSES, COSTS OR EXPENSES MAY INCLUDE, WITHOUT 
               LIMITATION, (i) ANY COMMERCIALLY REASONABLE COSTS INCURRED BY THE LENDER IN
               CARRYING FUNDS TO COVER ANY OVERDUE PRINCIPAL,  OVERDUE INTEREST, OR ANY
               OTHER OVERDUE SUMS PAYABLE BY THE BORROWER TO THE LENDER OR (ii) ANY LOSSES
               INCURRED OR SUSTAINED  BY THE LENDER IN LIQUIDATING OR REEMPLOYING FUNDS
               ACQUIRED BY THE LENDER FROM THIRD PARTIES, EXCEPT TO THE EXTENT CAUSED BY 
               THE LENDER’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. 



               



          		                (c)     
               THE BORROWER SHALL INDEMNIFY THE LENDER AND ITS DIRECTORS, OFFICERS,
               EMPLOYEES, AGENTS AND AFFILIATES FROM, AND HOLD EACH OF  THEM HARMLESS
               AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, COSTS OR EXPENSES
               INCURRED BY ANY OF THEM ARISING  OUT OF OR BY REASON OF ANY INVESTIGATION
               OR LITIGATION OR OTHER PROCEEDINGS (INCLUDING ANY THREATENED INVESTIGATION OR
                LITIGATION OR OTHER PROCEEDINGS) RELATING TO ANY TRANSACTION
               CONTEMPLATED BY THE LOAN DOCUMENTS, ANY ACTIONS OR OMISSIONS OF  THE
               BORROWER OR ANY OF ITS SUBSIDIARIES OR ANY OF THEIR RESPECTIVE DIRECTORS,
               OFFICERS, EMPLOYEES OR AGENTS IN CONNECTION  WITH THE LOAN DOCUMENTS, OR
               ANY ACTUAL OR PROPOSED USE BY THE BORROWER OF THE LOAN PROCEEDS, INCLUDING
               WITHOUT LIMITATION,  THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL
               INCURRED IN CONNECTION WITH ANY SUCH INVESTIGATION OR LITIGATION OR OTHER 
               PROCEEDINGS (BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES OR
               EXPENSES INCURRED BY REASON OF THE GROSS  NEGLIGENCE OR WILLFUL
               MISCONDUCT OF THE PERSON TO BE INDEMNIFIED). 



               



          		                (d)     
               THE BORROWER SHALL INDEMNIFY THE LENDER AND ITS DIRECTORS, OFFICERS,
               EMPLOYEES, AGENTS AND AFFILIATES FROM, AND HOLD EACH OF  THEM HARMLESS
               AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, COSTS OR EXPENSES
               (INCLUDING WITHOUT LIMITATION,  REASONABLE FEES AND DISBURSEMENTS OF
               COUNSEL, ENGINEERS OR SIMILAR PROFESSIONALS) WHICH MAY BE INCURRED BY OR
               ASSERTED  AGAINST THE LENDER OR ANY SUCH PARTY IN CONNECTION WITH OR
               ARISING OUT OF OR RELATING TO (i) THE LENDER’S COMPLIANCE WITH 
               ANY ENVIRONMENTAL LAW WITH RESPECT TO THE PROPERTIES OR OPERATIONS OF THE
               BORROWER OR ANY OF ITS SUBSIDIARIES, (ii) ANY  NATURAL RESOURCE
               DAMAGES, GOVERNMENTAL FINES OR PENALTIES OR OTHER AMOUNTS MANDATED BY ANY
               GOVERNMENTAL AUTHORITY, COURT  ORDER, DEMAND OR DECREE IN CONNECTION WITH
               THE DISPOSAL BY THE BORROWER OR ANY OF ITS SUBSIDIARIES EITHER ON-SITE OR 
               OFF-SITE (INCLUDING LEAKAGE OR SEEPAGE FROM ANY SUCH SITE INCLUDING THIRD
               PARTY TREATMENT FACILITIES) OF POLLUTANTS,  CONTAMINANTS OR HAZARDOUS
               WASTES AND (iii) ANY PERSONAL INJURY OR PROPERTY DAMAGE TO THIRD PARTIES
               RESULTING FROM SUCH  POLLUTANTS, CONTAMINANTS OR HAZARDOUS WASTES. 



               



        Section
8.4       Term; Survival. This Agreement shall continue in full force and effect until
payment in full of the Obligations and termination of all obligations of the Lender to
extend credit pursuant to this Agreement. If at any time any payment of the principal of
or interest on the Note, any of the other Obligations, or any other amount payable by any
Obligor under any Loan Document is rescinded or must be otherwise restored or returned
upon the insolvency, bankruptcy, or reorganization of such Obligor or otherwise, the
obligations of each Obligor under the Loan Documents with respect to such payment shall be
reinstated as though such payment had been due but not made at such time. No termination
of this Agreement or any other Loan Document shall in any way affect or impair the rights
and obligations of the parties hereto relating to any transactions or events prior to such
termination date, and all warranties and representations of each Obligor shall survive
such termination. All representations and warranties made hereunder and in any document,
certificate, or statement delivered pursuant hereto or in connection herewith shall
survive the execution and delivery of this Agreement or the Note and not be waived by, the
execution hereof by Lender, any investigation or inquiry by Lender, or by the making of
any Loan under this Agreement (except to the extent expressly waived by the Lender in
writing). The obligations of the Borrower under Section 8.3 shall survive the
repayment of the Loans and the termination of the Commitment. 



        Section
8.5       Reliance by Lender. Lender and its officers, directors, employees, attorneys
and agents shall be entitled to rely and shall be fully protected in relying on any board
resolution, written notice, consent, certificate, affidavit, letter, e-mail, cablegram,
telegram, telex or teletype message, order, or other document reasonably believed by it or
them in good faith to be genuine and correct and to have been signed or made by the proper
Person and, with respect to legal matters, upon opinions of counsel reasonably selected or
consented to by Lender. 



        Section
8.6       Assignment; Participations. This Agreement shall be binding upon, and shall
inure to the benefit of, the Borrower, the Lender and their respective successors and
assigns, except that the Borrower may not assign or transfer its rights or obligations
hereunder. Subject to the consent of the Insurance Commissioner, if required, the Lender
may (a) sell participations in any Loan, (b) upon ten (10) days’ notice to the
Borrower may assign all, but not a part, of any Loan to another lender, (c) without notice
to the Borrower may assign all or any part of any Loan to any Affiliate of the Lender, or
(d) with the prior written consent of the Borrower, which consent will not unreasonably be
withheld, may assign less than all of any Loan to another lender, in which event (i) in
the case of an assignment, the assignee shall have, to the extent of such assignment
(unless otherwise provided therein), the same rights, benefits and obligations as it would
have if it were the Lender hereunder; and (ii) in the case of a participation, the
participant shall have no rights under this Agreement or the Note. The agreement executed
by the Lender in favor of any participant shall not give such participant the right to
require the Lender to take or omit to take any action hereunder except action directly
relating to (a) the extension of a regularly scheduled payment date with respect to any
portion of the principal of or interest on any amount outstanding hereunder allocated to
such participant, (b) the reduction of the principal amount allocated to such participant
or (c) the reduction of the rate of interest payable on such amount or any amount of fees
payable hereunder to a rate or amount, as the case may be, below that which the
participant is entitled to receive under its agreement with the Lender. The Lender may
furnish any information concerning the Borrower in the possession of Lender from time to
time to assignees and participants (including prospective assignees and participants);
provided that the Lender shall require any such prospective assignee or such
participant (prospective or otherwise) to agree in writing to maintain the confidentiality
of such information in accordance with the provisions set forth in Section 8.15. 



        Section
8.7       Notices. All notices, requests, demands and other communications provided for
herein shall be in writing and shall be (a) hand delivered; (b) sent by certified,
registered or express United States mail, return receipt requested, or reputable next-day
courier service; or (c) given by telex, telecopy, telegraph or similar means of electronic
communication. All such communications shall be effective upon the receipt thereof.
Notices shall be addressed to each Obligor and the Lender at their respective addresses
set forth on the signature pages of this Agreement, or to such other address as such
Obligor or the Lender shall theretofore have transmitted to the other party in writing by
any of the means specified in this Section. 



        Section
8.8       Setoff. The Borrower agrees that, in addition to (and without limitation of)
any right of setoff, banker’s lien or counterclaim the Lender may otherwise have, the
Lender shall be entitled, at its option, to offset balances (general or special, time or
demand, provisional or final, and regardless of whether such balances are then due to the
Borrower) held by it for the account of the Borrower at any of the Lender’s offices,
in Dollars or in any other currency, against any amount payable by the Borrower under this
Agreement or the Note that is not paid when due, taking into account any applicable grace
period, in which case it shall promptly notify the Borrower thereof; provided that
the Lender’s failure to give such notice shall not affect the validity thereof. 


        Section
8.9      Jurisdiction; Immunities; Wavier of Jury Trial.



          		                (a)     
               EACH OBLIGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY TEXAS
               STATE OR UNITED STATES FEDERAL COURT SITTING IN  BEXAR COUNTY, TEXAS OVER
               ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
               SECURITY AGREEMENT, ANY  PLEDGE AGREEMENT, THE GUARANTY, THE RECEIVABLES
               PURCHASE AGREEMENT OR THE NOTE, AND EACH OBLIGOR HEREBY IRREVOCABLY AGREES 
               THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
               DETERMINED IN SUCH TEXAS STATE OR FEDERAL COURT.  EACH OBLIGOR
               IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR
               PROCEEDING BY THE MAILING OF  COPIES OF SUCH PROCESS TO SUCH OBLIGOR AT
               ITS ADDRESS SPECIFIED IN SECTION 8.7. EACH OBLIGOR AGREES THAT A FINAL
               JUDGMENT  IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
               ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR  IN ANY OTHER
               MANNER PROVIDED BY LAW. EACH OBLIGOR FURTHER WAIVES ANY OBJECTION TO VENUE IN
               SUCH STATE AND ANY OBJECTION TO  AN ACTION OR PROCEEDING IN SUCH STATE ON
               THE BASIS OF FORUM NON CONVENIENS. EACH OBLIGOR FURTHER
               AGREES THAT ANY ACTION OR  PROCEEDING BROUGHT AGAINST THE LENDER SHALL BE
               BROUGHT ONLY IN TEXAS STATE OR UNITED STATES FEDERAL COURTS SITTING IN BEXAR
                COUNTY, TEXAS. 



               



          		                (b)     
               EACH OBLIGOR AND THE LENDER HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY AND
               INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT NOT  PROHIBITED BY LAW, ALL
               RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR
               RELATED TO ANY OF THE  LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
               THEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER ENTERING 
               INTO THIS AGREEMENT AND MAKING THE LOANS HEREUNDER. 



               



          		                (c)     
               EACH OBLIGOR ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE
               WITH RESPECT TO THIS TRANSACTION AND THIS  AGREEMENT AND THAT IT
               IRREVOCABLY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT, ACTION OR
               PROCEEDING OR ANY MATTER  ARISING IN CONNECTION WITH OR IN ANY WAY
               RELATED TO THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS AND THE
               ENFORCEMENT  OF ANY OF THE LENDER’S RIGHTS AND REMEDIES. 



               



          		                (d)     
               Nothing in this Section shall affect the right of the Lender to serve
               legal process in any other manner permitted by law or affect the right of the
               Lender to bring any action or proceeding against any Obligor or its Property in
               the courts of any other jurisdictions. 



               



        Section
8.10     Table of Contents; Headings. Any table of contents and the headings and
captions hereunder are for convenience only and shall not affect the interpretation or
construction of this Agreement. 



        Section
8.11     Severability. The provisions of this Agreement are intended to be severable.
If for any reason any provision of this Agreement shall be held invalid or unenforceable
in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without in any manner
affecting the validity or enforceability thereof in any other jurisdiction or the
remaining provisions hereof in any jurisdiction. 



        Section
8.12     Counterparts. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and any party
hereto may execute this Agreement by signing any such counterpart. 



        Section
8.13     Integration. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 



        Section
8.14     GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS; PROVIDED, HOWEVER, IT IS AGREED THAT THE
PROVISIONS OF CHAPTER 346 OF THE TEXAS FINANCE CODE SHALL NOT APPLY TO THE LOANS, THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS. 



        Section
8.15     Confidentiality. Subject to the following sentence, the Lender (on behalf of
itself and each of its Affiliates, directors, officers, employees and representatives) and
any assignee of the Lender becoming a party to this Agreement agrees to use its best
efforts, consistent with its normal procedures for handling confidential information in
accordance with safe and sound bank practices, to retain in confidence and not disclose
without the prior written consent of the Borrower any written information about the
Borrower obtained pursuant to the requirements of this Agreement, except as permitted
under Section 8.6. Notwithstanding the foregoing, the Lender and its Affiliates (a)
may disclose or otherwise use such information to the extent that such information is
required in any application, report, statement or testimony submitted to any governmental
agency having or claiming to have jurisdiction over the Lender and its Affiliates, (b) may
disclose or otherwise use such information to the extent that such information is required
in response to any summons or subpoena or in connection with any litigation affecting the
Lender and its Affiliates, (c) may disclose or otherwise use such information to the
extent that such information is reasonably believed by the Lender or such Affiliate (after
notification to the Borrower, unless such notification is prohibited by law) to be
required in order to comply with any law, order, regulation, or ruling applicable to the
Lender or such Affiliate, (d) may disclose or otherwise use such information to the
extent that such information becomes publicly available, and (e) as provided in Section
8.6. Notwithstanding anything herein to the contrary, the Borrower and the Lender (and
each Affiliate and Person acting on behalf of any such party) agree that each party (and
each employee, representative and other agent of such party) may disclose to any and all
Persons, without limitation of any kind, the tax treatment and tax structure of this
transaction and all materials of any kind (including opinions or other tax analyses) that
are provided to such party of such Person relating to such tax treatment and tax
structure, except to the extent necessary to comply with any applicable Federal or state
securities law. 



        Section
8.16     Authorization of Third Parties to Deliver Opinions, Etc. Each Obligor hereby
authorizes and directs each Person whose preparation or delivery to the Lender of any
opinion, report or other information is a condition or covenant under this Agreement
(including under Articles IV, V, and VI) to so prepare or deliver
such opinion, report or other information for the benefit of the Lender. Each Obligor
agrees to confirm such authorizations and directions provided for in this Section
8.16 from time to time as may be requested by the Lender. 



        Section
8.17     USA Patriot Act Notice. The Lender hereby notifies the Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub.L. 107-56 (signed into law
October 26, 2001)) (the “Act”), the Lender is required to obtain, verify
and record information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow the Lender to identify
the Borrower in accordance with the Act. 



        Section
8.18     State of Making and Performance. The parties hereto agree that this Agreement
is being made and is to be performed in the State of Texas. 





 



        THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. 



     












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





	 	ASCENT FUNDING, INC.
	 
	 	By: /s/ Cynthia B. Koenig
	 	Print Name: Cynthia B. Koenig
	 	Print Title: SVP & CFO
	 
	 	ASCENT ASSURANCE, INC.
	 	By: /s/ Cynthia B. Koenig
	 	Print Name: Cynthia B. Koenig
	 	Print Title: SVP & CFO 
	 
	 	NATIONALCARE® MARKETING, INC.
	 	By: /s/ Cynthia B. Koenig
	 	Print Name: Cynthia B. Koenig
	 	Print Title: SVP & CFO 









Address for Notices:
Ascent Assurance, Inc.

3100 Burnett Plaza, Unit 33
801 Cherry Street
Fort Worth, TX
76102 
Attn: Chief Financial
Officer
Telecopier No.: (817) 878-3880 



With a copy to: 
Patrick O’Neill
General
Counsel 
Ascent Assurance, Inc.
3100 Burnett Plaza, Unit 33
801 Cherry Street
Fort Worth, Texas 76102
Telecopier No.:
(817) 878-3880 












	 	THE FROST NATIONAL BANK
	 
	 	By: /s/ J. Carey Womble
	 	Print Name: J. Carey Womble
	 	Print Title: Senior Vice president
	 










Address for Notices:
777
Main Street
Fort Worth, TX 76102
Attn: M. Adam Palmer 
Telecopier No.: (817) 420-5250 
and

100 West Houston Street 
San Antonio, Texas 78205
Attn: Kathy Hargrave 
Telecopier No.:
(210) 220-4258 



With a copy to (which shall not
constitute notice to the Lender): 
Winstead Sechrest &
Minick P.C.
5400 Renaissance Tower
1201 Elm Street 
Dallas, TX 7527
Attn: 
James
R. Littlejohn
Telecopier No.: (214) 745-5390 








GUARANTY AGREEMENT 



        THIS
GUARANTY AGREEMENT (“Guaranty”) is made as of December 31, 2003, by
Guarantor (as hereinafter defined) for the benefit of Lender (as hereinafter defined). 



             1.       
          Definitions. As used in this Guaranty, the following terms
          shall have the meanings indicated below: 



          		            (a)       
               “Lender” means THE FROST NATIONAL BANK, a national banking
               association, whose address for notice purposes is the following: 



               






P.O. Box 1600
San Antonio, Texas 78296 
Attn: Adam Palmer 



          		            (b)       
               “Borrower” means Ascent Funding, Inc., a Delaware corporation. 



               



          		            (c)       
               “Guarantor” means Ascent Assurance, Inc., a Delaware
               corporation, whose address for notice purposes is the following: 



               




3100 Burnett Plaza 
801 Cherry Street 
Fort Worth, Tarrant
County, Texas 76102 
Attn: Chief Financial
Officer. 



          		            (d)       
               “Guaranteed Indebtedness” means (i) all Obligations now or
               hereafter existing of Borrower and each other Obligor under the Credit
               Agreement, (ii) all obligations of Borrower and each other Obligor under
               each other Loan Document, (iii) all other indebtedness, obligations and
               liabilities of Borrower and each other Obligor to Lender of any kind or
               character, now existing or hereafter arising, whether direct, indirect, related,
               unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint
               and several (excluding only indebtedness originally payable to or in favor of a
               Person other than Lender and subsequently acquired by Lender), and all
               indebtedness, obligations and liabilities of Borrower and each other Obligor to
               Lender now existing or hereafter arising by note, draft, acceptance, guaranty,
               endorsement, letter of credit, assignment, purchase, overdraft, discount,
               indemnity agreement or otherwise, (iv) all accrued but unpaid interest
               (including all interest that would accrue but for the existence of a proceeding
               under any Debtor Relief Laws) on any of the indebtedness described in this
               definition of “Guaranteed Indebtedness”, (v) all costs and
               expenses incurred by Lender in connection with the collection and administration
               of all or any part of the indebtedness and obligations described in this
               definition of “Guaranteed Indebtedness” or the protection or
               preservation of, or realization upon, the Collateral securing all or any part of
               such indebtedness and obligations, including without limitation all reasonable
               attorneys’ fees, and (vi) all renewals, extensions, modifications and
               rearrangements of the indebtedness and obligations described in this definition
               of “Guaranteed  Indebtedness.” 



               



          		            (e)       
               “Credit Agreement” means the Credit Agreement dated as of
               December 31, 2003, among Borrower, each other Obligor, and Lender, together
               with all amendments and restatements thereto. 



               



          		            (f)       
               “Loan Documents” means the Credit Agreement, each note executed
               pursuant to the Credit Agreement, each document securing or guaranteeing
               performance of the obligations of Borrower and each other Obligor under the
               Credit Agreement, each other document, instrument, financing statement, public
               notice and the like executed in connection with Liens in favor of Lender or
               collateral, and all other documents and instruments executed and delivered to
               Lender by any Obligor or any other Person in connection with the Credit
               Agreement, and each other document evidencing, securing, guaranteeing, governing
               and/or pertaining to all or any part of the indebtedness and obligations
               described in clause (iii) of “Guaranteed
               Indebtedness.” 



               



        Capitalized
terms not otherwise defined herein have the meaning specified in the Credit Agreement. 



             2.       
          Obligations. As an inducement to Lender to extend or
          continue to extend credit and other financial accommodations to Borrower,
          Guarantor, for value received, does hereby unconditionally and absolutely
          guarantee the prompt and full payment and performance of the Guaranteed
          Indebtedness when due or declared to be due and at all times thereafter.
          Notwithstanding anything in this Guaranty to the contrary, the obligations of
          Guarantor under this Guaranty shall be limited to a maximum aggregate amount
          equal to the largest amount that would not render Guarantor’s obligations
          hereunder subject to avoidance as a fraudulent transfer or fraudulent conveyance
          under Section 548 of Title 11 of the United States Code or any applicable
          provisions of comparable state law (collectively, the “Fraudulent
          Transfer Laws”), in each case after giving effect to all other
          liabilities of Guarantor, contingent or otherwise, that are relevant under the
          Fraudulent Transfer Laws and after giving effect as assets to the value (as
          determined under the applicable provisions of the Fraudulent Transfer Laws) of
          any rights to subrogation, reimbursement or contribution of Guarantor pursuant
          to (a) applicable law, or (b) any agreement providing for rights of subrogation,
          reimbursement or contribution in favor of Guarantor, or for an equitable
          allocation among Guarantor, Borrower, any other Obligor, and any other Person of
          obligations arising under guaranties by such Persons. 



             3.       
          Character of Obligations. 



          		            (a)       
               This is an absolute, continuing and unconditional guaranty of payment and not of
               collection and if at any time or from time to time there is no outstanding
               Guaranteed Indebtedness, the obligations of Guarantor with respect to any and
               all Guaranteed Indebtedness incurred thereafter shall not be affected. This
               Guaranty and the Guarantor’s obligations hereunder are irrevocable. All of
               the Guaranteed Indebtedness shall be conclusively presumed to have been made or
               acquired in acceptance hereof. Guarantor shall be liable, jointly and severally,
               with Borrower and any other guarantor of all or any part of the Guaranteed
               Indebtedness. 



               



          		            (b)       
               Lender may, at its sole discretion and without impairing its rights hereunder,
               (i) apply any payments on the Guaranteed Indebtedness that Lender receives from
               Borrower or any other source other than Guarantor to that portion of the
               Guaranteed Indebtedness, if any, not guaranteed hereunder, and (ii) apply any
               proceeds it receives as a result of the foreclosure or other realization on any
               collateral for the Guaranteed Indebtedness to that portion, if any, of the
               Guaranteed Indebtedness not guaranteed hereunder or to any other indebtedness
               secured by such collateral. 



               



          		            (c)       
               Guarantor agrees that its obligations hereunder shall not be released,
               diminished, impaired, reduced or affected by the existence of any other guaranty
               or the payment by any other guarantor of all or any part of the Guaranteed
               Indebtedness and Guarantor’s payment obligations hereunder shall continue
               (except as provided in Paragraph 23) until Lender has received payment in
               full of the Guaranteed Indebtedness and all obligations of Lender to extend
               credit to Borrower under the Loan Documents are terminated. 



               



          		            (d)       
               Guarantor’s obligations hereunder shall not be released, diminished,
               impaired, reduced or affected by, nor shall any provision contained herein be
               deemed to be a limitation upon, the amount of credit which Lender may extend to
               Borrower, the number of transactions between Lender and Borrower, payments by
               Borrower to Lender or Lender’s allocation of payments by Borrower. 



               



          		            (e)       
               Without further authorization from or notice to Guarantor, Lender may
               compromise, accelerate, or otherwise alter the time or manner for the payment of
               the Guaranteed Indebtedness, increase or reduce the rate of interest thereon, or
               release or add any one or more guarantors or endorsers, or allow substitution of
               or withdrawal of collateral or other security and release collateral and other
               security or subordinate the same; provided that, the Commitment
               will not be increased to greater than $3,000,000 without the prior written
               consent of Guarantor. 



               



             4.       
          Representations and Warranties. Guarantor hereby represents
          and warrants the following to Lender: 



          		            (a)       
               This Guaranty may reasonably be expected to benefit, directly or indirectly,
               Guarantor, and the Board of Directors of Guarantor has determined that this
               Guaranty may reasonably be expected to benefit, directly or indirectly,
               Guarantor; and 



               



          		            (b)       
               Guarantor is familiar with, and has independently reviewed the books and records
               regarding, the financial condition of Borrower and is familiar with the value of
               any and all collateral intended to be security for the payment of all or any
               part of the Guaranteed Indebtedness; provided, however, Guarantor is not relying
               on such financial condition or collateral as an inducement to enter into this
               Guaranty; and 



               



          		            (c)       
               Guarantor has adequate means to obtain from Borrower on a continuing basis
               information concerning the financial condition of Borrower and Guarantor is not
               relying on Lender to provide such information to Guarantor either now or in the
               future; and 



               



          		            (d)       
               Guarantor has the corporate power and authority to execute, deliver and perform
               this Guaranty and any other agreements executed by Guarantor contemporaneously
               herewith, and the execution, delivery and performance of this Guaranty and any
               other agreements executed by Guarantor contemporaneously herewith do not and
               will not violate (i) any material agreement or instrument to which
               Guarantor is a party and with respect to which Guarantor has not obtained a
               waiver or consent of each such violation, (ii) any material law, rule,
               regulation or order of any governmental authority to which Guarantor is subject,
               or (iii) its articles or certificate of incorporation or bylaws; and 



               



          		            (e)       
               Neither Lender nor any other party has made any representation, warranty or
               statement to Guarantor in order to induce Guarantor to execute this Guaranty;
               and 



               



          		            (f)       
               The financial statements regarding Guarantor heretofore and hereafter delivered
               to Lender pursuant to the Credit Agreement fairly present in all material
               respects the consolidated financial position of Guarantor and its consolidated
               Subsidiaries as of the dates thereof, and no material adverse change has
               occurred in the financial condition of Guarantor reflected in the financial
               statements regarding Guarantor heretofore delivered to Lender since the date of
               the last statement thereof; and 



               



          		            (g)       
               As of the date hereof, and after giving effect to this Guaranty and the
               obligations evidenced hereby, Guarantor is and will be Solvent; and 



               



          		            (h)       
               Guarantor has not entered into this Guaranty or any of the other Loan Documents
               to which it is a party or its property is subject with the intent to hinder,
               delay or defraud any creditor. 



               



             5.       
          Covenants. Guarantor hereby covenants and agrees with
          Lender as follows: 



          		            (a)       
               Guarantor shall not, so long as its obligations under this Guaranty continue,
               transfer or pledge any (i) material portion of its assets for less than full and
               adequate consideration (as reasonably determined by Guarantor’s Board of
               Directors), or (ii) of its assets subject or intended to be subject to a Lien in
               favor of Lender or its affiliates; and 



               



          		            (b)       
               Guarantor shall comply with all terms and provisions of the Loan Documents to
               which it is a party; and 



               



          		            (c)       
               Guarantor shall promptly inform Lender of (i) any litigation or
               governmental investigation against Guarantor or affecting any security for all
               or any part of the Guaranteed Indebtedness or this Guaranty which could
               reasonably be expected to have a material adverse effect upon the financial
               condition of Guarantor or upon such security or could reasonably be expected to
               cause a default under any of the Loan Documents, (ii) any claim or
               controversy which might become the subject of such litigation or governmental
               investigation, and (iii) any material adverse change in the financial
               condition of Guarantor. 



               



             6.       
          Consent and Waiver. 



          		            (a)       
               Guarantor waives (i) promptness, diligence and notice of acceptance of this
               Guaranty and notice of the incurring of any obligation (subject to the proviso
               of Section 3(e)), indebtedness or liability to which this Guaranty
               applies or may apply and waives presentment for payment, notice of nonpayment,
               protest, demand, notice of protest, notice of intent to accelerate, notice of
               acceleration, notice of dishonor, diligence in enforcement and indulgences of
               every kind, and (ii) the taking of any other action by Lender, including without
               limitation giving any notice of default or any other notice to, or making any
               demand on, Borrower, any other guarantor of all or any part of the Guaranteed
               Indebtedness, any other Obligor or any other party. 



               



          		            (b)       
               Guarantor waives any rights Guarantor has under, or any requirements imposed by,
               Chapter 34 of the Texas Business and Commerce Code, as in effect on the date of
               this Guaranty or as it may be amended from time to time. 



               



          		            (c)       
               Lender may at any time (subject to the other Loan Documents), without the
               consent of or notice to Guarantor, without incurring responsibility to Guarantor
               and without impairing, releasing, reducing or affecting the obligations of
               Guarantor hereunder: (i) change the manner, place or terms of payment of
               all or any part of the Guaranteed Indebtedness, or renew, extend, modify,
               rearrange or alter all or any part of the Guaranteed Indebtedness; (ii) change
               the interest rate accruing on any of the Guaranteed Indebtedness (including,
               without limitation, any periodic change in such interest rate that occurs
               because such Guaranteed Indebtedness accrues interest at a variable rate which
               may fluctuate from time to time); (iii) sell, exchange, release, surrender,
               subordinate, realize upon or otherwise deal with in any manner and in any order
               any collateral for all or any part of the Guaranteed Indebtedness or this
               Guaranty or setoff against all or any part of the Guaranteed Indebtedness; (iv)
               neglect, delay, omit, fail or refuse to take or prosecute any action for the
               collection of all or any part of the Guaranteed Indebtedness or this Guaranty or
               to take or prosecute any action in connection with any of the Loan Documents;
               (v) exercise or refrain from exercising any rights against Borrower, any other
               Obligor or others, or otherwise act or refrain from acting; (vi) settle or
               compromise all or any part of the Guaranteed Indebtedness and subordinate the
               payment of all or any part of the Guaranteed Indebtedness to the payment of any
               obligations, indebtedness or liabilities which may be due or become due to
               Lender or others; (vii) apply any deposit balance, fund, payment, collections
               through process of law or otherwise or other collateral of Borrower to the
               satisfaction and liquidation of the indebtedness or obligations of Borrower and
               each other Obligor to Lender not guaranteed under this Guaranty; and (viii)
               apply any sums paid to Lender by Guarantor, Borrower, any other Obligor or
               others to the Guaranteed Indebtedness in such order and manner as Lender, in its
               sole discretion, may determine. 



               



          		            (d)       
               Should Lender seek to enforce the obligations of Guarantor hereunder by action
               in any court or otherwise, Guarantor waives any requirement, substantive or
               procedural, that (i) Lender first enforce any rights or remedies against
               Borrower, any other Obligor or any other Person liable to Lender for all or any
               part of the Guaranteed Indebtedness, including without limitation that a
               judgment first be rendered against Borrower, any other Obligor or any other
               Person, or that Borrower, any other Obligor or any other Person should be joined
               in such cause, or (ii) Lender first enforce rights against any collateral which
               shall ever have been given to secure all or any part of the Guaranteed
               Indebtedness or this Guaranty. Such waiver shall be without prejudice to
               Lender’s right, at its option, to proceed against Borrower, any other
               Obligor or any other Person, whether by separate action or by joinder. 



               



          		            (e)       
               IN ADDITION TO ANY OTHER WAIVERS, AGREEMENTS AND COVENANTS OF GUARANTOR SET
               FORTH HEREIN, GUARANTOR  HEREBY FURTHER WAIVES AND RELEASES ALL CLAIMS,
               CAUSES OF ACTION, DEFENSES AND OFFSETS FOR ANY ACT OR  OMISSION OF
               LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES OR AGENTS IN
               CONNECTION WITH  LENDER’S ADMINISTRATION OF THE GUARANTEED
               INDEBTEDNESS, EXCEPT FOR LENDER’S WILLFUL MISCONDUCT AND GROSS 
               NEGLIGENCE. 



               



             7.       
          Obligations Not Impaired. 



          		            (a)       
               Guarantor agrees that its obligations hereunder shall not be released,
               diminished, impaired, reduced or affected by the occurrence of any one or more
               of the following events: (i) the death, disability or lack of corporate power of
               Borrower, Guarantor, any other Obligor or any other guarantor of all or any part
               of the Guaranteed Indebtedness, (ii) any receivership, insolvency, bankruptcy or
               other proceedings affecting Borrower, Guarantor, any other Obligor or any other
               guarantor of all or any part of the Guaranteed Indebtedness, or any of their
               respective property; (iii) the partial or total release or discharge of
               Borrower, any other Obligor or any other guarantor of all or any part of the
               Guaranteed Indebtedness, or any other Person from the performance of any
               obligation contained in any instrument or agreement evidencing, governing or
               securing all or any part of the Guaranteed Indebtedness, whether occurring by
               reason of law or otherwise (other than as a result of payment in full in cash of
               the Guaranteed Indebtedness after termination of all obligations of Lender to
               extend credit to Borrower); (iv) the taking or accepting of any collateral for
               all or any part of the Guaranteed Indebtedness or this Guaranty; (v) the taking
               or accepting of any other guaranty for all or any part of the Guaranteed
               Indebtedness; (vi) any failure by Lender to acquire, perfect or continue any
               lien or security interest on collateral securing all or any part of the
               Guaranteed Indebtedness or this Guaranty; (vii) the impairment of any collateral
               securing all or any part of the Guaranteed Indebtedness or this Guaranty; (viii)
               subject to the other Loan Documents, any failure by Lender to sell any
               collateral securing all or any part of the Guaranteed Indebtedness or this
               Guaranty in a commercially reasonable manner or as otherwise required by law;
               (ix) any invalidity or unenforceability of or defect or deficiency in any of the
               Loan Documents; or (x) any other circumstance which might otherwise constitute a
               defense available to, or discharge of, Borrower, any other Obligor or any other
               guarantor of all or any part of the Guaranteed Indebtedness. 



               



          		            (b)       
               This Guaranty shall be reinstated if at any time any payment of all or any part
               of the Guaranteed Indebtedness is rescinded or must otherwise be returned by
               Lender upon the insolvency, bankruptcy or reorganization of Borrower, Guarantor,
               or any other Obligor or other guarantor of all or any part of the Guaranteed
               Indebtedness, or otherwise, all as though such payment had not been made. 



               



          		            (c)       
               None of the following shall affect Guarantor’s liability hereunder: (i) the
               unenforceability of all or any part of the Guaranteed Indebtedness against
               Borrower by reason of the fact that the Guaranteed Indebtedness exceeds the
               amount permitted by law; (ii) the act of creating all or any part of the
               Guaranteed Indebtedness is ultra vires; or (iii) the officers or partners
               creating all or any part of the Guaranteed Indebtedness acted in excess of their
               authority. Guarantor hereby acknowledges that withdrawal from, or termination
               of, any ownership interest in Borrower now or hereafter owned or held, directly
               or indirectly, by Guarantor shall not alter, affect or in any way limit the
               obligations of Guarantor hereunder. 



               



             8.       
          Actions Against Guarantor. If an Event of Default exists
          (including the default in the payment or performance of all or any part of the
          Guaranteed Indebtedness when such Guaranteed Indebtedness becomes due, whether
          by its terms, by acceleration or otherwise), Guarantor shall, without notice or
          demand, promptly pay the amount due thereon to Lender, in lawful money of the
          United States, at Lender’s address set forth in Subparagraph 1(a)
          above. One or more successive or concurrent actions may be brought against
          Guarantor, either in the same action in which Borrower or any other Obligor is
          sued or in separate actions, as often as Lender deems advisable. The exercise by
          Lender of any right or remedy under this Guaranty, any other Loan Document or
          under any other agreement or instrument, at law, in equity or otherwise, shall
          not preclude concurrent or subsequent exercise of any other right or remedy. The
          books and records of Lender shall be admissible as evidence in any action or
          proceeding involving this Guaranty and shall be prima facie
          evidence of the payments made on, and the outstanding balance of, the Guaranteed
          Indebtedness. 



             9.       
          Payment by Guarantor. Whenever Guarantor pays any sum which
          is or may become due under this Guaranty, written notice must be delivered to
          Lender contemporaneously with such payment. Such notice shall be effective for
          purposes of this paragraph when contemporaneously with such payment Lender
          receives such notice either by: (a) personal delivery to the address and
          designated department of Lender identified in Subparagraph 1(a) above, or
          (b) United States mail, certified or registered, return receipt requested,
          postage prepaid, addressed to Lender at the address shown in Subparagraph
          1(a) above. In the absence of such notice to Lender by Guarantor in
          compliance with the provisions hereof, any sum received by Lender on account of
          the Guaranteed Indebtedness shall be conclusively deemed paid by Borrower. 



             10.     
          Notice of Sale. In the event that Guarantor is entitled to
          receive any notice under the Uniform Commercial Code, as it exists in the state
          governing any such notice, of the sale or other disposition of any collateral
          securing all or any part of the Guaranteed Indebtedness or this Guaranty,
          reasonable notice shall be deemed given when such notice is deposited in the
          United States mail, postage prepaid, at the address for Guarantor set forth in
          Subparagraph 1(c) above, ten (10) Business Days prior to the date any
          public sale, or after which any private sale, of any such collateral is to be
          held; provided, however, that notice given in any other reasonable
          manner or at any other reasonable time shall be sufficient. 



             11.     
          Waiver by Lender. No delay on the part of Lender in
          exercising any right hereunder or failure to exercise the same shall operate as
          a waiver of such right. In no event shall any waiver of the provisions of this
          Guaranty be effective unless the same be in writing and signed by an officer of
          Lender, and then only in the specific instance and for the purpose given. 



             12.     
          Successors and Assigns. This Guaranty is for the benefit of
          Lender, its successors and assigns. This Guaranty is binding upon Guarantor and
          Guarantor’s heirs, executors, administrators, personal representatives and
          successors, including without limitation any Person obligated by operation of
          law upon the reorganization, merger, consolidation or other change in the
          organizational structure of Guarantor. 



             13.     
          Costs and Expenses. Guarantor shall pay on demand by Lender
          all costs and expenses, including without limitation all reasonable
          attorneys’ fees, incurred by Lender in connection with the preparation
          (subject to Section 8.3(a) of the Credit Agreement), administration,
          enforcement and/or collection of this Guaranty. This covenant shall survive the
          payment of the Guaranteed Indebtedness. 



             14.     
          Severability. If any provision of this Guaranty is held by
          a court of competent jurisdiction to be illegal, invalid or unenforceable under
          present or future laws, such provision shall be fully severable, shall not
          impair or invalidate the remainder of this Guaranty and the effect thereof shall
          be confined to the provision held to be illegal, invalid or unenforceable. 



             15.     
          No Obligation. Nothing contained herein shall be construed
          as an obligation on the part of Lender to extend or continue to extend credit to
          Borrower. 



             16.     
          Amendment. No modification or amendment of any provision of
          this Guaranty, nor consent to any departure by Guarantor therefrom, shall be
          effective unless the same shall be in writing and signed by an officer of
          Lender, and then shall be effective only in the specific instance and for the
          purpose for which given. 



             17.     
          Cumulative Rights. All rights and remedies of Lender
          hereunder are cumulative of each other and of every other right or remedy which
          Lender may otherwise have at law or in equity or under any instrument or
          agreement, and the exercise of one or more of such rights or remedies shall not
          prejudice or impair the concurrent or subsequent exercise of any other rights or
          remedies. This Guaranty, whether general, specific and/or limited, shall be in
          addition to and cumulative of, and not in substitution, novation or discharge
          of, any and all prior or contemporaneous guaranty agreements by Guarantor in
          favor of Lender or assigned to Lender by others. 



             18.     
          Governing Law, Venue. This Guaranty is intended to be
          performed in the State of Texas. Except to the extent that the laws of the
          United States may apply to the terms hereof, the substantive laws of the State
          of Texas shall govern the validity, construction, enforcement and interpretation
          of this Guaranty. In the event of a dispute involving this Guaranty, any other
          Loan Document or any other instruments executed in connection herewith, the
          undersigned irrevocably agrees that venue for such dispute shall lie in any
          court of competent jurisdiction in Bexar County, Texas. 



             19.     
          Compliance with Applicable Usury Laws. Notwithstanding any
          other provision of this Guaranty, any other Loan Document or of any instrument
          or agreement evidencing, governing or securing all or any part of the Guaranteed
          Indebtedness, Guarantor and Lender by its acceptance hereof agree that Guarantor
          shall never be required or obligated to pay interest in excess of the maximum
          non-usurious interest rate as may be authorized by applicable law for the
          written contracts which constitute the Guaranteed Indebtedness. It is the
          intention of Guarantor and Lender to conform strictly to the applicable laws
          which limit interest rates, and any of the aforesaid contracts for interest, if
          and to the extent payable by Guarantor, shall be held to be subject to reduction
          to the maximum non-usurious interest rate allowed under said law. 



             20.     
          Gender. Within this Guaranty, words of any gender shall be
          held and construed to include the other gender. 



             21.     
          Captions. The headings in this Guaranty are for convenience
          only and shall not define or limit the provisions hereof. 



             22.     
          No Subrogation. Notwithstanding any payment or payments by
          Guarantor hereunder or any set-off or application of funds of Guarantor by
          Lender, Guarantor shall not be entitled to be subrogated to any of the rights of
          Lender against Borrower, any other Obligor or any other Person or guarantee or
          right of offset held by Lender of the payment of the Guaranteed Indebtedness,
          nor shall Guarantor seek or be entitled to any reimbursement or contribution
          from Borrower, any other Obligor, or any other Person in respect of payments
          made by Guarantor hereunder, until all amounts owing to Lender by Borrower on
          account of the Guaranteed Indebtedness are indefeasibly paid in full in cash. If
          any amount shall be paid to Guarantor on account of the subrogation rights at
          any time when all of the Guaranteed Indebtedness has not been indefeasibly paid
          in full in cash, such amount shall be held by Guarantor in trust for the
          Guaranteed Parties, segregated from other funds of Guarantor, and shall,
          immediately upon receipt by Guarantor, be turned over to Lender in the exact
          form received by Guarantor (duly endorsed by Guarantor to Lender, if required),
          to be applied against the Guaranteed Indebtedness, whether matured or unmatured,
          in such order as Lender may determine. 



             23.     
          Right of Revocation. Guarantor understands and agrees that
          Guarantor may revoke its future obligations under this Guaranty at any time by
          giving Lender written notice that Guarantor will not be liable hereunder for any
          indebtedness or obligations of Borrower incurred on or after the effective date
          of such revocation. Such revocation shall be deemed to be effective on the day
          following the day Lender receives such notice delivered either by: (a) personal
          delivery to the address and designated department of Lender identified in
          Subparagraph 1(a) above, or (b) United States mail, registered or
          certified, return receipt requested, postage prepaid, addressed to Lender at the
          address shown in Subparagraph 1(a) above. Notwithstanding such
          revocation, Guarantor shall remain liable on its obligations hereunder until
          payment in full to Lender of (a) all of the Guaranteed Indebtedness that is
          outstanding on the effective date of such revocation, and any renewals and
          extensions thereof, and (b) all loans, advances and other extensions of credit
          made to or for the account of Borrower on or after the effective date of such
          revocation pursuant to the obligation of Lender under a commitment or agreement
          made to or with Borrower prior to the effective date of such revocation. The
          terms and conditions of this Guaranty, including without limitation the consents
          and waivers set forth in Paragraph 6 hereof, shall remain in effect with
          respect to the Guaranteed Indebtedness described in the preceding sentence in
          the same manner as if such revocation had not been made by Guarantor. 



     




REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK. 



     









        EXECUTED
as of the date first above written. 




	 	GUARANTOR:
	 
	 
	 	ASCENT ASSURANCE, INC.
	 
	 
	 	By: /s/ Cynthia B. Koenig
	 	Print Name: Cynthia B. Koenig
	 	Print Title: SVP & CFO
	 









GUARANTY AGREEMENT 



        THIS
GUARANTY AGREEMENT (“Guaranty”) is made as of December 31, 2003, by
Guarantor (as hereinafter defined) for the benefit of Lender (as hereinafter defined). 



             1.       
          Definitions. As used in this Guaranty, the following terms
          shall have the meanings indicated below: 



          		            (a)       
               “Lender” means THE FROST NATIONAL BANK, a national banking
               association, whose address for notice purposes is the following: 



               






P.O. Box 1600 
San Antonio, Texas 78296
Attn: Adam Palmer 



          		            (b)       
               “Borrower” means Ascent Funding, Inc., a Delaware corporation. 



               



          		            (c)       
               “Guarantor” means NationalCare® Marketing, Inc., a Delaware
               corporation, whose address for notice purposes is the following: 



               




3100 Burnett Plaza 
801 Cherry Street 
Fort Worth, Tarrant
County, Texas 76102 
Attn: Chief Financial
Officer. 



          		            (d)       
               “Guaranteed Indebtedness” means (i) all Obligations now or
               hereafter existing of Borrower and each other Obligor under the Credit
               Agreement, (ii) all obligations of Borrower and each other Obligor under
               each other Loan Document, (iii) all other indebtedness, obligations and
               liabilities of Borrower and each other Obligor to Lender of any kind or
               character, now existing or hereafter arising, whether direct, indirect, related,
               unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint
               and several (excluding only indebtedness originally payable to or in favor of a
               Person other than Lender and subsequently acquired by Lender), and all
               indebtedness, obligations and liabilities of Borrower and each other Obligor to
               Lender now existing or hereafter arising by note, draft, acceptance, guaranty,
               endorsement, letter of credit, assignment, purchase, overdraft, discount,
               indemnity agreement or otherwise, (iv) all accrued but unpaid interest
               (including all interest that would accrue but for the existence of a proceeding
               under any Debtor Relief Laws) on any of the indebtedness described in this
               definition of “Guaranteed Indebtedness”, (v) all costs and
               expenses incurred by Lender in connection with the collection and administration
               of all or any part of the indebtedness and obligations described in this
               definition of “Guaranteed Indebtedness” or the protection or
               preservation of, or realization upon, the Collateral securing all or any part of
               such indebtedness and obligations, including without limitation all reasonable
               attorneys’ fees, and (vi) all renewals, extensions, modifications and
               rearrangements of the indebtedness and obligations described in this definition
               of “Guaranteed  Indebtedness.” 



               



          		            (e)       
               “Credit Agreement” means the Credit Agreement dated as of
               December 31, 2003, among Borrower, each other Obligor, and Lender, together
               with all amendments and restatements thereto. 



               



          		            (f)       
               “Loan Documents” means the Credit Agreement, each note executed
               pursuant to the Credit Agreement, each document securing or guaranteeing
               performance of the obligations of Borrower and each other Obligor under the
               Credit Agreement, each other document, instrument, financing statement, public
               notice and the like executed in connection with Liens in favor of Lender or
               collateral, and all other documents and instruments executed and delivered to
               Lender by any Obligor or any other Person in connection with the Credit
               Agreement, and each other document evidencing, securing, guaranteeing, governing
               and/or pertaining to all or any part of the indebtedness and obligations
               described in clause (iii) of “Guaranteed
               Indebtedness.” 



               



        Capitalized
terms not otherwise defined herein have the meaning specified in the Credit Agreement. 



             2.       
          Obligations. As an inducement to Lender to extend or
          continue to extend credit and other financial accommodations to Borrower,
          Guarantor, for value received, does hereby unconditionally and absolutely
          guarantee the prompt and full payment and performance of the Guaranteed
          Indebtedness when due or declared to be due and at all times thereafter.
          Notwithstanding anything in this Guaranty to the contrary, the obligations of
          Guarantor under this Guaranty shall be limited to a maximum aggregate amount
          equal to the largest amount that would not render Guarantor’s obligations
          hereunder subject to avoidance as a fraudulent transfer or fraudulent conveyance
          under Section 548 of Title 11 of the United States Code or any applicable
          provisions of comparable state law (collectively, the “Fraudulent
          Transfer Laws”), in each case after giving effect to all other
          liabilities of Guarantor, contingent or otherwise, that are relevant under the
          Fraudulent Transfer Laws and after giving effect as assets to the value (as
          determined under the applicable provisions of the Fraudulent Transfer Laws) of
          any rights to subrogation, reimbursement or contribution of Guarantor pursuant
          to (a) applicable law, or (b) any agreement providing for rights of subrogation,
          reimbursement or contribution in favor of Guarantor, or for an equitable
          allocation among Guarantor, Borrower, any other Obligor, and any other Person of
          obligations arising under guaranties by such Persons. 



             3.       
          Character of Obligations. 



          		            (a)       
               This is an absolute, continuing and unconditional guaranty of payment and not of
               collection and if at any time or from time to time there is no outstanding
               Guaranteed Indebtedness, the obligations of Guarantor with respect to any and
               all Guaranteed Indebtedness incurred thereafter shall not be affected. This
               Guaranty and the Guarantor’s obligations hereunder are irrevocable. All of
               the Guaranteed Indebtedness shall be conclusively presumed to have been made or
               acquired in acceptance hereof. Guarantor shall be liable, jointly and severally,
               with Borrower and any other guarantor of all or any part of the Guaranteed
               Indebtedness. 



               



          		            (b)       
               Lender may, at its sole discretion and without impairing its rights hereunder,
               (i) apply any payments on the Guaranteed Indebtedness that Lender receives from
               Borrower or any other source other than Guarantor to that portion of the
               Guaranteed Indebtedness, if any, not guaranteed hereunder, and (ii) apply any
               proceeds it receives as a result of the foreclosure or other realization on any
               collateral for the Guaranteed Indebtedness to that portion, if any, of the
               Guaranteed Indebtedness not guaranteed hereunder or to any other indebtedness
               secured by such collateral. 



               



          		            (c)       
               Guarantor agrees that its obligations hereunder shall not be released,
               diminished, impaired, reduced or affected by the existence of any other guaranty
               or the payment by any other guarantor of all or any part of the Guaranteed
               Indebtedness and Guarantor’s payment obligations hereunder shall continue
               (except as provided in Paragraph 23) until Lender has received payment in
               full of the Guaranteed Indebtedness and all obligations of Lender to extend
               credit to Borrower under the Loan Documents are terminated. 



               



          		            (d)       
               Guarantor’s obligations hereunder shall not be released, diminished,
               impaired, reduced or affected by, nor shall any provision contained herein be
               deemed to be a limitation upon, the amount of credit which Lender may extend to
               Borrower, the number of transactions between Lender and Borrower, payments by
               Borrower to Lender or Lender’s allocation of payments by Borrower. 



               



          		            (e)       
               Without further authorization from or notice to Guarantor, Lender may
               compromise, accelerate, or otherwise alter the time or manner for the payment of
               the Guaranteed Indebtedness, increase or reduce the rate of interest thereon, or
               release or add any one or more guarantors or endorsers, or allow substitution of
               or withdrawal of collateral or other security and release collateral and other
               security or subordinate the same; provided that, the Commitment
               will not be increased to greater than $3,000,000 without the prior written
               consent of Guarantor. 



               



             4.       
          Representations and Warranties. Guarantor hereby represents
          and warrants the following to Lender: 



          		            (a)       
               This Guaranty may reasonably be expected to benefit, directly or indirectly,
               Guarantor, and the Board of Directors of Guarantor has determined that this
               Guaranty may reasonably be expected to benefit, directly or indirectly,
               Guarantor; and 



               



          		            (b)       
               Guarantor is familiar with, and has independently reviewed the books and records
               regarding, the financial condition of Borrower and is familiar with the value of
               any and all collateral intended to be security for the payment of all or any
               part of the Guaranteed Indebtedness; provided, however, Guarantor is not relying
               on such financial condition or collateral as an inducement to enter into this
               Guaranty; and 



               



          		            (c)       
               Guarantor has adequate means to obtain from Borrower on a continuing basis
               information concerning the financial condition of Borrower and Guarantor is not
               relying on Lender to provide such information to Guarantor either now or in the
               future; and 



               



          		            (d)       
               Guarantor has the corporate power and authority to execute, deliver and perform
               this Guaranty and any other agreements executed by Guarantor contemporaneously
               herewith, and the execution, delivery and performance of this Guaranty and any
               other agreements executed by Guarantor contemporaneously herewith do not and
               will not violate (i) any material agreement or instrument to which
               Guarantor is a party and with respect to which Guarantor has not obtained a
               waiver or consent of each such violation, (ii) any material law, rule,
               regulation or order of any governmental authority to which Guarantor is subject,
               or (iii) its articles or certificate of incorporation or bylaws; and 



               



          		            (e)       
               Neither Lender nor any other party has made any representation, warranty or
               statement to Guarantor in order to induce Guarantor to execute this Guaranty;
               and 



               



          		            (f)       
               The financial statements regarding Guarantor heretofore and hereafter delivered
               to Lender pursuant to the Credit Agreement fairly present in all material
               respects the consolidated financial position of Guarantor and its consolidated
               Subsidiaries as of the dates thereof, and no material adverse change has
               occurred in the financial condition of Guarantor reflected in the financial
               statements regarding Guarantor heretofore delivered to Lender since the date of
               the last statement thereof; and 



               



          		            (g)       
               As of the date hereof, and after giving effect to this Guaranty and the
               obligations evidenced hereby, Guarantor is and will be Solvent; and 



               



          		            (h)       
               Guarantor has not entered into this Guaranty or any of the other Loan Documents
               to which it is a party or its property is subject with the intent to hinder,
               delay or defraud any creditor. 



               



             5.       
          Covenants. Guarantor hereby covenants and agrees with
          Lender as follows: 



          		            (a)       
               Guarantor shall not, so long as its obligations under this Guaranty continue,
               transfer or pledge any (i) material portion of its assets for less than full and
               adequate consideration (as reasonably determined by Guarantor’s Board of
               Directors), or (ii) of its assets subject or intended to be subject to a Lien in
               favor of Lender or its affiliates; and 



               



          		            (b)       
               Guarantor shall c omply with all terms and provisions of the Loan Documents to
               which it is a party; and 



               



          		            (c)       
               Guarantor shall promptly inform Lender of (i) any litigation or
               governmental investigation against Guarantor or affecting any security for all
               or any part of the Guaranteed Indebtedness or this Guaranty which could
               reasonably be expected to have a material adverse effect upon the financial
               condition of Guarantor or upon such security or could reasonably be expected to
               cause a default under any of the Loan Documents, (ii) any claim or
               controversy which might become the subject of such litigation or governmental
               investigation, and (iii) any material adverse change in the financial
               condition of Guarantor. 



               



             6.       
          Consent and Waiver. 



          		            (a)       
               Guarantor waives (i) promptness, diligence and notice of acceptance of this
               Guaranty and notice of the incurring of any obligation (subject to the proviso
               of Section 3(e)), indebtedness or liability to which this Guaranty
               applies or may apply and waives presentment for payment, notice of nonpayment,
               protest, demand, notice of protest, notice of intent to accelerate, notice of
               acceleration, notice of dishonor, diligence in enforcement and indulgences of
               every kind, and (ii) the taking of any other action by Lender, including without
               limitation giving any notice of default or any other notice to, or making any
               demand on, Borrower, any other guarantor of all or any part of the Guaranteed
               Indebtedness, any other Obligor or any other party. 



               



          		            (b)       
               Guarantor waives any rights Guarantor has under, or any requirements imposed by,
               Chapter 34 of the Texas Business and Commerce Code, as in effect on the date of
               this Guaranty or as it may be amended from time to time. 



               



          		            (c)       
               Lender may at any time (subject to the other Loan Documents), without the
               consent of or notice to Guarantor, without incurring responsibility to Guarantor
               and without impairing, releasing, reducing or affecting the obligations of
               Guarantor hereunder: (i) change the manner, place or terms of payment of
               all or any part of the Guaranteed Indebtedness, or renew, extend, modify,
               rearrange or alter all or any part of the Guaranteed Indebtedness; (ii) change
               the interest rate accruing on any of the Guaranteed Indebtedness (including,
               without limitation, any periodic change in such interest rate that occurs
               because such Guaranteed Indebtedness accrues interest at a variable rate which
               may fluctuate from time to time); (iii) sell, exchange, release, surrender,
               subordinate, realize upon or otherwise deal with in any manner and in any order
               any collateral for all or any part of the Guaranteed Indebtedness or this
               Guaranty or setoff against all or any part of the Guaranteed Indebtedness; (iv)
               neglect, delay, omit, fail or refuse to take or prosecute any action for the
               collection of all or any part of the Guaranteed Indebtedness or this Guaranty or
               to take or prosecute any action in connection with any of the Loan Documents;
               (v) exercise or refrain from exercising any rights against Borrower, any other
               Obligor or others, or otherwise act or refrain from acting; (vi) settle or
               compromise all or any part of the Guaranteed Indebtedness and subordinate the
               payment of all or any part of the Guaranteed Indebtedness to the payment of any
               obligations, indebtedness or liabilities which may be due or become due to
               Lender or others; (vii) apply any deposit balance, fund, payment, collections
               through process of law or otherwise or other collateral of Borrower to the
               satisfaction and liquidation of the indebtedness or obligations of Borrower and
               each other Obligor to Lender not guaranteed under this Guaranty; and (viii)
               apply any sums paid to Lender by Guarantor, Borrower, any other Obligor or
               others to the Guaranteed Indebtedness in such order and manner as Lender, in its
               sole discretion, may determine. 



               



          		            (d)       
               Should Lender seek to enforce the obligations of Guarantor hereunder by action
               in any court or otherwise, Guarantor waives any requirement, substantive or
               procedural, that (i) Lender first enforce any rights or remedies against
               Borrower, any other Obligor or any other Person liable to Lender for all or any
               part of the Guaranteed Indebtedness, including without limitation that a
               judgment first be rendered against Borrower, any other Obligor or any other
               Person, or that Borrower, any other Obligor or any other Person should be joined
               in such cause, or (ii) Lender first enforce rights against any collateral which
               shall ever have been given to secure all or any part of the Guaranteed
               Indebtedness or this Guaranty. Such waiver shall be without prejudice to
               Lender’s right, at its option, to proceed against Borrower, any other
               Obligor or any other Person, whether by separate action or by joinder. 



               



          		            (e)       
               IN ADDITION TO ANY OTHER WAIVERS, AGREEMENTS AND COVENANTS OF GUARANTOR SET
               FORTH HEREIN, GUARANTOR  HEREBY FURTHER WAIVES AND RELEASES ALL CLAIMS,
               CAUSES OF ACTION, DEFENSES AND OFFSETS FOR ANY ACT OR  OMISSION OF
               LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES OR AGENTS IN
               CONNECTION WITH  LENDER’S ADMINISTRATION OF THE GUARANTEED
               INDEBTEDNESS, EXCEPT FOR LENDER’S WILLFUL MISCONDUCT AND GROSS 
               NEGLIGENCE. 



               



             7.       
          Obligations Not Impaired. 



          		            (a)       
               Guarantor agrees that its obligations hereunder shall not be released,
               diminished, impaired, reduced or affected by the occurrence of any one or more
               of the following events: (i) the death, disability or lack of corporate power of
               Borrower, Guarantor, any other Obligor or any other guarantor of all or any part
               of the Guaranteed Indebtedness, (ii) any receivership, insolvency, bankruptcy or
               other proceedings affecting Borrower, Guarantor, any other Obligor or any other
               guarantor of all or any part of the Guaranteed Indebtedness, or any of their
               respective property; (iii) the partial or total release or discharge of
               Borrower, any other Obligor or any other guarantor of all or any part of the
               Guaranteed Indebtedness, or any other Person from the performance of any
               obligation contained in any instrument or agreement evidencing, governing or
               securing all or any part of the Guaranteed Indebtedness, whether occurring by
               reason of law or otherwise (other than as a result of payment in full in cash of
               the Guaranteed Indebtedness after termination of all obligations of Lender to
               extend credit to Borrower); (iv) the taking or accepting of any collateral for
               all or any part of the Guaranteed Indebtedness or this Guaranty; (v) the taking
               or accepting of any other guaranty for all or any part of the Guaranteed
               Indebtedness; (vi) any failure by Lender to acquire, perfect or continue any
               lien or security interest on collateral securing all or any part of the
               Guaranteed Indebtedness or this Guaranty; (vii) the impairment of any collateral
               securing all or any part of the Guaranteed Indebtedness or this Guaranty; (viii)
               subject to the other Loan Documents, any failure by Lender to sell any
               collateral securing all or any part of the Guaranteed Indebtedness or this
               Guaranty in a commercially reasonable manner or as otherwise required by law;
               (ix) any invalidity or unenforceability of or defect or deficiency in any of the
               Loan Documents; or (x) any other circumstance which might otherwise constitute a
               defense available to, or discharge of, Borrower, any other Obligor or any other
               guarantor of all or any part of the Guaranteed Indebtedness. 



               



          		            (b)       
               This Guaranty shall be reinstated if at any time any payment of all or any part
               of the Guaranteed Indebtedness is rescinded or must otherwise be returned by
               Lender upon the insolvency, bankruptcy or reorganization of Borrower, Guarantor,
               or any other Obligor or other guarantor of all or any part of the Guaranteed
               Indebtedness, or otherwise, all as though such payment had not been made. 



               



          		            (c)       
               None of the following shall affect Guarantor’s liability hereunder: (i) the
               unenforceability of all or any part of the Guaranteed Indebtedness against
               Borrower by reason of the fact that the Guaranteed Indebtedness exceeds the
               amount permitted by law; (ii) the act of creating all or any part of the
               Guaranteed Indebtedness is ultra vires; or (iii) the officers or partners
               creating all or any part of the Guaranteed Indebtedness acted in excess of their
               authority. Guarantor hereby acknowledges that withdrawal from, or termination
               of, any ownership interest in Borrower now or hereafter owned or held, directly
               or indirectly, by Guarantor shall not alter, affect or in any way limit the
               obligations of Guarantor hereunder. 



               



             8.       
          Actions Against Guarantor. If an Event of Default exists
          (including the default in the payment or performance of all or any part of the
          Guaranteed Indebtedness when such Guaranteed Indebtedness becomes due, whether
          by its terms, by acceleration or otherwise), Guarantor shall, without notice or
          demand, promptly pay the amount due thereon to Lender, in lawful money of the
          United States, at Lender’s address set forth in Subparagraph 1(a)
          above. One or more successive or concurrent actions may be brought against
          Guarantor, either in the same action in which Borrower or any other Obligor is
          sued or in separate actions, as often as Lender deems advisable. The exercise by
          Lender of any right or remedy under this Guaranty, any other Loan Document or
          under any other agreement or instrument, at law, in equity or otherwise, shall
          not preclude concurrent or subsequent exercise of any other right or remedy. The
          books and records of Lender shall be admissible as evidence in any action or
          proceeding involving this Guaranty and shall be prima facie
          evidence of the payments made on, and the outstanding balance of, the Guaranteed
          Indebtedness. 



             9.       
          Payment by Guarantor. Whenever Guarantor pays any sum which
          is or may become due under this Guaranty, written notice must be delivered to
          Lender contemporaneously with such payment. Such notice shall be effective for
          purposes of this paragraph when contemporaneously with such payment Lender
          receives such notice either by: (a) personal delivery to the address and
          designated department of Lender identified in Subparagraph 1(a) above, or
          (b) United States mail, certified or registered, return receipt requested,
          postage prepaid, addressed to Lender at the address shown in Subparagraph
          1(a) above. In the absence of such notice to Lender by Guarantor in
          compliance with the provisions hereof, any sum received by Lender on account of
          the Guaranteed Indebtedness shall be conclusively deemed paid by Borrower. 



             10.     
          Notice of Sale. In the event that Guarantor is entitled to
          receive any notice under the Uniform Commercial Code, as it exists in the state
          governing any such notice, of the sale or other disposition of any collateral
          securing all or any part of the Guaranteed Indebtedness or this Guaranty,
          reasonable notice shall be deemed given when such notice is deposited in the
          United States mail, postage prepaid, at the address for Guarantor set forth in
          Subparagraph 1(c) above, ten (10) Business Days prior to the date any
          public sale, or after which any private sale, of any such collateral is to be
          held; provided, however, that notice given in any other reasonable
          manner or at any other reasonable time shall be sufficient. 



             11.     
          Waiver by Lender. No delay on the part of Lender in
          exercising any right hereunder or failure to exercise the same shall operate as
          a waiver of such right. In no event shall any waiver of the provisions of this
          Guaranty be effective unless the same be in writing and signed by an officer of
          Lender, and then only in the specific instance and for the purpose given. 



             12.     
          Successors and Assigns. This Guaranty is for the benefit of
          Lender, its successors and assigns. This Guaranty is binding upon Guarantor and
          Guarantor’s heirs, executors, administrators, personal representatives and
          successors, including without limitation any Person obligated by operation of
          law upon the reorganization, merger, consolidation or other change in the
          organizational structure of Guarantor. 



             13.     
          Costs and Expenses. Guarantor shall pay on demand by Lender
          all costs and expenses, including without limitation all reasonable
          attorneys’ fees, incurred by Lender in connection with the preparation
          (subject to Section 8.3(a) of the Credit Agreement), administration,
          enforcement and/or collection of this Guaranty. This covenant shall survive the
          payment of the Guaranteed Indebtedness. 



             14.     
          Severability. If any provision of this Guaranty is held by
          a court of competent jurisdiction to be illegal, invalid or unenforceable under
          present or future laws, such provision shall be fully severable, shall not
          impair or invalidate the remainder of this Guaranty and the effect thereof shall
          be confined to the provision held to be illegal, invalid or unenforceable. 



             15.     
          No Obligation. Nothing contained herein shall be construed
          as an obligation on the part of Lender to extend or continue to extend credit to
          Borrower. 



             16.     
          Amendment. No modification or amendment of any provision of
          this Guaranty, nor consent to any departure by Guarantor therefrom, shall be
          effective unless the same shall be in writing and signed by an officer of
          Lender, and then shall be effective only in the specific instance and for the
          purpose for which given. 



             17.     
          Cumulative Rights. All rights and remedies of Lender
          hereunder are cumulative of each other and of every other right or remedy which
          Lender may otherwise have at law or in equity or under any instrument or
          agreement, and the exercise of one or more of such rights or remedies shall not
          prejudice or impair the concurrent or subsequent exercise of any other rights or
          remedies. This Guaranty, whether general, specific and/or limited, shall be in
          addition to and cumulative of, and not in substitution, novation or discharge
          of, any and all prior or contemporaneous guaranty agreements by Guarantor in
          favor of Lender or assigned to Lender by others. 



             18.     
          Governing Law, Venue. This Guaranty is intended to be
          performed in the State of Texas. Except to the extent that the laws of the
          United States may apply to the terms hereof, the substantive laws of the State
          of Texas shall govern the validity, construction, enforcement and interpretation
          of this Guaranty. In the event of a dispute involving this Guaranty, any other
          Loan Document or any other instruments executed in connection herewith, the
          undersigned irrevocably agrees that venue for such dispute shall lie in any
          court of competent jurisdiction in Bexar County, Texas. 



             19.     
          Compliance with Applicable Usury Laws. Notwithstanding any
          other provision of this Guaranty, any other Loan Document or of any instrument
          or agreement evidencing, governing or securing all or any part of the Guaranteed
          Indebtedness, Guarantor and Lender by its acceptance hereof agree that Guarantor
          shall never be required or obligated to pay interest in excess of the maximum
          non-usurious interest rate as may be authorized by applicable law for the
          written contracts which constitute the Guaranteed Indebtedness. It is the
          intention of Guarantor and Lender to conform strictly to the applicable laws
          which limit interest rates, and any of the aforesaid contracts for interest, if
          and to the extent payable by Guarantor, shall be held to be subject to reduction
          to the maximum non-usurious interest rate allowed under said law. 



             20.     
          Gender. Within this Guaranty, words of any gender shall be
          held and construed to include the other gender. 



             21.     
          Captions. The headings in this Guaranty are for convenience
          only and shall not define or limit the provisions hereof. 



             22.     
          No Subrogation. Notwithstanding any payment or payments by
          Guarantor hereunder or any set-off or application of funds of Guarantor by
          Lender, Guarantor shall not be entitled to be subrogated to any of the rights of
          Lender against Borrower, any other Obligor or any other Person or guarantee or
          right of offset held by Lender of the payment of the Guaranteed Indebtedness,
          nor shall Guarantor seek or be entitled to any reimbursement or contribution
          from Borrower, any other Obligor, or any other Person in respect of payments
          made by Guarantor hereunder, until all amounts owing to Lender by Borrower on
          account of the Guaranteed Indebtedness are indefeasibly paid in full in cash. If
          any amount shall be paid to Guarantor on account of the subrogation rights at
          any time when all of the Guaranteed Indebtedness has not been indefeasibly paid
          in full in cash, such amount shall be held by Guarantor in trust for the
          Guaranteed Parties, segregated from other funds of Guarantor, and shall,
          immediately upon receipt by Guarantor, be turned over to Lender in the exact
          form received by Guarantor (duly endorsed by Guarantor to Lender, if required),
          to be applied against the Guaranteed Indebtedness, whether matured or unmatured,
          in such order as Lender may determine. 



             23.     
          Right of Revocation. Guarantor understands and agrees that
          Guarantor may revoke its future obligations under this Guaranty at any time by
          giving Lender written notice that Guarantor will not be liable hereunder for any
          indebtedness or obligations of Borrower incurred on or after the effective date
          of such revocation. Such revocation shall be deemed to be effective on the day
          following the day Lender receives such notice delivered either by: (a) personal
          delivery to the address and designated department of Lender identified in
          Subparagraph 1(a) above, or (b) United States mail, registered or
          certified, return receipt requested, postage prepaid, addressed to Lender at the
          address shown in Subparagraph 1(a) above. Notwithstanding such
          revocation, Guarantor shall remain liable on its obligations hereunder until
          payment in full to Lender of (a) all of the Guaranteed Indebtedness that is
          outstanding on the effective date of such revocation, and any renewals and
          extensions thereof, and (b) all loans, advances and other extensions of credit
          made to or for the account of Borrower on or after the effective date of such
          revocation pursuant to the obligation of Lender under a commitment or agreement
          made to or with Borrower prior to the effective date of such revocation. The
          terms and conditions of this Guaranty, including without limitation the consents
          and waivers set forth in Paragraph 6 hereof, shall remain in effect with
          respect to the Guaranteed Indebtedness described in the preceding sentence in
          the same manner as if such revocation had not been made by Guarantor. 



     




REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK. 



     

















        EXECUTED
as of the date first above written. 




	 	GUARANTOR:
	 
	 
	 	NATIONALCARE®MARKETING, INC.
	 
	 
	 	By: /s/ Cynthia B. Koenig
	 	Print Name: Cynthia B. Koenig
	 	Print Title: SVP & CFO
	 












PLEDGE AND SECURITY
AGREEMENT 



        THIS
PLEDGE AND SECURITY AGREEMENT (“Agreement”) is made as of December
31, 2003, by NATIONALCARE® MARKETING, INC., a Delaware corporation
(“Debtor”), whose chief executive office (as that term is used in the
Code) is located at 3100 Burnett Plaza, 801 Cherry Street, Fort Worth, Tarrant County,
Texas 76102, and whose organizational identification number issued by the appropriate
authority of the State of Delaware is 75-2192748, and its federal taxpayer identification
number is 2133638, in favor of THE FROST NATIONAL BANK, a national banking association
(“Secured Party”), whose address is P.O. Box 1600, San Antonio,
Texas 78296. Debtor hereby agrees with Secured Party as follows: 



             1.       
          Definitions. As used in this Agreement, the following terms
          shall have the meanings indicated below: 



          		            (a)     
               “Code” means the Texas Business and Commerce Code as in effect
               in the State of Texas on the date of this Agreement or as it may hereafter be
               amended from time to time. 



               



          		            (b)     
               “Collateral” means (i) all personal property of Debtor
               specifically described on Schedule A attached hereto and made a part
               hereof, (ii) all certificates, instruments and/or other documents
               evidencing the foregoing and following, (iii) all renewals, replacements
               and substitutions of all of the foregoing and following, (iv) all
               Additional Property (as hereinafter defined), and (v) all PRODUCTS and
               PROCEEDS of all of the foregoing. The designation of proceeds does not authorize
               Debtor to sell, transfer or otherwise convey any of the foregoing property. The
               delivery at any time by Debtor to Secured Party of any property as a pledge to
               secure payment or performance of any indebtedness or obligation whatsoever shall
               also constitute a pledge of such property as Collateral hereunder. 



               



          		            (c)     
               “Credit Agreement” means the Credit Agreement dated as of
               December 31, 2003, among Borrower, each other Obligor and Secured Party,
               together with all amendments and restatements thereto. 



               



          		            (d)     
               “Indebtedness” means (i) all indebtedness, obligations and
               liabilities of Debtor and each other Obligor to Secured Party of any kind or
               character, now existing or hereafter arising, whether direct, indirect, related,
               unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint
               and several (excluding only indebtedness originally payable to or in favor of a
               Person other than Secured Party and subsequently acquired by Secured Party),
               including without limitation all indebtedness, obligations and liabilities of
               Debtor and each other Obligor to Secured Party now existing or hereafter arising
               by note, draft, acceptance, guaranty, endorsement, letter of credit, assignment,
               purchase, overdraft, discount, indemnity agreement or otherwise, (ii) all
               obligations now or hereafter existing of Debtor and each other Obligor under the
               Credit Agreement and each other Loan Document (including, but not limited to,
               the Obligations), (iii) all accrued but unpaid interest (including all interest
               that would accrue but for the existence of a proceeding under any Debtor Relief
               Laws) on any of the indebtedness described in this definition of
               “Indebtedness,” (iv) all obligations of Debtor and each
               other Obligor to Secured Party under any documents evidencing, securing,
               governing and/or pertaining to all or any part of the indebtedness described in
               this definition of “Indebtedness,” (v) all costs and
               expenses incurred by Secured Party in connection with the collection and
               administration of all or any part of the indebtedness and obligations described
               in this definition of “Indebtedness” or the protection or
               preservation of, or realization upon, the collateral securing all or any part of
               such indebtedness and obligations, including without limitation all reasonable
               attorneys’ fees, and (vi) all renewals, extensions, modifications and
               rearrangements of the indebtedness and obligations described in this definition
               of “Indebtedness.” 



               



All words and phrases used herein
which are expressly defined in Section 1.201, Chapter 8 or Chapter 9 of the
Code shall have the meaning provided for therein. Other words and phrases defined
elsewhere in the Code shall have the meaning specified therein except to the extent such
meaning is inconsistent with a definition in Section 1.201, Chapter 8 or
Chapter 9 of the Code. 



Capitalized terms not otherwise
defined herein have the meaning specified in the Credit Agreement. 



             2.       
          Security Interest. As security for the
          Indebtedness, Debtor, for value received, hereby grants to Secured Party a
          continuing security interest in the Collateral. 



             3.       
          Additional Property. Collateral shall also include the following
          property (collectively, the “Additional Property”) which Debtor
          becomes entitled to receive or shall receive in connection with any other
          Collateral: (a) any stock certificate, including without limitation, any
          certificate representing a stock dividend or any certificate in connection with
          any recapitalization, reclassification, merger, consolidation, conversion, sale
          of assets, combination of shares, stock split or spin-off; (b) any option,
          warrant, subscription or right, whether as an addition to or in substitution of
          any other Collateral; (c) any dividends or distributions of any kind
          whatsoever, whether distributable in cash, stock or other property; (d) any
          interest, premium or principal payments; and (e) any conversion or
          redemption proceeds; provided, however, that until the occurrence
          of an Event of Default (as hereinafter defined) which is continuing, Debtor
          shall be entitled to all cash dividends (other than dividends representing a
          return of capital) and all interest paid on the Collateral free of the security
          interest created under this Agreement (such dividends and interest being the
          “Excluded Property”). All Additional Property (other than
          Excluded Property) received by Debtor shall be received in trust for the benefit
          of Secured Party. All Additional Property (other than Excluded Property) and all
          certificates or other written instruments or documents evidencing and/or
          representing the Additional Property that is received by Debtor, together with
          such instruments of transfer as Secured Party may request, shall immediately be
          delivered to or deposited with Secured Party and held by Secured Party as
          Collateral under the terms of this Agreement. If the Additional Property
          received by Debtor shall be shares of stock, other securities or other equity
          interests, such shares of stock, other securities or other equity interests
          shall be duly endorsed in blank or accompanied by proper instruments of transfer
          and assignment duly executed in blank with, if requested by Secured Party,
          signatures guaranteed by a bank or member firm of the New York Stock Exchange,
          all in form and substance satisfactory to Secured Party. Secured Party shall be
          deemed to have possession of any Collateral in transit to Secured Party or its
          agent. 



             4.       
          Voting Rights. As long as no Event of Default exists, any
          voting rights incident to any stock, other securities or other equity interests
          pledged as Collateral may be exercised by Debtor; provided,
          however, that Debtor will not exercise, or cause to be exercised, any
          such voting rights, without the prior written consent of Secured Party, if the
          direct or indirect effect of such vote will result in an Event of Default
          hereunder. 



             5.       
          Maintenance of Collateral. Other than the exercise of
          reasonable care to assure the safe custody of any Collateral in Secured
          Party’s possession from time to time, Secured Party does not have any
          obligation, duty or responsibility with respect to the Collateral. Without
          limiting the generality of the foregoing, Secured Party shall not have any
          obligation, duty or responsibility to do any of the following:
          (a) ascertain any maturities, calls, conversions, exchanges, offers,
          tenders or similar matters relating to the Collateral or informing Debtor with
          respect to any such matters; (b) fix, preserve or exercise any right,
          privilege or option (whether conversion, redemption or otherwise) with respect
          to the Collateral unless (i) Debtor makes written demand to Secured Party
          to do so, (ii) such written demand is received by Secured Party in
          sufficient time to permit Secured Party to take the action demanded in the
          ordinary course of its business, and (iii) Debtor provides additional
          collateral, acceptable to Secured Party in its sole discretion; (c) collect
          any amounts payable in respect of the Collateral (Secured Party being liable to
          account to Debtor only for what Secured Party may actually receive or collect
          thereon); (d) sell all or any portion of the Collateral to avoid market
          loss; (e) sell all or any portion of the Collateral unless and until
          (i) Debtor makes written demand upon Secured Party to sell the Collateral,
          and (ii) Debtor provides additional collateral, acceptable to Secured Party
          in its sole discretion; or (f) hold the Collateral for or on behalf of any
          party other than Debtor. 



             6.       
          Representations and Warranties. Debtor hereby represents and
          warrants the following to Secured Party: 



          		            (a)     
               Authority. The execution, delivery and performance of this Agreement and
               all of the other Loan Documents by Debtor have been duly authorized by all
               necessary corporate action of Debtor. 



               



          		            (b)     
               Accuracy of Information. All information contained herein with respect to
               the Collateral is true and correct in all material respects. The exact legal
               name and federal taxpayer identification number of Debtor are correctly shown in
               the first paragraph hereof. 



               



          		            (c)     
               Enforceability. This Agreement and the other Loan Documents constitute
               legal, valid and binding obligations of Debtor, enforceable in accordance with
               their respective terms, except as limited as to enforcement of remedies by
               bankruptcy, insolvency or similar laws of general application relating to the
               enforcement of creditors’ rights and except to the extent specific remedies
               may generally be limited by equitable principles. 



               



          		            (d)     
               Ownership and Liens. Debtor has good and marketable title to the
               Collateral free and clear of all Liens or adverse claims, except for the
               security interest created by this Agreement. No dispute, right of setoff,
               counterclaim or defense exists with respect to all or any part of the
               Collateral. Debtor has not executed any other security agreement currently
               affecting the Collateral and no financing statement or other instrument similar
               in effect covering all or any part of the Collateral is on file in any recording
               office except as may have been executed or filed in favor of Secured Party. 



               



          		            (e)     
               No Conflicts or Consents. Neither the ownership, the intended use of the
               Collateral by Debtor, the grant of the security interest by Debtor to Secured
               Party herein nor the exercise by Secured Party of its rights or remedies
               hereunder, will (i) conflict with any provision of (A) any material
               domestic or foreign law, statute, rule or regulation (B) the articles or
               certificate of incorporation or bylaws of Debtor, or (C) any agreement,
               judgment, license, order or permit applicable to or binding upon Debtor or
               otherwise affecting the Collateral, or (ii) result in or require the
               creation of any Lien upon any assets or properties of Debtor or of any Person
               except as may be expressly contemplated in the Loan Documents. Except as
               expressly contemplated in the Loan Documents, no consent, approval,
               authorization or order of, and no notice to or filing with, any court,
               governmental authority or other Person is required in connection with the grant
               by Debtor of the security interest herein or the exercise by Secured Party of
               its rights and remedies hereunder. 



               



          		            (f)     
               Security Interest. Debtor has and will have at all times full right,
               power and authority to grant a security interest in the Collateral to Secured
               Party in the manner provided herein, free and clear of any Lien or other charge
               or encumbrance. This Agreement creates a legal, valid and binding security
               interest in favor of Secured Party in the Collateral. Upon the filing of a
               financing statement describing the Collateral with the Uniform Commercial Code
               central filing officer of the jurisdiction of Debtor’s location and
               delivery to Secured Party of all certificates evidencing Collateral, the
               security interest granted by this Agreement shall be perfected and prior to all
               other Liens therein. 



               



          		            (g)     
               Location/Identity. Debtor’s principal place of business and chief
               executive office (as those terms are used in the Code), as the case may be is
               located at the address set forth on the first page hereof. Except as specified
               elsewhere herein, all Collateral and records concerning the Collateral shall be
               kept at such address. Debtor is not organized in more than one jurisdiction.
               Debtor’s organizational structure, state of organization, and
               organizational number issued by the appropriate authority of the State of
               Delaware (the “Organizational Information”) are as set forth on
               the first page hereof. Except as specified herein, the Organizational
               Information shall not change. 



               



          		            (h)     
               Solvency of Debtor. Debtor is not entering into this Agreement or any
               other Loan Document to which Debtor is a party or its property is subject with
               the intent of hindering, delaying or defrauding any creditor. 



               



          		            (i)     
               Securities. Any certificates evidencing securities or other equity
               interests pledged as Collateral are valid and genuine and have not been altered.
               All securities or other equity interests pledged as Collateral have been duly
               authorized and validly issued, are fully paid and non-assessable, and were not
               issued in violation of the preemptive rights of any party or of any agreement by
               which Debtor or the issuer thereof is bound. No restrictions or conditions exist
               with respect to the transfer or voting of any securities or other equity
               interests pledged as Collateral. No issuer of such securities or other equity
               interests has any outstanding stock rights, rights to subscribe, options,
               warrants or convertible securities or other equity interests outstanding or any
               other rights outstanding entitling any party to have issued to such party
               capital stock or other security interests of such issuer. Schedule A 
               contains a complete and correct description of each certificate or other
               instrument included in or evidencing Collateral. Schedule B is a complete
               and correct list of the exact name of the issuer of all Collateral described on
               Schedule A, its jurisdiction of organization, its federal taxpayer
               identification number, and the authorized, issued and outstanding capital stock
               of such issuer. As of the date hereof, Debtor’s interest in such issuer is
               as stated on Schedule A. 



               



          		            (j)     
               Benefit. This Agreement may reasonably be expected to benefit, directly
               or indirectly, Debtor and the Board of Directors of Debtor has determined that
               this Agreement may reasonably be expected to benefit, directly or indirectly,
               Debtor. 



               



             7.       
          Affirmative Covenants. Debtor will comply with the
          covenants contained in this Section at all times during the period of time this
          Agreement is effective unless Secured Party shall otherwise consent in writing. 



          		            (a)     
               Ownership and Liens. Debtor will maintain good and marketable title to
               all Collateral free and clear of all Liens or adverse claims, except for the
               security interest created by this Agreement and the security interests and other
               encumbrances expressly permitted by the other Loan Documents. Debtor will not
               permit any dispute, right of setoff, counterclaim or defense to exist with
               respect to all or any part of the Collateral. Debtor will cause any financing
               statement or other security instrument with respect to the Collateral to be
               terminated, except as may exist or as may have been filed in favor of Secured
               Party. Debtor hereby irrevocably appoints Secured Party as Debtor’s
               attorney-in-fact, such power of attorney being coupled with an interest, with
               full authority in the place and stead of Debtor and in the name of Debtor or
               otherwise, for the purpose of terminating any financing statements currently
               filed with respect to the Collateral. Debtor will defend at its expense Secured
               Party’s right, title and security interest in and to the Collateral against
               the claims of any third party. 



               



          		            (b)     
               Inspection of Books and Records. Debtor will keep adequate records
               concerning the Collateral and will, subject to the terms of the Credit
               Agreement, permit Secured Party and all representatives and agents appointed by
               Secured Party to inspect any of the Collateral and the books and records of or
               relating to the Collateral at any time during normal business hours, to make and
               take away photocopies, photographs and printouts thereof and to write down and
               record any such information (If no Event of Default exists, Debtor shall not be
               required to reimburse Secured Party for the related photocopy, photograph and
               printout costs and expenses). 



               



          		            (c)     
               Adverse Claim. Debtor covenants and agrees to promptly notify Secured
               Party of any claim, action or proceeding affecting title to the Collateral, or
               any part thereof, or the security interest created hereunder and, at
               Debtor’s expense, defend Secured Party’s security interest in the
               Collateral against the claims of any third party. Debtor also covenants and
               agrees to promptly deliver to Secured Party a copy of all written notices
               received by Debtor with respect to the Collateral, including without limitation,
               notices received from the issuer of any securities or other equity interests
               pledged hereunder as Collateral. 



               



          		            (d)     
               Further Assurances. Debtor will contemporaneously with the execution
               hereof and from time to time thereafter at its expense promptly execute and
               deliver all further instruments and documents and take all further action
               necessary or appropriate or that Secured Party may request in order (i) to
               perfect and protect the security interest created or purported to be created
               hereby and the first priority of such security interest, (ii) to enable
               Secured Party to exercise and enforce its rights and remedies hereunder in
               respect of the Collateral, and (iii) to otherwise effect the purposes of
               this Agreement, including without limitation: (A) executing (if requested)
               and filing any financing or continuation statements, or any amendments thereto;
               (B) obtaining written confirmation from the issuer of any securities or
               other equity interests pledged as Collateral of the pledge of such securities or
               other equity interests, in form and substance satisfactory to Secured Party;
               (C) cooperating with Secured Party in registering the pledge of any
               securities or other equity interests pledged as Collateral with the issuer of
               such securities or other equity interests; (D) delivering notice of Secured
               Party’s security interest in any securities or other equity interests
               pledged as Collateral to any financial intermediary, clearing corporation or
               other party required by Secured Party, in form and substance satisfactory to
               Secured Party; and (E) obtaining written confirmation of the pledge of any
               securities or other equity interests constituting Collateral from any financial
               intermediary, clearing corporation or other party required by Secured Party, in
               form and substance satisfactory to Secured Party. If all or any part of the
               Collateral is securities issued by an agency or department of the United States,
               Debtor covenants and agrees, at Secured Party’s request, to cooperate in
               registering such securities in Secured Party’s name or with Secured
               Party’s account maintained with a Federal Reserve Bank. 



               



          		            (e)     
               Control Agreements. Debtor will cooperate with Secured Party in obtaining
               a control agreement in form and substance satisfactory to Secured Party with
               respect to Collateral for which such agreement is required for perfection of a
               security interest pursuant to the Code (as determined by Secured Party in its
               sole discretion) 



               



             8.       
          Negative Covenants. Debtor will comply with the covenants
          contained in this Section at all times during the period of time this Agreement
          is effective, unless Secured Party shall otherwise consent in writing. 



          		            (a)     
               Transfer or Encumbrance. Debtor will not (i) sell, assign (by
               operation of law or otherwise) or transfer Debtor’s rights in any of the
               Collateral (other than Excluded Property), (ii) grant a Lien in or execute,
               authorize, file or record any financing statement or other security instrument
               with respect to the Collateral to any party other than Secured Party, or
               (iii) deliver actual or constructive possession of any certificate,
               instrument or document evidencing and/or representing any of the Collateral to
               any party other than Secured Party. 



               



          		            (b)     
               Impairment of Security Interest. Debtor will not take or fail to take any
               action which would in any manner impair the value or enforceability of Secured
               Party’s security interest in any Collateral. 



               



          		            (c)     
               Dilution of Ownership. As to any securities or other equity interests
               pledged as Collateral, Debtor will not consent to or approve of the issuance of
               (i) any additional shares of any class of securities or other equity
               interests of such issuer (unless immediately upon issuance additional securities
               or other equity interests are pledged and delivered to Secured Party pursuant to
               the terms hereof to the extent necessary to give Secured Party a security
               interest after such issuance in at least the same percentage of such
               issuer’s outstanding securities or other equity interests as Secured Party
               had before such issuance), (ii) any instrument convertible voluntarily by
               the holder thereof or automatically upon the occurrence or non-occurrence of any
               event or condition into, or exchangeable for, any such securities or other
               equity interests, or (iii) any warrants, options, contracts or other
               commitments entitling any third party to purchase or otherwise acquire any such
               securities or other equity interests. 



               



          		            (d)     
               Restrictions on Securities. Debtor will not enter into any agreement
               creating, or otherwise permit to exist, any restriction or condition upon the
               transfer, voting or control of any securities or other equity interests pledged
               as Collateral, except as consented to in writing by Secured Party. 



               



             9.       
          Rights of Secured Party. Secured Party shall have the
          rights contained in this Section at all times during the period of time this
          Agreement is effective. 



          		            (a)     
               Power of Attorney. Debtor hereby irrevocably appoints Secured Party as
               Debtor’s attorney-in-fact, such power of attorney being coupled with an
               interest, exercisable if an Event of Default exists, with full authority in the
               place and stead of Debtor and in the name of Debtor or otherwise, to take any
               action and to execute any instrument which Secured Party may from time to time
               in Secured Party’s discretion deem necessary or appropriate to accomplish
               the purposes of this Agreement, including without limitation, the following
               action: (i) transfer any securities or other equity interests, instruments,
               documents or certificates pledged as Collateral in the name of Secured Party or
               its nominee; (ii) use any interest, premium or principal payments,
               conversion or redemption proceeds or other cash proceeds received in connection
               with any Collateral to reduce any of the Indebtedness; (iii) exchange any
               of the securities or other equity interests pledged as Collateral for any other
               property upon any merger, consolidation, reorganization, recapitalization or
               other readjustment of the issuer thereof, and, in connection therewith, to
               deposit and deliver any and all of such securities or other equity interests
               with any committee, depository, transfer agent, registrar or other designated
               agent upon such terms and conditions as Secured Party may deem necessary or
               appropriate; (iv) exercise or comply with any conversion, exchange,
               redemption, subscription or any other right, privilege or option pertaining to
               any securities or other equity interests pledged as Collateral; provided,
               however, except as provided herein, Secured Party shall not have a duty
               to exercise or comply with any such right, privilege or option (whether
               conversion, redemption or otherwise) and shall not be responsible for any delay
               or failure to do so; and (v) file any claims or take any action or
               institute any proceedings which Secured Party may deem necessary or appropriate
               for the collection and/or preservation of the Collateral or otherwise to enforce
               the rights of Secured Party with respect to the Collateral. THE PROXY AND
               POWER OF  ATTORNEY HEREIN GRANTED, AND EACH STOCK POWER AND SIMILAR POWER
               NOW OR HEREAFTER GRANTED (INCLUDING ANY  EVIDENCED BY A SEPARATE
               WRITING), ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR TO PAYMENT IN
                FULL OF THE INDEBTEDNESS. 



               



          		            (b)     
               Performance by Secured Party. If Debtor fails to perform any agreement or
               obligation provided herein, Secured Party may itself perform, or cause
               performance of, such agreement or obligation, and the expenses of Secured Party
               incurred in connection therewith shall be a part of the Indebtedness, secured by
               the Collateral and payable by Debtor on demand. 



               



Notwithstanding any other provision
herein to the contrary, Secured Party does not have any duty to exercise or continue to
exercise any of the foregoing rights and shall not be responsible for any failure to do so
or for any delay in doing so. 



             10.     
          Events of Default. Each of the following constitutes an
          “Event of Default” under this Agreement: 



          		            (a)     
               Default in Payment. The failure, refusal or neglect of Debtor or any
               other Obligor to make any payment of principal or interest on the Indebtedness,
               or any portion thereof, as the same shall become due and payable after giving
               effect to any applicable grace period; or 



               



          		            (b)     
               Non-Performance of Covenants. Subject to any applicable grace period, the
               failure of Debtor or any other Obligor to timely and properly observe, keep or
               perform any covenant, agreement, warranty or condition required herein or in any
               of the other Loan Documents; or 



               



          		            (c)     
               Default Under other Loan Documents. The occurrence of an Event of Default
               (as defined in the Credit Agreement) under any of the other Loan Documents; or 



               



          		            (d)     
               False Representation. Any representation contained herein or in any of
               the other Loan Documents made by Debtor or any other Obligor is not true and
               correct in any material respect; or 



               



          		            (e)     
               Execution on Collateral. If Debtor fails to have discharged within a
               period of sixty (60) days any attachment, sequestration or similar writ levied
               upon any property (other than the Collateral) of Debtor, or the Collateral or
               any portion thereof is taken on execution or other process of law in any action
               against Debtor or any attachment, sequestration or similar writ is levied upon
               any Collateral; or 



               



          		            (f)     
               Abandonment. Debtor abandons the Collateral or any portion thereof; or 



               



          		            (g)     
               Action by Other Lienholder. The holder of any Lien on the Collateral
               (without hereby implying the consent of Secured Party to the existence or
               creation of any such Lien on the Collateral) or any other asset of Debtor having
               a value of $100,000 or greater declares a default thereunder or institutes
               foreclosure or other proceedings for the enforcement of its remedies thereunder;
               or 



               



          		            (h)     
               Liquidation and Related Events. The liquidation, dissolution, merger or
               consolidation of Debtor or any other Obligor not otherwise permitted by the
               Credit Agreement; or 



               



          		            (i)     
               Bankruptcy of Issuer. (i) The issuer of any securities or other
               equity interest constituting Collateral files a petition for relief under any
               Applicable Bankruptcy Law, (ii) an involuntary petition for relief is filed
               against any such issuer under any Applicable Bankruptcy Law and such involuntary
               petition is not dismissed within thirty (30) days after the filing thereof,
               (iii) an order for relief naming any such issuer is entered under any
               Applicable Bankruptcy Law (iv) any court or governmental authority shall
               issue any order of conservation, supervision or any other order of like effect
               relating to any such issuer, or (v) any Insurance Commissioner intervenes
               or takes any formal steps towards intervening in the management of the business
               or operations of any issuer or any such issuer facilitates or takes any
               affirmative action with the intention of facilitating such intervention, or 



               



          		            (j)     
               Search Report. If Secured Party shall have elected to file any financing
               statement with respect to the Collateral, Secured Party shall receive at any
               time following the execution of this Agreement a search report indicating that
               Secured Party’s security interest is not prior to all other Liens, security
               interests or other interests reflected in the report and Secured Party does not
               receive within twenty days after the date of notice to Debtor of such Lien, a
               file stamped termination statement of each financing statement related to such
               Lien, the written release of such Lien in form and substance satisfactory to
               Secured Party, and a search report indicating the filing of each such
               termination statement. 



               



             11.     
          Remedies and Related Rights. If an Event of Default shall
          have occurred, and without limiting any other rights and remedies provided
          herein, under any of the other Loan Documents or otherwise available to Secured
          Party, Secured Party may exercise one or more of the rights and remedies
          provided in this Section. 



          		            (a)     
               Remedies. Secured Party may from time to time at its discretion, without
               limitation and without notice except as expressly provided in any of the Loan
               Documents: 



               



          		           (i)       
               exercise in respect of the Collateral all the rights and remedies of a secured
               party under the Code (whether or not the Code applies to the affected
               Collateral); 



               



          		           (ii)      
               reduce its claim to judgment or foreclose or otherwise enforce, in whole or in
               part, the security interest granted hereunder by any available judicial
               procedure; 



               



          		           (iii)     
               sell or otherwise dispose of, at its office, on the premises of Debtor or
               elsewhere, the Collateral, as a unit or in parcels, by public or private
               proceedings, and by way of one or more contracts (it being agreed that the sale
               or other disposition of any part of the Collateral shall not exhaust Secured
               Party’s power of sale, but sales or other dispositions may be made from
               time to time until all of the Collateral has been sold or disposed of or until
               the Indebtedness has been paid and performed in full), and at any such sale or
               other disposition it shall not be necessary to exhibit any of the Collateral; 



               



          		           (iv)      
               buy the Collateral, or any portion thereof, at any public sale; 



               



          		           (v)       
               buy the Collateral, or any portion thereof, at any private sale if the
               Collateral is of a type customarily sold in a recognized market or is of a type
               which is the subject of widely distributed standard price quotations; 



               



          		           (vi)      
               apply for the appointment of a receiver for the Collateral, and Debtor hereby
               consents to any such appointment; and 



               



          		           (vii)     
               at its option, retain the Collateral in satisfaction of the Indebtedness
               whenever the circumstances are such that Secured Party is entitled to do so
               under the Code or otherwise, to the full extent permitted by the Code, Secured
               Party shall be permitted to elect whether such retention shall be in full or
               partial satisfaction of the Indebtedness. 



               



        In
the event Secured Party shall elect to sell the Collateral, Secured Party may sell the
Collateral without giving any warranties as and shall be permitted to specifically
disclaim any warranties of title or the like (other than warranties that Secured Party has
not created any Lien in the Collateral to be sold). Further, if Secured Party sells any of
the Collateral on credit, Debtor will be credited only with payments actually made by the
purchaser, received by Secured Party and applied to the Indebtedness. In the event the
purchaser fails to pay for the Collateral, Secured Party may resell the Collateral and
Debtor shall be credited with the proceeds of the sale. Debtor agrees that in the event
Debtor or any Obligor is entitled to receive any notice under the Code, as it exists in
the state governing any such notice, of the sale or other disposition of any Collateral,
reasonable notice shall be deemed given when such notice is deposited in a depository
receptacle under the care and custody of the United States Postal Service, postage
prepaid, at such party’s address set forth on the first page hereof, ten (10) days
prior to the date of any public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured Party 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. Debtor further acknowledges and agrees that the redemption by
Secured Party of any certificate of deposit pledged as Collateral shall be deemed to be a
commercially reasonable disposition under Section 9.610 of the Code. 


		            (b)     
          Private Sale of Securities; Further Approvals. 



               



          		           (i)       
               Debtor recognizes that Secured Party may be unable to effect a public sale of
               all or any part of the securities or other equity interests pledged as
               Collateral because of restrictions in applicable federal and state securities
               laws, insurance laws and contractual restrictions and that Secured Party may,
               therefore, determine to make one or more private sales of any such securities or
               other equity interests to a restricted group of purchasers who will be obligated
               to agree, among other things, to acquire such securities or other equity
               interests for their own account, for investment and not with a view to the
               distribution or resale thereof. Debtor acknowledges that each any such private
               sale may be at prices and other terms less favorable than what might have been
               obtained at a public sale and, notwithstanding the foregoing, agrees that each
               such private sale shall be deemed to have been made in a commercially reasonable
               manner and that Secured Party shall have no obligation to delay the sale of any
               such securities or other equity interests for the period of time necessary to
               permit the issuer to register such securities or other equity interests for
               public sale under any federal or state securities laws. Debtor further
               acknowledges and agrees that any offer to sell such securities or other equity
               interests which has been made privately in the manner described above to not
               less than five (5) bona fide offerees shall be deemed to involve a
               “public sale” for the purposes of Chapter 9 of the Code,
               notwithstanding that such sale may not constitute a “public offering”
               under any federal or state securities laws and that Secured Party may, in such
               event, bid for the purchase of such securities or other equity interests. 



               



          		           (ii)      
               In connection with the exercise by Secured Party of its rights hereunder that
               effects the disposition of or use of any Collateral, it may be necessary to
               obtain the prior consent or approval of governmental authorities (including any
               Insurance Commissioner) and other Persons to a transfer or assignment of
               Collateral, including, without limitation, any governmental authorities
               (including any Insurance Commissioner) regulating insurance companies and their
               Affiliates. 



               



          		           (iii)     
               Debtor agrees, if an Event of Default exists, to execute, deliver, and file, and
               hereby appoints Secured Party as its attorney-in-fact, to execute, deliver, and
               file on Debtor’s behalf and in Debtor’s name, all applications,
               certificates, filings, instruments, and other documents (including without
               limitation any application for an assignment or transfer of control or
               ownership) that may be necessary or appropriate, in Secured Party’s
               opinion, and to obtain such consents, waivers, or approvals under applicable
               laws and agreements prior to an Event of Default. Debtor further agrees to use
               its best efforts to obtain the foregoing consents, waivers, and approvals,
               including receipt of consents, waivers, and approvals under applicable laws and
               agreements prior to an Event of Default. Debtor acknowledges that there is no
               adequate remedy at Law for failure by it to comply with the provisions of this
               Section and that such failure would not be adequately compensable in damages,
               and therefore agrees that this Section may be specifically enforced. 



               



          		            (c)     
               Application of Proceeds. If any Event of Default exists, Secured Party
               may at its discretion apply or use any cash held by Secured Party as Collateral,
               and any cash proceeds received by Secured Party in respect of any sale or other
               disposition of, collection from, or other realization upon, all or any part of
               the Collateral as follows in such order and manner as Secured Party may elect: 



               



          		           (i)       
               to the repayment or reimbursement of the reasonable costs and expenses
               (including, without limitation, reasonable attorneys’ fees and expenses)
               incurred by Secured Party in connection with (A) the administration of the
               Loan Documents, (B) the custody, preservation, use or operation of, or the
               sale of, collection from, or other realization upon, the Collateral, and
               (C) the exercise or enforcement of any of the rights and remedies of
               Secured Party hereunder; 



               



          		           (ii)      
               to the payment or other satisfaction of any liens and other encumbrances upon
               the Collateral; 



               



          		           (iii)     
               to the satisfaction of the Indebtedness; 



               



          		           (iv)      
               by holding such cash and proceeds as Collateral prior to application to the
               Indebtedness if required to hold such cash or proceeds by applicable law or any
               court or governmental authority; 



               



          		           (v)       
               to the payment of any other amounts required by applicable law (including
               without limitation, Section 9.615(a)(3) of the Code or any other applicable
               statutory provision); and 



               



          		           (vi)      
               by delivery to Debtor or any other party lawfully entitled to receive such cash
               or proceeds whether by direction of a court of competent jurisdiction or
               otherwise. 



               



          		            (d)     
               Deficiency. In the event that the proceeds of any sale of, collection
               from, or other realization upon, all or any part of the Collateral by Secured
               Party are insufficient to pay all amounts to which Secured Party is legally
               entitled, Debtor and each other Obligor who guaranteed or is otherwise obligated
               to pay all or any portion of the Indebtedness shall be liable for the
               deficiency, together with interest thereon as provided in the Loan Documents, to
               the full extent not prohibited by law. 



               



          		            (e)     
               Non-Judicial Remedies. In granting to Secured Party the power to enforce
               its rights hereunder without prior judicial process or judicial hearing, Debtor
               expressly waives, renounces and knowingly relinquishes any legal right which
               might otherwise require Secured Party to enforce its rights by judicial process.
               Debtor recognizes and concedes that non-judicial remedies are consistent with
               the usage of trade, are responsive to commercial necessity and are the result of
               a bargain at arm’s length. Nothing herein is intended to prevent Secured
               Party or Debtor from resorting to judicial process at either party’s
               option. 



               



          		            (f)     
               Other Recourse. Debtor waives any right to require Secured Party to
               proceed against any third party, exhaust any Collateral or other security for
               the Indebtedness, or to have any third party joined with Debtor in any suit
               arising out of the Indebtedness or any of the Loan Documents, or pursue any
               other remedy available to Secured Party. Debtor further waives any and all
               notice of acceptance of this Agreement and of the creation, modification,
               rearrangement, renewal or extension of the Indebtedness. Debtor further waives
               any defense arising by reason of any disability or other defense of any third
               party or by reason of the cessation from any cause whatsoever of the liability
               of any third party. Until all of the Indebtedness shall have been paid in full,
               Debtor shall have no right of subrogation and Debtor waives the right to enforce
               any remedy which Secured Party has or may hereafter have against any third
               party, and waives any benefit of and any right to participate in any other
               security whatsoever now or hereafter held by Secured Party. Debtor authorizes
               Secured Party, and without notice or demand and without any reservation of
               rights against Debtor and without affecting Debtor’s liability hereunder or
               on the Indebtedness, to (i) take or hold any other property of any type
               from any third party as security for the Indebtedness, and exchange, enforce,
               waive and release any or all of such other property, (ii) apply such other
               property and direct the order or manner of sale thereof as Secured Party may in
               its discretion determine, (iii) renew, extend, accelerate, modify,
               compromise, settle or release any of the Indebtedness or other security for the
               Indebtedness, (iv) waive, enforce or modify any of the provisions of any of
               the Loan Documents executed by any third party, and (v) release or
               substitute any third party. Notwithstanding anything in this Agreement to the
               contrary, the obligations of Debtor under this Agreement shall be limited to a
               maximum aggregate amount equal to the largest amount that would not render
               Debtor’s obligations hereunder subject to avoidance as a fraudulent
               transfer or fraudulent conveyance under Section 548 of Title 11 of the
               United States Code or any applicable provisions of comparable state law
               (collectively, the “Fraudulent Transfer Laws”), in each case
               after giving effect to all other liabilities of Debtor, contingent or otherwise,
               that are relevant under the Fraudulent Transfer Laws and after giving effect as
               assets to the value (as determined under the applicable provisions of the
               Fraudulent Transfer Laws) of any rights to subrogation, reimbursement or
               contribution of Debtor pursuant to applicable law, or any agreement providing
               for rights of subrogation, reimbursement or contribution in favor of Debtor, or
               for an equitable allocation among Debtor, Borrower, any other Obligor, and any
               other Person of obligations arising under guaranties by such Persons. 



               



          		            (g)     
               Voting Rights. If an Event of Default exists, Debtor will not exercise
               any voting rights with respect to securities or other equity interests pledged
               as Collateral. Debtor hereby irrevocably appoints Secured Party as Debtor’s
               attorney-in-fact (such power of attorney being coupled with an interest) and
               proxy to exercise any voting rights with respect to Debtor’s securities or
               other equity interests pledged as Collateral upon the occurrence of an Event of
               Default. 



               



          		            (h)     
               Dividend Rights and Interest Payments. If an Event of Default exists: 



               



          		           (i)       
               all rights of Debtor to receive and retain the dividends and interest payments
               which it would otherwise be authorized to receive and retain pursuant to
               Section 3 shall automatically cease, and all such rights shall thereupon
               become vested with Secured Party which shall thereafter have the sole right to
               receive, hold and apply as Collateral such dividends and interest payments; and 



               



          		           (ii)      
               all dividend and interest payments which are received by Debtor contrary to the
               provisions of clause (i) of this Subsection shall be received in trust for
               the benefit of Secured Party, shall be segregated from other funds of Debtor,
               and shall be forthwith paid over to Secured Party in the exact form received
               (properly endorsed or assigned if requested by Secured Party), to be held by
               Secured Party as Collateral. 



               



             12.     
          INDEMNITY. DEBTOR HEREBY INDEMNIFIES AND AGREES TO HOLD
          HARMLESS SECURED PARTY, AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND
          REPRESENTATIVES (EACH AN “INDEMNIFIED PERSON”) FROM AND AGAINST
          ANY AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES,
          ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR
          NATURE (COLLECTIVELY, THE “CLAIMS”) WHICH MAY BE IMPOSED ON,
          INCURRED BY, OR ASSERTED AGAINST, ANY INDEMNIFIED PERSON ARISING IN CONNECTION
          WITH THE LOAN DOCUMENTS, THE INDEBTEDNESS OR THE COLLATERAL (INCLUDING WITHOUT
          LIMITATION, THE ENFORCEMENT OF THE LOAN DOCUMENTS AND THE DEFENSE OF ANY
          INDEMNIFIED PERSON’S ACTIONS AND/OR INACTIONS IN CONNECTION WITH THE LOAN
          DOCUMENTS). THE INDEMNIFICATION PROVIDED FOR IN THIS SECTION SHALL SURVIVE THE
          TERMINATION OF THIS AGREEMENT AND SHALL EXTEND AND CONTINUE TO BENEFIT EACH
          INDIVIDUAL OR ENTITY WHO IS OR HAS AT ANY TIME BEEN AN INDEMNIFIED PERSON
          HEREUNDER. 




        13.     
Miscellaneous. 



          		            (a)     
               Entire Agreement. This Agreement contains the entire agreement of Secured
               Party and Debtor with respect to the Collateral. If the parties hereto are
               parties to any prior agreement, either written or oral, relating to the
               Collateral, the terms of this Agreement shall amend and supersede the terms of
               such prior agreements as to transactions on or after the effective date of this
               Agreement, but all security agreements, financing statements, guaranties, other
               contracts and notices for the benefit of Secured Party shall continue in full
               force and effect to secure the Indebtedness unless Secured Party specifically
               releases its rights thereunder by separate release. 



               



          		            (b)     
               Amendment. No modification, consent or amendment of any provision of this
               Agreement or any of the other Loan Documents shall be valid or effective unless
               the same is in writing and authenticated by the party against whom it is sought
               to be enforced, except to the extent of amendments specifically permitted by the
               Code without authentication by the Debtor or any other Obligor. 



               



          		            (c)     
               Actions by Secured Party. The Lien of Secured Party hereunder shall not
               be impaired by (i) any renewal, extension, increase or modification with respect
               to the Indebtedness, (ii) any surrender, compromise, release, renewal,
               extension, exchange or substitution which Secured Party may grant with respect
               to the Collateral, or (iii) any release or indulgence granted to any endorser,
               guarantor or surety of the Indebtedness. The taking of additional security by
               Secured Party shall not release or impair the Lien of Secured Party hereunder or
               affect the obligations of Debtor hereunder. 



               



          		            (d)     
               Waiver by Secured Party. Secured Party may waive any Event of Default
               without waiving any other prior or subsequent Event of Default. Secured Party
               may remedy any default without waiving the Event of Default remedied. Neither
               the failure by Secured Party to exercise, nor the delay by Secured Party in
               exercising, any right or remedy upon any Event of Default shall be construed as
               a waiver of such Event of Default or as a waiver of the right to exercise any
               such right or remedy at a later date. No single or partial exercise by Secured
               Party of any right or remedy hereunder shall exhaust the same or shall preclude
               any other or further exercise thereof, and every such right or remedy hereunder
               may be exercised at any time. No waiver of any provision hereof or consent to
               any departure by Debtor therefrom shall be effective unless the same shall be in
               writing and signed by Secured Party and then such waiver or consent shall be
               effective only in the specific instances, for the purpose for which given and to
               the extent therein specified. No notice to or demand on Debtor in any case shall
               of itself entitle Debtor to any other or further notice or demand in similar or
               other circumstances. 



               



          		            (e)     
               Costs and Expenses. Debtor will upon demand pay to Secured Party the
               amount of any and all costs and expenses (including without limitation,
               attorneys’ fees and expenses), which Secured Party may incur in connection
               with (i) the transactions which give rise to the Loan Documents (subject to
               Section 8.3(a) of the Credit Agreement), (ii) the preparation of
               this Agreement (subject to Section 8.3(a) of the Credit Agreement) and
               the perfection and preservation of the security interests granted under the Loan
               Documents, (iii) the administration of the Loan Documents, (iv) the
               custody, preservation, use or operation of, or the sale of, collection from, or
               other realization upon, the Collateral, (v) the exercise or enforcement of
               any of the rights of Secured Party under the Loan Documents, or (vi) the
               failure by Debtor to perform or observe any of the provisions hereof. 



               



          		            (f)     
               GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
               ACCORDANCE WITH THE LAWS OF THE  STATE OF TEXAS AND APPLICABLE FEDERAL
               LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION  OR
               NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN RESPECT OF ANY
               PARTICULAR COLLATERAL,  ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
               THAN THE STATE OF TEXAS. 



               



          		            (g)     
               Venue. This Agreement has been entered into in the county in Texas where
               Secured Party’s address for notice purposes is located, and it shall be
               performable for all purposes in such county. Courts within the State of Texas
               shall have jurisdiction over any and all disputes arising under or pertaining to
               this Agreement and venue for any such disputes shall be in the county or
               judicial district where this Agreement has been executed and delivered. 



               



          		            (h)     
               Severability. If any provision of this Agreement is held by a court of
               competent jurisdiction to be illegal, invalid or unenforceable under present or
               future laws, such provision shall be fully severable, shall not impair or
               invalidate the remainder of this Agreement and the effect thereof shall be
               confined to the provision held to be illegal, invalid or unenforceable. 



               



          		            (i)     
               No Obligation. Nothing contained herein shall be construed as an
               obligation on the part of Secured Party to extend or continue to extend credit
               to Debtor or any other Obligor. 



               



          		            (j)     
               Notices. All notices, requests, demands or other communications required
               or permitted to be given pursuant to this Agreement shall be in writing and
               given by (i) personal delivery, (ii) expedited delivery service with
               proof of delivery, or (iii) United States mail, postage prepaid, registered
               or certified mail, return receipt requested, sent to the intended addressee at
               the address set forth on the first page hereof or to such different address as
               the addressee shall have designated by written notice sent pursuant to the terms
               hereof and shall be deemed to have been received either, in the case of personal
               delivery, at the time of personal delivery, in the case of expedited delivery
               service, as of the date of first attempted delivery at the address and in the
               manner provided herein, or in the case of mail, upon deposit in a depository
               receptacle under the care and custody of the United States Postal Service.
               Either party shall have the right to change its address for notice hereunder to
               any other location within the continental United States by notice to the other
               party of such new address at least thirty (30) days prior to the effective date
               of such new address. 



               



          		            (k)     
               Binding Effect and Assignment. This Agreement (i) creates a
               continuing security interest in the Collateral, (ii) shall be binding on
               Debtor and the heirs, executors, administrators, personal representatives,
               successors and assigns of Debtor, and (iii) shall inure to the benefit of
               Secured Party and its successors and assigns. Without limiting the generality of
               the foregoing, Secured Party may pledge, assign or otherwise transfer the
               Indebtedness and its rights under this Agreement and any of the other Loan
               Documents to any other party. Debtor’s rights and obligations hereunder may
               not be assigned or otherwise transferred without the prior written consent of
               Secured Party. 



               



          		            (l)     
               Termination. It is contemplated by the parties hereto that from time to
               time there may be no outstanding Indebtedness, but notwithstanding such
               occurrences, this Agreement shall remain valid and shall be in full force and
               effect as to subsequent outstanding Indebtedness. Upon (i) the indefeasible
               satisfaction in full of the Indebtedness, (ii) the termination or expiration of
               any commitment of Secured Party to extend credit to any Obligor, (iii) written
               request for the termination hereof delivered by Debtor to Secured Party, and
               (iv) written release delivered by Secured Party to Debtor, this Agreement and
               the security interests created hereby shall terminate. Upon termination of this
               Agreement and Debtor’s written request, Secured Party will, at
               Debtor’s sole cost and expense, return to Debtor such of the Collateral as
               shall not have been sold or otherwise disposed of or applied pursuant to the
               terms hereof and execute and deliver to Debtor such documents as Debtor shall
               reasonably request to evidence such termination. 



               



          		            (m)     
               Cumulative Rights. All rights and remedies of Secured Party hereunder are
               cumulative of each other and of every other right or remedy which Secured Party
               may otherwise have at law or in equity or under any of the other Loan Documents,
               and the exercise of one or more of such rights or remedies shall not prejudice
               or impair the concurrent or subsequent exercise of any other rights or remedies.
               Further, except as specifically noted as a waiver herein, no provision of this
               Agreement is intended by the parties to this Agreement to waive any rights,
               benefits or protection afforded to Secured Party under the Code. 



               



          		            (n)     
               Gender and Number. Within this Agreement, words of any gender shall be
               held and construed to include the other gender, and words in the singular number
               shall be held and construed to include the plural and words in the plural number
               shall be held and construed to include the singular, unless in each instance the
               context requires otherwise. 



               



          		            (o)     
               Descriptive Headings. The headings in this Agreement are for convenience
               only and shall in no way enlarge, limit or define the scope or meaning of the
               various and several provisions hereof. 



               



             14.     
          Financing Statement Filings. Debtor recognizes that
          financing statements pertaining to the Collateral have been or may be filed in
          one or more of the following jurisdictions: the location of Debtor’s place
          of business, the location of Debtor’s chief executive office, or other such
          place as the Debtor may be “located” under the provisions of the Code;
          where Debtor maintains any Collateral, or has its records concerning any
          Collateral, as the case may be. Without limitation of any other covenant herein,
          Debtor will neither cause or permit any change in the location of (i) any
          Collateral, (ii) any records concerning any Collateral, or (iii) the
          location of Debtor’s place of business, or the location of Debtor’s
          chief executive office, as the case may be, to a jurisdiction other than as
          represented in Subsection 6(g), nor will Debtor change its name or
          the Organizational Information as represented in Subsection 6(g), unless
          Debtor shall have notified Secured Party in writing of such change at least
          thirty (30) days prior to the effective date of such change, and shall have
          first taken all action required by Secured Party for the purpose of further
          perfecting or protecting the security interest in favor of Secured Party in the
          Collateral. In any written notice furnished pursuant to this Subsection, Debtor
          will expressly state that the notice is required by this Agreement and contains
          facts that may require additional filings of financing statements, amendments or
          other notices for the purpose of continuing perfection of Secured Party’s
          security interest in the Collateral. 



        Without
limiting Secured Party’s rights hereunder, Debtor authorizes Secured Party to file
financing statements or amendments thereto under the provisions of the Code as amended
from time to time. 



     



        REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK. 



     








        EXECUTED
as of the date first written above. 




	 	DEBTOR:
	 
	 
	 	NATIONALCARE®MARKETING, INC.
	 
	 
	 	By: /s/ Cynthia B. Koenig
	 	Print Name: Cynthia B. Koenig
	 	Print Title: SVP & CFO
	 
	 
	 	SECURED PARTY:
	 
	 
	 	THE FROST NATIONAL BANK, 
a national banking association
	 
	 
	 	By: /s/ J. Carey Womble
	 	Print Name: J. Carey Womble
	 	Print Title: Senior Vice president
	 




 




















SCHEDULE A 
TO
PLEDGE AND SECURITY
AGREEMENT 
DATED DECEMBER 31, 2003 
BY AND BETWEEN 
THE FROST NATIONAL BANK 
AND 
NATIONALCARE®
MARKETING, INC. 




        The
following property is a part of the Collateral as defined in Subsection 1(b): 




        Ascent
Funding, Inc. 



        All
capital stock and other equity interests of Ascent Funding, Inc., a Delaware corporation,
now or hereafter owned beneficially or of record by Debtor. 



        Capital
stock issued and outstanding on the date of this Agreement: 


        100 shares of common stock of Ascent Funding,  Inc., a Delaware  corporation,  as evidenced by certificate
no. 1 issued in the name of Debtor.



        As
of the date of this Agreement, such common stock represents all of the authorized, issued
and outstanding capital stock of Ascent Funding, Inc. 




















SCHEDULE B 
TO 
PLEDGE AND SECURITY
AGREEMENT 
DATED DECEMBER 31, 2003 
BY AND BETWEEN 
THE FROST NATIONAL BANK 
AND 
NATIONALCARE®
MARKETING, INC. 




Ascent Funding, Inc. 

	Issuer Name: 	Ascent Funding, Inc.
	 
	Jurisdiction of Incorporation:	Delaware 
	 
	Federal Taxpayer I.D. Number: 	75-2225185
	 
	Authorized Capital Stock:	100 shares of $0.10 par common stock 
	 
	Issued Capital Stock:  	100 shares of $0.10 par common stock 
	 
	Outstanding Capital Stock: 	100 shares of $0.10 par common stock 











PLEDGE AND SECURITY
AGREEMENT 



        THIS
PLEDGE AND SECURITY AGREEMENT (“Agreement”) is made as of December
31, 2003, by ASCENT ASSURANCE, INC., a Delaware corporation (“Debtor”),
whose chief executive office (as that term is used in the Code) is located at 3100 Burnett
Plaza, 801 Cherry Street, Fort Worth, Tarrant County, Texas 76102, and whose
organizational identification number issued by the appropriate authority of the State of
Delaware is 0936067, and its federal taxpayer identification number is 73-1165000, in
favor of THE FROST NATIONAL BANK, a national banking association (“Secured
Party”), whose address is P.O. Box 1600, San Antonio, Texas 78296. Debtor
hereby agrees with Secured Party as follows: 



             1.       
          Definitions. As used in this Agreement, the following terms
          shall have the meanings indicated below: 



          		            (a)     
               “Code” means the Texas Business and Commerce Code as in effect
               in the State of Texas on the date of this Agreement or as it may hereafter be
               amended from time to time. 



               



          		            (b)     
               “Collateral” means (i) all personal property of Debtor
               specifically described on Schedule A attached hereto and made a part
               hereof, (ii) all certificates, instruments and/or other documents
               evidencing the foregoing and following, (iii) all renewals, replacements
               and substitutions of all of the foregoing and following, (iv) all
               Additional Property (as hereinafter defined), and (v) all PRODUCTS and
               PROCEEDS of all of the foregoing. The designation of proceeds does not authorize
               Debtor to sell, transfer or otherwise convey any of the foregoing property. The
               delivery at any time by Debtor to Secured Party of any property as a pledge to
               secure payment or performance of any indebtedness or obligation whatsoever shall
               also constitute a pledge of such property as Collateral hereunder. 



               



          		            (c)     
               “Credit Agreement” means the Credit Agreement dated as of
               December 31, 2003, among Borrower, each other Obligor and Secured Party,
               together with all amendments and restatements thereto. 



               



          		            (d)     
               “Indebtedness” means (i) all indebtedness, obligations and
               liabilities of Debtor and each other Obligor to Secured Party of any kind or
               character, now existing or hereafter arising, whether direct, indirect, related,
               unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint
               and several (excluding only indebtedness originally payable to or in favor of a
               Person other than Secured Party and subsequently acquired by Secured Party),
               including without limitation all indebtedness, obligations and liabilities of
               Debtor and each other Obligor to Secured Party now existing or hereafter arising
               by note, draft, acceptance, guaranty, endorsement, letter of credit, assignment,
               purchase, overdraft, discount, indemnity agreement or otherwise, (ii) all
               obligations now or hereafter existing of Debtor and each other Obligor under the
               Credit Agreement and each other Loan Document (including, but not limited to,
               the Obligations), (iii) all accrued but unpaid interest (including all interest
               that would accrue but for the existence of a proceeding under any Debtor Relief
               Laws) on any of the indebtedness described in this definition of
               “Indebtedness,” (iv) all obligations of Debtor and each
               other Obligor to Secured Party under any documents evidencing, securing,
               governing and/or pertaining to all or any part of the indebtedness described in
               this definition of “Indebtedness,” (v) all costs and
               expenses incurred by Secured Party in connection with the collection and
               administration of all or any part of the indebtedness and obligations described
               in this definition of “Indebtedness” or the protection or
               preservation of, or realization upon, the collateral securing all or any part of
               such indebtedness and obligations, including without limitation all reasonable
               attorneys’ fees, and (vi) all renewals, extensions, modifications and
               rearrangements of the indebtedness and obligations described in this definition
               of “Indebtedness.” 



               



All words and phrases used herein
which are expressly defined in Section 1.201, Chapter 8 or Chapter 9 of the
Code shall have the meaning provided for therein. Other words and phrases defined
elsewhere in the Code shall have the meaning specified therein except to the extent such
meaning is inconsistent with a definition in Section 1.201, Chapter 8 or
Chapter 9 of the Code. 



Capitalized terms not otherwise
defined herein have the meaning specified in the Credit Agreement. 



             2.       
          Security Interest. As security for the
          Indebtedness, Debtor, for value received, hereby grants to Secured Party a
          continuing security interest in the Collateral. 



             3.       
          Additional Property. Collateral shall also include the following
          property (collectively, the “Additional Property”) which Debtor
          becomes entitled to receive or shall receive in connection with any other
          Collateral: (a) any stock certificate, including without limitation, any
          certificate representing a stock dividend or any certificate in connection with
          any recapitalization, reclassification, merger, consolidation, conversion, sale
          of assets, combination of shares, stock split or spin-off; (b) any option,
          warrant, subscription or right, whether as an addition to or in substitution of
          any other Collateral; (c) any dividends or distributions of any kind
          whatsoever, whether distributable in cash, stock or other property; (d) any
          interest, premium or principal payments; and (e) any conversion or
          redemption proceeds; provided, however, that until the occurrence
          of an Event of Default (as hereinafter defined) which is continuing, Debtor
          shall be entitled to all cash dividends (other than dividends representing a
          return of capital) and all interest paid on the Collateral free of the security
          interest created under this Agreement (such dividends and interest being the
          “Excluded Property”). All Additional Property (other than
          Excluded Property) received by Debtor shall be received in trust for the benefit
          of Secured Party. All Additional Property (other than Excluded Property) and all
          certificates or other written instruments or documents evidencing and/or
          representing the Additional Property that is received by Debtor, together with
          such instruments of transfer as Secured Party may request, shall immediately be
          delivered to or deposited with Secured Party and held by Secured Party as
          Collateral under the terms of this Agreement. If the Additional Property
          received by Debtor shall be shares of stock, other securities or other equity
          interests, such shares of stock, other securities or other equity interests
          shall be duly endorsed in blank or accompanied by proper instruments of transfer
          and assignment duly executed in blank with, if requested by Secured Party,
          signatures guaranteed by a bank or member firm of the New York Stock Exchange,
          all in form and substance satisfactory to Secured Party. Secured Party shall be
          deemed to have possession of any Collateral in transit to Secured Party or its
          agent. 



             4.       
          Voting Rights. As long as no Event of Default exists, any
          voting rights incident to any stock, other securities or other equity interests
          pledged as Collateral may be exercised by Debtor; provided,
          however, that Debtor will not exercise, or cause to be exercised, any
          such voting rights, without the prior written consent of Secured Party, if the
          direct or indirect effect of such vote will result in an Event of Default
          hereunder. 



             5.       
          Maintenance of Collateral. Other than the exercise of
          reasonable care to assure the safe custody of any Collateral in Secured
          Party’s possession from time to time, Secured Party does not have any
          obligation, duty or responsibility with respect to the Collateral. Without
          limiting the generality of the foregoing, Secured Party shall not have any
          obligation, duty or responsibility to do any of the following:
          (a) ascertain any maturities, calls, conversions, exchanges, offers,
          tenders or similar matters relating to the Collateral or informing Debtor with
          respect to any such matters; (b) fix, preserve or exercise any right,
          privilege or option (whether conversion, redemption or otherwise) with respect
          to the Collateral unless (i) Debtor makes written demand to Secured Party
          to do so, (ii) such written demand is received by Secured Party in
          sufficient time to permit Secured Party to take the action demanded in the
          ordinary course of its business, and (iii) Debtor provides additional
          collateral, acceptable to Secured Party in its sole discretion; (c) collect
          any amounts payable in respect of the Collateral (Secured Party being liable to
          account to Debtor only for what Secured Party may actually receive or collect
          thereon); (d) sell all or any portion of the Collateral to avoid market
          loss; (e) sell all or any portion of the Collateral unless and until
          (i) Debtor makes written demand upon Secured Party to sell the Collateral,
          and (ii) Debtor provides additional collateral, acceptable to Secured Party
          in its sole discretion; or (f) hold the Collateral for or on behalf of any
          party other than Debtor. 



             6.       
          Representations and Warranties. Debtor hereby represents and
          warrants the following to Secured Party: 



          		            (a)     
               Authority. The execution, delivery and performance of this Agreement and
               all of the other Loan Documents by Debtor have been duly authorized by all
               necessary corporate action of Debtor. 



               



          		            (b)     
               Accuracy of Information. All information contained herein with respect to
               the Collateral is true and correct in all material respects. The exact legal
               name and federal taxpayer identification number of Debtor are correctly shown in
               the first paragraph hereof. 



               



          		            (c)     
               Enforceability. This Agreement and the other Loan Documents constitute
               legal, valid and binding obligations of Debtor, enforceable in accordance with
               their respective terms, except as limited as to enforcement of remedies by
               bankruptcy, insolvency or similar laws of general application relating to the
               enforcement of creditors’ rights and except to the extent specific remedies
               may generally be limited by equitable principles. 



               



          		            (d)     
               Ownership and Liens. Debtor has good and marketable title to the
               Collateral free and clear of all Liens or adverse claims, except for the
               security interest created by this Agreement. No dispute, right of setoff,
               counterclaim or defense exists with respect to all or any part of the
               Collateral. Debtor has not executed any other security agreement currently
               affecting the Collateral and no financing statement or other instrument similar
               in effect covering all or any part of the Collateral is on file in any recording
               office except as may have been executed or filed in favor of Secured Party. 



               



          		            (e)     
               No Conflicts or Consents. Neither the ownership, the intended use of the
               Collateral by Debtor, the grant of the security interest by Debtor to Secured
               Party herein nor the exercise by Secured Party of its rights or remedies
               hereunder, will (i) conflict with any provision of (A) any material
               domestic or foreign law, statute, rule or regulation (B) the articles or
               certificate of incorporation or bylaws of Debtor, or (C) any agreement,
               judgment, license, order or permit applicable to or binding upon Debtor or
               otherwise affecting the Collateral, or (ii) result in or require the
               creation of any Lien upon any assets or properties of Debtor or of any Person
               except as may be expressly contemplated in the Loan Documents. Except (i) as
               expressly contemplated in the Loan Documents, and (ii) for any consent of the
               Insurance Commissioner of the state of domicile of NFL and FLICA to any
               realization upon the capital stock of NFL and FLICA, no consent, approval,
               authorization or order of, and no notice to or filing with, any court,
               governmental authority or other Person is required in connection with the grant
               by Debtor of the security interest herein or the exercise by Secured Party of
               its rights and remedies hereunder. 



               



          		            (f)     
               Security Interest. Debtor has and will have at all times full right,
               power and authority to grant a security interest in the Collateral to Secured
               Party in the manner provided herein, free and clear of any Lien or other charge
               or encumbrance. This Agreement creates a legal, valid and binding security
               interest in favor of Secured Party in the Collateral. Upon the filing of a
               financing statement describing the Collateral with the Uniform Commercial Code
               central filing officer of the jurisdiction of Debtor’s location and
               delivery to Secured Party of all certificates evidencing Collateral, the
               security interest granted by this Agreement shall be perfected and prior to all
               other Liens therein. 



               



          		            (g)     
               Location/Identity. Debtor’s principal place of business and chief
               executive office (as those terms are used in the Code), as the case may be is
               located at the address set forth on the first page hereof. Except as specified
               elsewhere herein, all Collateral and records concerning the Collateral shall be
               kept at such address. Debtor is not organized in more than one jurisdiction.
               Debtor’s organizational structure, state of organization, and
               organizational number issued by the appropriate authority of the State of
               Delaware (the “Organizational Information”) are as set forth on
               the first page hereof. Except as specified herein, the Organizational
               Information shall not change. 



               



          		            (h)     
               Solvency of Debtor. Debtor is not entering into this Agreement or any
               other Loan Document to which Debtor is a party or its property is subject with
               the intent of hindering, delaying or defrauding any creditor. 



               



          		            (i)     
               Securities. Any certificates evidencing securities or other equity
               interests pledged as Collateral are valid and genuine and have not been altered.
               All securities or other equity interests pledged as Collateral have been duly
               authorized and validly issued, are fully paid and non-assessable, and were not
               issued in violation of the preemptive rights of any party or of any agreement by
               which Debtor or the issuer thereof is bound. No restrictions or conditions exist
               with respect to the transfer or voting of any securities or other equity
               interests pledged as Collateral. No issuer of such securities or other equity
               interests has any outstanding stock rights, rights to subscribe, options,
               warrants or convertible securities or other equity interests outstanding or any
               other rights outstanding entitling any party to have issued to such party
               capital stock or other security interests of such issuer. Schedule A
               contains a complete and correct description of each certificate or other
               instrument included in or evidencing Collateral. Schedule B is a complete
               and correct list of the exact name of the issuer of all Collateral described on
               Schedule A, its jurisdiction of organization, its federal taxpayer
               identification number, and the authorized, issued and outstanding capital stock
               of such issuer. As of the date hereof, Debtor’s interest in such issuer is
               as stated on Schedule A. 



               



          		            (j)     
               Benefit. This Agreement may reasonably be expected to benefit, directly
               or indirectly, Debtor and the Board of Directors of Debtor has determined that
               this Agreement may reasonably be expected to benefit, directly or indirectly,
               Debtor. 



               



             7.       
          Affirmative Covenants. Debtor will comply with the
          covenants contained in this Section at all times during the period of time this
          Agreement is effective unless Secured Party shall otherwise consent in writing. 



          		            (a)     
               Ownership and Liens. Debtor will maintain good and marketable title to
               all Collateral free and clear of all Liens or adverse claims, except for the
               security interest created by this Agreement and the security interests and other
               encumbrances expressly permitted by the other Loan Documents. Debtor will not
               permit any dispute, right of setoff, counterclaim or defense to exist with
               respect to all or any part of the Collateral. Debtor will cause any financing
               statement or other security instrument with respect to the Collateral to be
               terminated, except as may exist or as may have been filed in favor of Secured
               Party. Debtor hereby irrevocably appoints Secured Party as Debtor’s
               attorney-in-fact, such power of attorney being coupled with an interest, with
               full authority in the place and stead of Debtor and in the name of Debtor or
               otherwise, for the purpose of terminating any financing statements currently
               filed with respect to the Collateral. Debtor will defend at its expense Secured
               Party’s right, title and security interest in and to the Collateral against
               the claims of any third party. 



               



          		            (b)     
               Inspection of Books and Records. Debtor will keep adequate records
               concerning the Collateral and will, subject to the terms of the Credit
               Agreement, permit Secured Party and all representatives and agents appointed by
               Secured Party to inspect any of the Collateral and the books and records of or
               relating to the Collateral at any time during normal business hours, to make and
               take away photocopies, photographs and printouts thereof and to write down and
               record any such information (If no Event of Default exists, Debtor shall not be
               required to reimburse Secured Party for the related photocopy, photograph and
               printout costs and expenses). 



               



          		            (c)     
               Adverse Claim. Debtor covenants and agrees to promptly notify Secured
               Party of any claim, action or proceeding affecting title to the Collateral, or
               any part thereof, or the security interest created hereunder and, at
               Debtor’s expense, defend Secured Party’s security interest in the
               Collateral against the claims of any third party. Debtor also covenants and
               agrees to promptly deliver to Secured Party a copy of all written notices
               received by Debtor with respect to the Collateral, including without limitation,
               notices received from the issuer of any securities or other equity interests
               pledged hereunder as Collateral. 



               



          		            (d)     
               Further Assurances. Debtor will contemporaneously with the execution
               hereof and from time to time thereafter at its expense promptly execute and
               deliver all further instruments and documents and take all further action
               necessary or appropriate or that Secured Party may request in order (i) to
               perfect and protect the security interest created or purported to be created
               hereby and the first priority of such security interest, (ii) to enable
               Secured Party to exercise and enforce its rights and remedies hereunder in
               respect of the Collateral, and (iii) to otherwise effect the purposes of
               this Agreement, including without limitation: (A) executing (if requested)
               and filing any financing or continuation statements, or any amendments thereto;
               (B) obtaining written confirmation from the issuer of any securities or
               other equity interests pledged as Collateral of the pledge of such securities or
               other equity interests, in form and substance satisfactory to Secured Party;
               (C) cooperating with Secured Party in registering the pledge of any
               securities or other equity interests pledged as Collateral with the issuer of
               such securities or other equity interests; (D) delivering notice of Secured
               Party’s security interest in any securities or other equity interests
               pledged as Collateral to any financial intermediary, clearing corporation or
               other party required by Secured Party, in form and substance satisfactory to
               Secured Party; and (E) obtaining written confirmation of the pledge of any
               securities or other equity interests constituting Collateral from any financial
               intermediary, clearing corporation or other party required by Secured Party, in
               form and substance satisfactory to Secured Party. If all or any part of the
               Collateral is securities issued by an agency or department of the United States,
               Debtor covenants and agrees, at Secured Party’s request, to cooperate in
               registering such securities in Secured Party’s name or with Secured
               Party’s account maintained with a Federal Reserve Bank. 



               



          		            (e)     
               Control Agreements. Debtor will cooperate with Secured Party in obtaining
               a control agreement in form and substance satisfactory to Secured Party with
               respect to Collateral for which such agreement is required for perfection of a
               security interest pursuant to the Code (as determined by Secured Party in its
               sole discretion) 



               



             8.       
          Negative Covenants. Debtor will comply with the covenants
          contained in this Section at all times during the period of time this Agreement
          is effective, unless Secured Party shall otherwise consent in writing. 



          		            (a)     
               Transfer or Encumbrance. Debtor will not (i) sell, assign (by
               operation of law or otherwise) or transfer Debtor’s rights in any of the
               Collateral (other than Excluded Property), (ii) grant a Lien in or execute,
               authorize, file or record any financing statement or other security instrument
               with respect to the Collateral to any party other than Secured Party, or
               (iii) deliver actual or constructive possession of any certificate,
               instrument or document evidencing and/or representing any of the Collateral to
               any party other than Secured Party. 



               



          		            (b)     
               Impairment of Security Interest. Debtor will not take or fail to take any
               action which would in any manner impair the value or enforceability of Secured
               Party’s security interest in any Collateral. 



               



          		            (c)     
               Dilution of Ownership. As to any securities or other equity interests
               pledged as Collateral, Debtor will not consent to or approve of the issuance of
               (i) any additional shares of any class of securities or other equity
               interests of such issuer (unless immediately upon issuance additional securities
               or other equity interests are pledged and delivered to Secured Party pursuant to
               the terms hereof to the extent necessary to give Secured Party a security
               interest after such issuance in at least the same percentage of such
               issuer’s outstanding securities or other equity interests as Secured Party
               had before such issuance), (ii) any instrument convertible voluntarily by
               the holder thereof or automatically upon the occurrence or non-occurrence of any
               event or condition into, or exchangeable for, any such securities or other
               equity interests, or (iii) any warrants, options, contracts or other
               commitments entitling any third party to purchase or otherwise acquire any such
               securities or other equity interests. 



               



          		            (d)     
               Restrictions on Securities. Debtor will not enter into any agreement
               creating, or otherwise permit to exist, any restriction or condition upon the
               transfer, voting or control of any securities or other equity interests pledged
               as Collateral, except as consented to in writing by Secured Party. 



               



             9.       
          Rights of Secured Party. Secured Party shall have the
          rights contained in this Section at all times during the period of time this
          Agreement is effective. 



          		            (a)     
               Power of Attorney. Debtor hereby irrevocably appoints Secured Party as
               Debtor’s attorney-in-fact, such power of attorney being coupled with an
               interest, exercisable if an Event of Default exists, with full authority in the
               place and stead of Debtor and in the name of Debtor or otherwise, to take any
               action and to execute any instrument which Secured Party may from time to time
               in Secured Party’s discretion deem necessary or appropriate to accomplish
               the purposes of this Agreement, including without limitation, the following
               action: (i) transfer any securities or other equity interests, instruments,
               documents or certificates pledged as Collateral in the name of Secured Party or
               its nominee; (ii) use any interest, premium or principal payments,
               conversion or redemption proceeds or other cash proceeds received in connection
               with any Collateral to reduce any of the Indebtedness; (iii) exchange any
               of the securities or other equity interests pledged as Collateral for any other
               property upon any merger, consolidation, reorganization, recapitalization or
               other readjustment of the issuer thereof, and, in connection therewith, to
               deposit and deliver any and all of such securities or other equity interests
               with any committee, depository, transfer agent, registrar or other designated
               agent upon such terms and conditions as Secured Party may deem necessary or
               appropriate; (iv) exercise or comply with any conversion, exchange,
               redemption, subscription or any other right, privilege or option pertaining to
               any securities or other equity interests pledged as Collateral; provided,
               however, except as provided herein, Secured Party shall not have a duty
               to exercise or comply with any such right, privilege or option (whether
               conversion, redemption or otherwise) and shall not be responsible for any delay
               or failure to do so; and (v) file any claims or take any action or
               institute any proceedings which Secured Party may deem necessary or appropriate
               for the collection and/or preservation of the Collateral or otherwise to enforce
               the rights of Secured Party with respect to the Collateral. THE PROXY AND
               POWER OF ATTORNEY HEREIN GRANTED, AND EACH STOCK POWER AND SIMILAR POWER NOW OR
               HEREAFTER  GRANTED (INCLUDING ANY EVIDENCED BY A SEPARATE WRITING), ARE
               COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR TO PAYMENT  IN FULL OF
               THE INDEBTEDNESS. 



               



          		            (b)     
               Performance by Secured Party. If Debtor fails to perform any agreement or
               obligation provided herein, Secured Party may itself perform, or cause
               performance of, such agreement or obligation, and the expenses of Secured Party
               incurred in connection therewith shall be a part of the Indebtedness, secured by
               the Collateral and payable by Debtor on demand. 



               



Notwithstanding any other provision
herein to the contrary, Secured Party does not have any duty to exercise or continue to
exercise any of the foregoing rights and shall not be responsible for any failure to do so
or for any delay in doing so. 



             10.     
          Events of Default. Each of the following constitutes an
          “Event of Default” under this Agreement: 



          		            (a)     
               Default in Payment. The failure, refusal or neglect of Debtor or any
               other Obligor to make any payment of principal or interest on the Indebtedness,
               or any portion thereof, as the same shall become due and payable after giving
               effect to any applicable grace period; or 



               



          		            (b)     
               Non-Performance of Covenants. Subject to any applicable grace period, the
               failure of Debtor or any other Obligor to timely and properly observe, keep or
               perform any covenant, agreement, warranty or condition required herein or in any
               of the other Loan Documents; or 



               



          		            (c)     
               Default Under other Loan Documents. The occurrence of an Event of Default
               (as defined in the Credit Agreement) under any of the other Loan Documents; or 



               



          		            (d)     
               False Representation. Any representation contained herein or in any of
               the other Loan Documents made by Debtor or any other Obligor is not true and
               correct in any material respect; or 



               



          		            (e)     
               Execution on Collateral. If Debtor fails to have discharged within a
               period of sixty (60) days any attachment, sequestration or similar writ levied
               upon any property (other than the Collateral) of Debtor, or the Collateral or
               any portion thereof is taken on execution or other process of law in any action
               against Debtor or any attachment, sequestration or similar writ is levied upon
               any Collateral; or 



               



          		            (f)     
               Abandonment. Debtor abandons the Collateral or any portion thereof; or 



               



          		            (g)     
               Action by Other Lienholder. The holder of any Lien on the Collateral
               (without hereby implying the consent of Secured Party to the existence or
               creation of any such Lien on the Collateral) or any other asset of Debtor having
               a value of $100,000 or greater declares a default thereunder or institutes
               foreclosure or other proceedings for the enforcement of its remedies thereunder;
               or 



               



          		            (h)     
               Liquidation and Related Events. The liquidation, dissolution, merger or
               consolidation of Debtor or any other Obligor not otherwise permitted by the
               Credit Agreement; or 



               



          		            (i)     
               Bankruptcy of Issuer. (i) The issuer of any securities or other
               equity interest constituting Collateral files a petition for relief under any
               Applicable Bankruptcy Law, (ii) an involuntary petition for relief is filed
               against any such issuer under any Applicable Bankruptcy Law and such involuntary
               petition is not dismissed within thirty (30) days after the filing thereof,
               (iii) an order for relief naming any such issuer is entered under any
               Applicable Bankruptcy Law (iv) any court or governmental authority shall
               issue any order of conservation, supervision or any other order of like effect
               relating to any such issuer, or (v) any Insurance Commissioner intervenes
               or takes any formal steps towards intervening in the management of the business
               or operations of any issuer or any such issuer facilitates or takes any
               affirmative action with the intention of facilitating such intervention, or 



               



          		            (j)     
               Search Report. If Secured Party shall have elected to file any financing
               statement with respect to the Collateral, Secured Party shall receive at any
               time following the execution of this Agreement a search report indicating that
               Secured Party’s security interest is not prior to all other Liens, security
               interests or other interests reflected in the report and Secured Party does not
               receive within twenty days after the date of notice to Debtor of such Lien, a
               file stamped termination statement of each financing statement related to such
               Lien, the written release of such Lien in form and substance satisfactory to
               Secured Party, and a search report indicating the filing of each such
               termination statement. 



               



             11.     
          Remedies and Related Rights. If an Event of Default shall
          have occurred, and without limiting any other rights and remedies provided
          herein, under any of the other Loan Documents or otherwise available to Secured
          Party, Secured Party may exercise one or more of the rights and remedies
          provided in this Section. 



          		            (a)     
               Remedies. Secured Party may from time to time at its discretion, without
               limitation and without notice except as expressly provided in any of the Loan
               Documents: 



               



          		           (i)       
               exercise in respect of the Collateral all the rights and remedies of a secured
               party under the Code (whether or not the Code applies to the affected
               Collateral); 



               



          		           (ii)      
               reduce its claim to judgment or foreclose or otherwise enforce, in whole or in
               part, the security interest granted hereunder by any available judicial
               procedure; 



               



          		           (iii)     
               sell or otherwise dispose of, at its office, on the premises of Debtor or
               elsewhere, the Collateral, as a unit or in parcels, by public or private
               proceedings, and by way of one or more contracts (it being agreed that the sale
               or other disposition of any part of the Collateral shall not exhaust Secured
               Party’s power of sale, but sales or other dispositions may be made from
               time to time until all of the Collateral has been sold or disposed of or until
               the Indebtedness has been paid and performed in full), and at any such sale or
               other disposition it shall not be necessary to exhibit any of the Collateral; 



               



          		           (iv)      
               buy the Collateral, or any portion thereof, at any public sale; 



               



          		           (v)       
               buy the Collateral, or any portion thereof, at any private sale if the
               Collateral is of a type customarily sold in a recognized market or is of a type
               which is the subject of widely distributed standard price quotations; 



               



          		           (vi)      
               apply for the appointment of a receiver for the Collateral, and Debtor hereby
               consents to any such appointment; and 



               



          		           (vii)     
               at its option, retain the Collateral in satisfaction of the Indebtedness
               whenever the circumstances are such that Secured Party is entitled to do so
               under the Code or otherwise, to the full extent permitted by the Code, Secured
               Party shall be permitted to elect whether such retention shall be in full or
               partial satisfaction of the Indebtedness. 



               



	  	
In
the event Secured Party shall elect to sell the Collateral, Secured Party may sell the
Collateral without giving any warranties as and shall be permitted to specifically
disclaim any warranties of title or the like (other than warranties that Secured Party has
not created any Lien in the Collateral to be sold). Further, if Secured Party sells any of
the Collateral on credit, Debtor will be credited only with payments actually made by the
purchaser, received by Secured Party and applied to the Indebtedness. In the event the
purchaser fails to pay for the Collateral, Secured Party may resell the Collateral and
Debtor shall be credited with the proceeds of the sale. Debtor agrees that in the event
Debtor or any Obligor is entitled to receive any notice under the Code, as it exists in
the state governing any such notice, of the sale or other disposition of any Collateral,
reasonable notice shall be deemed given when such notice is deposited in a depository
receptacle under the care and custody of the United States Postal Service, postage
prepaid, at such party’s address set forth on the first page hereof, ten (10) days
prior to the date of any public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured Party 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. Debtor further acknowledges and agrees that the redemption by
Secured Party of any certificate of deposit pledged as Collateral shall be deemed to be a
commercially reasonable disposition under Section 9.610 of the Code. 






     		            (b)     
          Private Sale of Securities; Further Approvals. 



               



          		           (i)       
               Debtor recognizes that Secured Party may be unable to effect a public sale of
               all or any part of the securities or other equity interests pledged as
               Collateral because of restrictions in applicable federal and state securities
               laws, insurance laws and contractual restrictions and that Secured Party may,
               therefore, determine to make one or more private sales of any such securities or
               other equity interests to a restricted group of purchasers who will be obligated
               to agree, among other things, to acquire such securities or other equity
               interests for their own account, for investment and not with a view to the
               distribution or resale thereof. Debtor acknowledges that each any such private
               sale may be at prices and other terms less favorable than what might have been
               obtained at a public sale and, notwithstanding the foregoing, agrees that each
               such private sale shall be deemed to have been made in a commercially reasonable
               manner and that Secured Party shall have no obligation to delay the sale of any
               such securities or other equity interests for the period of time necessary to
               permit the issuer to register such securities or other equity interests for
               public sale under any federal or state securities laws. Debtor further
               acknowledges and agrees that any offer to sell such securities or other equity
               interests which has been made privately in the manner described above to not
               less than five (5) bona fide offerees shall be deemed to involve a
               “public sale” for the purposes of Chapter 9 of the Code,
               notwithstanding that such sale may not constitute a “public offering”
               under any federal or state securities laws and that Secured Party may, in such
               event, bid for the purchase of such securities or other equity interests. 



               



          		           (ii)      
               In connection with the exercise by Secured Party of its rights hereunder that
               effects the disposition of or use of any Collateral, it may be necessary to
               obtain the prior consent or approval of governmental authorities (including any
               Insurance Commissioner) and other Persons to a transfer or assignment of
               Collateral, including, without limitation, any governmental authorities
               (including any Insurance Commissioner) regulating insurance companies and their
               Affiliates. 



               



          		           (iii)     
               Debtor agrees, if an Event of Default exists, to execute, deliver, and file, and
               hereby appoints Secured Party as its attorney-in-fact, to execute, deliver, and
               file on Debtor’s behalf and in Debtor’s name, all applications,
               certificates, filings, instruments, and other documents (including without
               limitation any application for an assignment or transfer of control or
               ownership) that may be necessary or appropriate, in Secured Party’s
               opinion, and to obtain such consents, waivers, or approvals under applicable
               laws and agreements prior to an Event of Default. Debtor further agrees to use
               its best efforts to obtain the foregoing consents, waivers, and approvals,
               including receipt of consents, waivers, and approvals under applicable laws and
               agreements prior to an Event of Default. Debtor acknowledges that there is no
               adequate remedy at Law for failure by it to comply with the provisions of this
               Section and that such failure would not be adequately compensable in damages,
               and therefore agrees that this Section may be specifically enforced. 



               



          		            (c)     
               Application of Proceeds. If any Event of Default exists, Secured Party
               may at its discretion apply or use any cash held by Secured Party as Collateral,
               and any cash proceeds received by Secured Party in respect of any sale or other
               disposition of, collection from, or other realization upon, all or any part of
               the Collateral as follows in such order and manner as Secured Party may elect: 



               



          		           (i)       
               to the repayment or reimbursement of the reasonable costs and expenses
               (including, without limitation, reasonable attorneys’ fees and expenses)
               incurred by Secured Party in connection with (A) the administration of the
               Loan Documents, (B) the custody, preservation, use or operation of, or the
               sale of, collection from, or other realization upon, the Collateral, and
               (C) the exercise or enforcement of any of the rights and remedies of
               Secured Party hereunder; 



               



          		           (ii)      
               to the payment or other satisfaction of any liens and other encumbrances upon
               the Collateral; 



               



          		           (iii)     
               to the satisfaction of the Indebtedness; 



               



          		           (iv)     
               by holding such cash and proceeds as Collateral prior to application to the
               Indebtedness if required to hold such cash or proceeds by applicable law or any
               court or governmental authority; 



               



          		           (v)      
               to the payment of any other amounts required by applicable law (including
               without limitation, Section 9.615(a)(3) of the Code or any other applicable
               statutory provision); and 



               



          		           (vi)     
               by delivery to Debtor or any other party lawfully entitled to receive such cash
               or proceeds whether by direction of a court of competent jurisdiction or
               otherwise. 



               



          		            (d)     
               Deficiency. In the event that the proceeds of any sale of, collection
               from, or other realization upon, all or any part of the Collateral by Secured
               Party are insufficient to pay all amounts to which Secured Party is legally
               entitled, Debtor and each other Obligor who guaranteed or is otherwise obligated
               to pay all or any portion of the Indebtedness shall be liable for the
               deficiency, together with interest thereon as provided in the Loan Documents, to
               the full extent not prohibited by law. 



               



          		            (e)     
               Non-Judicial Remedies. In granting to Secured Party the power to enforce
               its rights hereunder without prior judicial process or judicial hearing, Debtor
               expressly waives, renounces and knowingly relinquishes any legal right which
               might otherwise require Secured Party to enforce its rights by judicial process.
               Debtor recognizes and concedes that non-judicial remedies are consistent with
               the usage of trade, are responsive to commercial necessity and are the result of
               a bargain at arm’s length. Nothing herein is intended to prevent Secured
               Party or Debtor from resorting to judicial process at either party’s
               option. 



               



          		            (f)     
               Other Recourse. Debtor waives any right to require Secured Party to
               proceed against any third party, exhaust any Collateral or other security for
               the Indebtedness, or to have any third party joined with Debtor in any suit
               arising out of the Indebtedness or any of the Loan Documents, or pursue any
               other remedy available to Secured Party. Debtor further waives any and all
               notice of acceptance of this Agreement and of the creation, modification,
               rearrangement, renewal or extension of the Indebtedness. Debtor further waives
               any defense arising by reason of any disability or other defense of any third
               party or by reason of the cessation from any cause whatsoever of the liability
               of any third party. Until all of the Indebtedness shall have been paid in full,
               Debtor shall have no right of subrogation and Debtor waives the right to enforce
               any remedy which Secured Party has or may hereafter have against any third
               party, and waives any benefit of and any right to participate in any other
               security whatsoever now or hereafter held by Secured Party. Debtor authorizes
               Secured Party, and without notice or demand and without any reservation of
               rights against Debtor and without affecting Debtor’s liability hereunder or
               on the Indebtedness, to (i) take or hold any other property of any type
               from any third party as security for the Indebtedness, and exchange, enforce,
               waive and release any or all of such other property, (ii) apply such other
               property and direct the order or manner of sale thereof as Secured Party may in
               its discretion determine, (iii) renew, extend, accelerate, modify,
               compromise, settle or release any of the Indebtedness or other security for the
               Indebtedness, (iv) waive, enforce or modify any of the provisions of any of
               the Loan Documents executed by any third party, and (v) release or
               substitute any third party. Notwithstanding anything in this Agreement to the
               contrary, the obligations of Debtor under this Agreement shall be limited to a
               maximum aggregate amount equal to the largest amount that would not render
               Debtor’s obligations hereunder subject to avoidance as a fraudulent
               transfer or fraudulent conveyance under Section 548 of Title 11 of the
               United States Code or any applicable provisions of comparable state law
               (collectively, the “Fraudulent Transfer  Laws”), in each case
               after giving effect to all other liabilities of Debtor, contingent or otherwise,
               that are relevant under the Fraudulent Transfer Laws and after giving effect as
               assets to the value (as determined under the applicable provisions of the
               Fraudulent Transfer Laws) of any rights to subrogation, reimbursement or
               contribution of Debtor pursuant to (i) applicable law, or (ii) any agreement
               providing for rights of subrogation, reimbursement or contribution in favor of
               Debtor, or for an equitable allocation among Debtor, Borrower, any other
               Obligor, and any other Person of obligations arising under guaranties by such
               Persons. 



               



          		            (g)     
               Voting Rights. If an Event of Default exists, Debtor will not exercise
               any voting rights with respect to securities or other equity interests pledged
               as Collateral. Debtor hereby irrevocably appoints Secured Party as Debtor’s
               attorney-in-fact (such power of attorney being coupled with an interest) and
               proxy to exercise any voting rights with respect to Debtor’s securities or
               other equity interests pledged as Collateral upon the occurrence of an Event of
               Default. 



               



          		            (h)     
               Dividend Rights and Interest Payments. If an Event of Default exists: 



               



          		           (i)       
               all rights of Debtor to receive and retain the dividends and interest payments
               which it would otherwise be authorized to receive and retain pursuant to
               Section 3 shall automatically cease, and all such rights shall thereupon
               become vested with Secured Party which shall thereafter have the sole right to
               receive, hold and apply as Collateral such dividends and interest payments; and 



               



          		           (ii)      
               all dividend and interest payments which are received by Debtor contrary to the
               provisions of clause (i) of this Subsection shall be received in trust for
               the benefit of Secured Party, shall be segregated from other funds of Debtor,
               and shall be forthwith paid over to Secured Party in the exact form received
               (properly endorsed or assigned if requested by Secured Party), to be held by
               Secured Party as Collateral. 



               



             12.     
          INDEMNITY. DEBTOR HEREBY INDEMNIFIES AND AGREES TO HOLD
          HARMLESS SECURED PARTY, AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND
          REPRESENTATIVES (EACH AN “INDEMNIFIED PERSON”) FROM AND AGAINST
          ANY AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES,
          ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR
          NATURE (COLLECTIVELY, THE “CLAIMS”) WHICH MAY BE IMPOSED ON,
          INCURRED BY, OR ASSERTED AGAINST, ANY INDEMNIFIED PERSON ARISING IN CONNECTION
          WITH THE LOAN DOCUMENTS, THE INDEBTEDNESS OR THE COLLATERAL (INCLUDING WITHOUT
          LIMITATION, THE ENFORCEMENT OF THE LOAN DOCUMENTS AND THE DEFENSE OF ANY
          INDEMNIFIED PERSON’S ACTIONS AND/OR INACTIONS IN CONNECTION WITH THE LOAN
          DOCUMENTS). THE INDEMNIFICATION PROVIDED FOR IN THIS SECTION SHALL SURVIVE THE
          TERMINATION OF THIS AGREEMENT AND SHALL EXTEND AND CONTINUE TO BENEFIT EACH
          INDIVIDUAL OR ENTITY WHO IS OR HAS AT ANY TIME BEEN AN INDEMNIFIED PERSON
          HEREUNDER. 




        13.     
Miscellaneous. 



          		            (a)     
               Entire Agreement. This Agreement contains the entire agreement of Secured
               Party and Debtor with respect to the Collateral. If the parties hereto are
               parties to any prior agreement, either written or oral, relating to the
               Collateral, the terms of this Agreement shall amend and supersede the terms of
               such prior agreements as to transactions on or after the effective date of this
               Agreement, but all security agreements, financing statements, guaranties, other
               contracts and notices for the benefit of Secured Party shall continue in full
               force and effect to secure the Indebtedness unless Secured Party specifically
               releases its rights thereunder by separate release. 



               



          		            (b)     
               Amendment. No modification, consent or amendment of any provision of this
               Agreement or any of the other Loan Documents shall be valid or effective unless
               the same is in writing and authenticated by the party against whom it is sought
               to be enforced, except to the extent of amendments specifically permitted by the
               Code without authentication by the Debtor or any other Obligor. 



               



          		            (c)     
               Actions by Secured Party. The Lien of Secured Party hereunder shall not
               be impaired by (i) any renewal, extension, increase or modification with respect
               to the Indebtedness, (ii) any surrender, compromise, release, renewal,
               extension, exchange or substitution which Secured Party may grant with respect
               to the Collateral, or (iii) any release or indulgence granted to any endorser,
               guarantor or surety of the Indebtedness. The taking of additional security by
               Secured Party shall not release or impair the Lien of Secured Party hereunder or
               affect the obligations of Debtor hereunder. 



               



          		            (d)     
               Waiver by Secured Party. Secured Party may waive any Event of Default
               without waiving any other prior or subsequent Event of Default. Secured Party
               may remedy any default without waiving the Event of Default remedied. Neither
               the failure by Secured Party to exercise, nor the delay by Secured Party in
               exercising, any right or remedy upon any Event of Default shall be construed as
               a waiver of such Event of Default or as a waiver of the right to exercise any
               such right or remedy at a later date. No single or partial exercise by Secured
               Party of any right or remedy hereunder shall exhaust the same or shall preclude
               any other or further exercise thereof, and every such right or remedy hereunder
               may be exercised at any time. No waiver of any provision hereof or consent to
               any departure by Debtor therefrom shall be effective unless the same shall be in
               writing and signed by Secured Party and then such waiver or consent shall be
               effective only in the specific instances, for the purpose for which given and to
               the extent therein specified. No notice to or demand on Debtor in any case shall
               of itself entitle Debtor to any other or further notice or demand in similar or
               other circumstances. 



               



          		            (e)     
               Costs and Expenses. Debtor will upon demand pay to Secured Party the
               amount of any and all costs and expenses (including without limitation,
               attorneys’ fees and expenses), which Secured Party may incur in connection
               with (i) the transactions which give rise to the Loan Documents (subject to
               Section 8.3(a) of the Credit Agreement), (ii) the preparation of
               this Agreement (subject to Section 8.3(a) of the Credit Agreement) and
               the perfection and preservation of the security interests granted under the Loan
               Documents, (iii) the administration of the Loan Documents, (iv) the
               custody, preservation, use or operation of, or the sale of, collection from, or
               other realization upon, the Collateral, (v) the exercise or enforcement of
               any of the rights of Secured Party under the Loan Documents, or (vi) the
               failure by Debtor to perform or observe any of the provisions hereof. 



               



          		            (f)     
               GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
               ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND  APPLICABLE FEDERAL
               LAWS, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR
               NON-PERFECTION OF THE SECURITY  INTEREST GRANTED HEREUNDER, IN RESPECT OF
               ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
                THE STATE OF TEXAS. 



               



          		            (g)     
               Venue. This Agreement has been entered into in the county in Texas where
               Secured Party’s address for notice purposes is located, and it shall be
               performable for all purposes in such county. Courts within the State of Texas
               shall have jurisdiction over any and all disputes arising under or pertaining to
               this Agreement and venue for any such disputes shall be in the county or
               judicial district where this Agreement has been executed and delivered. 



               



          		            (h)     
               Severability. If any provision of this Agreement is held by a court of
               competent jurisdiction to be illegal, invalid or unenforceable under present or
               future laws, such provision shall be fully severable, shall not impair or
               invalidate the remainder of this Agreement and the effect thereof shall be
               confined to the provision held to be illegal, invalid or unenforceable. 



               



          		            (i)     
               No Obligation. Nothing contained herein shall be construed as an
               obligation on the part of Secured Party to extend or continue to extend credit
               to Debtor or any other Obligor. 



               



          		            (j)     
               Notices. All notices, requests, demands or other communications required
               or permitted to be given pursuant to this Agreement shall be in writing and
               given by (i) personal delivery, (ii) expedited delivery service with
               proof of delivery, or (iii) United States mail, postage prepaid, registered
               or certified mail, return receipt requested, sent to the intended addressee at
               the address set forth on the first page hereof or to such different address as
               the addressee shall have designated by written notice sent pursuant to the terms
               hereof and shall be deemed to have been received either, in the case of personal
               delivery, at the time of personal delivery, in the case of expedited delivery
               service, as of the date of first attempted delivery at the address and in the
               manner provided herein, or in the case of mail, upon deposit in a depository
               receptacle under the care and custody of the United States Postal Service.
               Either party shall have the right to change its address for notice hereunder to
               any other location within the continental United States by notice to the other
               party of such new address at least thirty (30) days prior to the effective date
               of such new address. 



               



          		            (k)     
               Binding Effect and Assignment. This Agreement (i) creates a
               continuing security interest in the Collateral, (ii) shall be binding on
               Debtor and the heirs, executors, administrators, personal representatives,
               successors and assigns of Debtor, and (iii) shall inure to the benefit of
               Secured Party and its successors and assigns. Without limiting the generality of
               the foregoing, Secured Party may pledge, assign or otherwise transfer the
               Indebtedness and its rights under this Agreement and any of the other Loan
               Documents to any other party. Debtor’s rights and obligations hereunder may
               not be assigned or otherwise transferred without the prior written consent of
               Secured Party. 



               



          		            (l)     
               Termination. It is contemplated by the parties hereto that from time to
               time there may be no outstanding Indebtedness, but notwithstanding such
               occurrences, this Agreement shall remain valid and shall be in full force and
               effect as to subsequent outstanding Indebtedness. Upon (i) the indefeasible
               satisfaction in full of the Indebtedness, (ii) the termination or expiration of
               any commitment of Secured Party to extend credit to any Obligor, (iii) written
               request for the termination hereof delivered by Debtor to Secured Party, and
               (iv) written release delivered by Secured Party to Debtor, this Agreement and
               the security interests created hereby shall terminate. Upon termination of this
               Agreement and Debtor’s written request, Secured Party will, at
               Debtor’s sole cost and expense, return to Debtor such of the Collateral as
               shall not have been sold or otherwise disposed of or applied pursuant to the
               terms hereof and execute and deliver to Debtor such documents as Debtor shall
               reasonably request to evidence such termination. 



               



          		            (m)     
               Cumulative Rights. All rights and remedies of Secured Party hereunder are
               cumulative of each other and of every other right or remedy which Secured Party
               may otherwise have at law or in equity or under any of the other Loan Documents,
               and the exercise of one or more of such rights or remedies shall not prejudice
               or impair the concurrent or subsequent exercise of any other rights or remedies.
               Further, except as specifically noted as a waiver herein, no provision of this
               Agreement is intended by the parties to this Agreement to waive any rights,
               benefits or protection afforded to Secured Party under the Code. 



               



          		            (n)     
               Gender and Number. Within this Agreement, words of any gender shall be
               held and construed to include the other gender, and words in the singular number
               shall be held and construed to include the plural and words in the plural number
               shall be held and construed to include the singular, unless in each instance the
               context requires otherwise. 



               



          		            (o)     
               Descriptive Headings. The headings in this Agreement are for convenience
               only and shall in no way enlarge, limit or define the scope or meaning of the
               various and several provisions hereof. 



               



             14.     
          Financing Statement Filings. Debtor recognizes that
          financing statements pertaining to the Collateral have been or may be filed in
          one or more of the following jurisdictions: the location of Debtor’s place
          of business, the location of Debtor’s chief executive office, or other such
          place as the Debtor may be “located” under the provisions of the Code;
          where Debtor maintains any Collateral, or has its records concerning any
          Collateral, as the case may be. Without limitation of any other covenant herein,
          Debtor will neither cause or permit any change in the location of (i) any
          Collateral, (ii) any records concerning any Collateral, or (iii) the
          location of Debtor’s place of business, or the location of Debtor’s
          chief executive office, as the case may be, to a jurisdiction other than as
          represented in Subsection 6(g), nor will Debtor change its name or
          the Organizational Information as represented in Subsection 6(g), unless
          Debtor shall have notified Secured Party in writing of such change at least
          thirty (30) days prior to the effective date of such change, and shall have
          first taken all action required by Secured Party for the purpose of further
          perfecting or protecting the security interest in favor of Secured Party in the
          Collateral. In any written notice furnished pursuant to this Subsection, Debtor
          will expressly state that the notice is required by this Agreement and contains
          facts that may require additional filings of financing statements, amendments or
          other notices for the purpose of continuing perfection of Secured Party’s
          security interest in the Collateral. 



        Without
limiting Secured Party’s rights hereunder, Debtor authorizes Secured Party to file
financing statements or amendments thereto under the provisions of the Code as amended
from time to time. 



     



        REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK. 



     








        EXECUTED
as of the date first written above. 





	 	DEBTOR:
	 
	 
	 	ASCENT ASSURANCE, INC.
	 
	 
	 	By: /s/ Cynthia B. Koenig
	 	Print Name: Cynthia B. Koenig
	 	Print Title: SVP & CFO
	 
	 
	 	SECURED PARTY:
	 
	 
	 	THE FROST NATIONAL BANK, 
a national banking association
	 
	 
	 	By: J. Carey Womble
	 	Print Name: J. Carey Womble
	 	Print Title: Senior Vice president
	 
























SCHEDULE A 
TO 
PLEDGE AND SECURITY AGREEMENT 

DATED DECEMBER 31, 2003 
BY AND BETWEEN 
THE FROST NATIONAL BANK 
AND 
ASCENT ASSURANCE, INC. 



        The
following property is a part of the Collateral as defined in Subsection 1(b): 




        Freedom
Life Insurance Company of America 



        All
capital stock and other equity interests of Freedom Life Insurance Company of America, a
Texas corporation, now or hereafter owned beneficially or of record by Debtor. 



        Capital
stock issued and outstanding on the date of this Agreement: 



        1,761,816
shares of common stock of Freedom Life Insurance Company of America, a Texas corporation,
as evidenced by certificate no. 2 issued in the name of Debtor. 



        As
of the date of this Agreement, such common stock represents all of the authorized, issued
and outstanding capital stock of Freedom Life Insurance Company of America. 




        National
Foundation Life Insurance Company 



        All
capital stock and other equity interests of National Foundation Life Insurance Company, a
Texas corporation, now or hereafter owned beneficially or of record by Debtor. 



        Capital
stock issued and outstanding on the date of this Agreement: 



        100
shares of common stock of National Foundation Life Insurance Company, a Texas corporation,
as evidenced by certificate no. 1 issued in the name of Debtor. 



        As
of the date of this Agreement, such common stock represents all of the authorized, issued
and outstanding capital stock of National Foundation Life Insurance Company. 


















SCHEDULE B 
TO 
PLEDGE AND SECURITY
AGREEMENT 
DATED DECEMBER 31, 2003 
BY AND BETWEEN 
THE FROST NATIONAL BANK 
AND 
ASCENT ASSURANCE, INC. 




Freedom Life Insurance
Company of America 


	Issuer Name: 	Freedom Life
Insurance Company of America 
	 
	Jurisdiction of Incorporation:	Texas 
	 
	Federal Taxpayer I.D. Number: 	61-1096685 
	 
	Authorized Capital Stock:	3,000,000 shares of $1.00 par common stock 
	 
	Issued Capital Stock:  	176,816 shares of $1.00 par common stock 
	 
	Outstanding Capital Stock: 	176,816 shares of $1.00 par common stock 









National Foundation Life
Insurance Company 


	Issuer Name: 	National
Foundation Life Insurance Company 
	 
	Jurisdiction of Incorporation:	Texas 
	 
	Federal Taxpayer I.D. Number: 	73-1187572 
	 
	Authorized Capital Stock:	2,600,000 shares of $1.00 par common stock 
	 
	Issued Capital Stock:  	2,600,000 shares of $1.00 par common stock 
	 
	Outstanding Capital Stock: 	2,600,000 shares of $1.00 par common stock 








REVOLVING PROMISSORY
NOTE 

	$3,000,000.00 	December 31, 2003        




        For
value received, ASCENT FUNDING, INC., a Delaware corporation
(“Borrower”) does hereby promise to pay to the order of THE FROST
NATIONAL BANK (“Lender”), at P.O. Box 1600, San Antonio, Texas 78296,
or at such other address as Lender shall from time to time specify in writing, in lawful
money of the United States of America, the sum of THREE MILLION AND 00/100 DOLLARS
($3,000,000.00), or so much thereof as from time to time may be disbursed by Lender to
Borrower under the terms of that certain Credit Agreement dated of even date herewith
among Borrower, certain Subsidiaries (as defined in the Credit Agreement) of
Borrower’s ultimate parent and Lender (such agreement, together with all amendments
and restatements, the “Credit Agreement”), and be outstanding, together
with interest from date hereof on the principal balance outstanding from time to time as
hereinafter provided. Interest shall be computed on a per annum basis of a year of 360
days and for the actual number of days elapsed, unless such calculation would result in a
rate greater than the highest rate permitted by applicable law, in which case interest
shall be computed on a per annum basis of a year of 365 days or 366 days in a leap year,
as the case may be. 



     1.    
          Payment Terms. Interest only on amounts outstanding
          hereunder shall be due and payable monthly as it accrues, on the first day of
          each and every calendar month, beginning January 1, 2004, and continuing
          regularly and monthly thereafter until January 15, 2005, when the entire amount
          hereof, principal and interest then remaining unpaid, shall be then due and
          payable; interest being calculated on the unpaid principal each day principal is
          outstanding and all payments made credited to any collection costs and late
          charges, to the discharge of the interest accrued and to the reduction of the
          principal, in such order as Lender shall determine. 



     2.    
          Late Charge. If a payment is made 10 days or more late,
          Borrower will be charged, in addition to interest, a delinquency charge of (i)
          5% of the unpaid portion of the regularly scheduled payment, or (ii) $250.00,
          whichever is less. Additionally, upon maturity of this Note, if the outstanding
          principal balance (plus all accrued but unpaid interest) is not paid within 10
          days of the maturity date, Borrower will be charged a delinquency charge of (i)
          5% of the sum of the outstanding principal balance (plus all accrued but unpaid
          interest), or (ii) $250.00, whichever is less. Borrower agrees with Lender that
          the charges set forth herein are reasonable compensation to Lender for the
          handling of such late payments. 



     3.    
          Interest Rate. Interest on the outstanding and unpaid
          principal balance hereof shall be computed at a per annum rate equal to the
          lesser of (a) a rate equal to the Prime Rate, plus one-half percent (0.5%) per
          annum, with said rate to be adjusted to reflect any change in said Prime Rate at
          the time of any such change (“Applicable Rate”) and (b) the
          Highest Lawful Rate (as defined in the Credit Agreement), but in no event shall
          interest contracted for, charged or received hereunder plus any other charges in
          connection herewith which constitute interest exceed the maximum interest
          permitted by applicable law, said rate to be effective prior to maturity
          (however such maturity is brought about). “Prime Rate” means
          for any day a per annum rate of interest equal to the “prime rate,” as
          published in the “Money Rates” column of The Wall Street
          Journal, Central Edition, from time to time, or if for any reason such rate
          is no longer available, the rate established by Lender as its prime rate. The
          Prime Rate shall change effective as of the date of any change as published in
          The Wall Street Journal, Central Edition, or as established by Lender, as
          appropriate. The Prime Rate is a reference rate and does not necessarily
          represent the lowest or best rate actually charged to another customer. 



     4.    
          Default Rate. If an Event of Default (as defined in the
          Credit Agreement) exists, unpaid principal and, to the extent not prohibited by
          Applicable Law (as defined in the Credit Agreement), accrued unpaid interest on
          Loans (as defined in the Credit Agreement) shall bear interest for each day
          until paid at a percentage per annum equal to the lesser of (a) the Applicable
          Rate plus five percent (5%), and (b) the Highest Lawful Rate. 



     5.    
          Revolving Line of Credit. Under the Credit Agreement,
          Borrower may request advances and make payments hereunder from time to time,
          provided that it is understood and agreed that the aggregate principal amount
          outstanding from time to time hereunder shall not at any time exceed
          $3,000,000.00. The unpaid balance of this Note shall increase and decrease with
          each new advance or payment hereunder, as the case may be. This Note shall not
          be deemed terminated or canceled prior to the date of its maturity, although the
          entire principal balance hereof may from time to time be paid in full. Borrower
          may borrow, repay and re-borrow hereunder. All payments and prepayments of
          principal or interest on this Note shall be made in lawful money of the United
          States of America in immediately available funds, at the address of Lender
          indicated above, or such other place as the holder of this Note shall designate
          in writing to Borrower. If any payment of principal or interest on this Note
          shall become due on a day which is not a Business Day (as defined in the Credit
          Agreement), such payment shall be made on the next succeeding Business Day and
          any such extension of time shall be included in computing interest in connection
          with such payment. The books and records of Lender shall be prima facie
          evidence of all outstanding principal of and accrued and unpaid interest on this
          Note. 



     6.    
          Prepayment. Borrower reserves the right to prepay, prior to
          maturity, all or any part of the principal of this Note without penalty. Any
          prepayments shall be applied first to accrued interest and then to principal.
          Borrower will provide written notice to the holder of this Note of any such
          prepayment of all or any part of the principal at the time thereof. All payments
          and prepayments of principal or interest on this Note shall be made in lawful
          money of the United States of America in immediately available funds, at the
          address of Lender indicated above, or such other place as the holder of this
          Note shall designate in writing to Borrower. All partial prepayments of
          principal shall be applied to the last installments payable in their inverse
          order of maturity. 



     7.    
          Default. It is expressly provided that upon default in the
          punctual payment of this Note or any part hereof, principal or interest, as the
          same shall become due and payable, or upon the occurrence of an Event of Default
          specified in any of the other Loan Documents (as defined in the Credit
          Agreement), the holder of this Note may, at its option, without further notice
          or demand, (a) declare the outstanding principal balance of and accrued but
          unpaid interest on this Note at once due and payable, (b) refuse to advance any
          additional amounts under this Note, (c) foreclose all liens securing payment
          hereof, (d) pursue any and all other rights, remedies and recourses available to
          the holder hereof, including but not limited to any such rights, remedies or
          recourses under the Loan Documents, at law or in equity, or (e) pursue any
          combination of the foregoing; and in the event default is made in the prompt
          payment of this Note when due or declared due, and the same is placed in the
          hands of an attorney for collection, or suit is brought on same, or the same is
          collected through probate, bankruptcy or other judicial proceedings, then the
          Borrower agrees and promises to pay all costs of collection, including
          reasonable attorney’s fees. 



     8.    
          No Usury Intended; Usury Savings Clause. In no event shall
          interest contracted for, charged or received hereunder, plus any other charges
          in connection herewith which constitute interest, exceed the maximum interest
          permitted by Applicable Law. The amounts of such interest or other charges
          previously paid to the holder of the Note in excess of the amounts permitted by
          Applicable Law shall be applied by the holder of the Note to reduce the
          principal of the indebtedness evidenced by the Note, or, at the option of the
          holder of the Note, be refunded. To the extent permitted by Applicable Law,
          determination of the legal maximum amount of interest shall at all times be made
          by amortizing, prorating, allocating and spreading in equal parts during the
          period of the full stated term of the loan and indebtedness, all interest at any
          time contracted for, charged or received from the Borrower hereof in connection
          with the loan and indebtedness evidenced hereby, so that the actual rate of
          interest on account of such indebtedness is uniform throughout the term hereof. 



     9.    
          Security. This Note has been executed and delivered
          pursuant the Credit Agreement, and is secured by, inter alia, certain of
          the Loan Documents. The holder of this Note is entitled to the benefits and
          security provided in the Loan Documents. 



     10.  
          Joint and Several Liability; Waiver. Each maker, signer,
          surety and endorser hereof, as well as all heirs, successors and legal
          representatives of said parties, shall be directly and primarily, jointly and
          severally, liable for the payment of all indebtedness hereunder. Lender may
          release or modify the obligations of any of the foregoing persons or entities,
          or guarantors hereof, in connection with this loan without affecting the
          obligations of the others. All such persons or entities expressly waive
          presentment and demand for payment, notice of default, notice of intent to
          accelerate maturity, notice of acceleration of maturity, protest, notice of
          protest, notice of dishonor, and all other notices and demands for which waiver
          is not prohibited by law, and diligence in the collection hereof; and agree to
          all renewals, extensions, indulgences, partial payments, releases or exchanges
          of collateral, or taking of additional collateral, with or without notice,
          before or after maturity. No delay or omission of Lender in exercising any right
          hereunder shall be a waiver of such right or any other right under this Note. 



     11.  
          Texas Finance Code. In no event shall Chapter 346 of the
          Texas Finance Code (which regulates certain revolving loan accounts and
          revolving tri-party accounts) apply to this Note. To the extent that Chapter 303
          of the Texas Finance Code is applicable to this Note, the “weekly
          ceiling” specified in such article is the applicable ceiling; provided
          that, if any Applicable Law permits greater interest, the law permitting the
          greatest interest shall apply. 



     12.  
          Governing Law, Venue. This Note is being executed and
          delivered, and is intended to be performed in the State of Texas. Except to the
          extent that the laws of the United States may apply to the terms hereof, the
          substantive laws of the State of Texas shall govern the validity, construction,
          enforcement and interpretation of this Note. In the event of a dispute involving
          this Note or any other instruments executed in connection herewith, the
          undersigned irrevocably agrees that venue for such dispute shall lie in any
          court of competent jurisdiction in Bexar County, Texas. 



     13.  
          Purpose of Loan. Borrower agrees that no advances under
          this Note shall be used for personal, family or household purposes, and that all
          advances hereunder shall be used solely for business, commercial, investment, or
          other similar purposes. 



     14.  
          Captions. The captions in this Note are inserted for
          convenience only and are not to be used to limit the terms herein. 



     15.  
          Financial Information. Borrower agrees to promptly furnish
          such financial information and statements, including financial statements in a
          format acceptable to Lender, lists of assets and liabilities, agings of
          receivables and payables, inventory schedules, budgets, forecasts, tax returns,
          and other reports with respect to Borrower’s financial condition and
          business operations as Lender may request from time to time. This provision
          shall not alter the obligation of Borrower to deliver to Lender any other
          financial statements or reports pursuant to the terms of any other loan
          documents executed in connection with this Note. 



	 	BORROWER:
	 
	 
	 	ASCENT
FUNDING, INC.
	 
	 
	 	By: /s/ Cynthia B. Koenig
	 	Print Name: Cynthia B. Koenig
	 	Print Title: SVP & CFO
	 








SECURITY AGREEMENT  



        THIS
SECURITY AGREEMENT (“Agreement”) is made as of December 31, 2003, by ASCENT
FUNDING, INC., a Delaware corporation (hereinafter called “Debtor”, whether one
or more), whose principal place of business and chief executive office (as those terms are
used in the Code) is located at 3100 Burnett Plaza, 801 Cherry Street, Fort Worth, Tarrant
County, Texas 76102, and whose federal taxpayer identification number is 75-2225185, and
whose organizational number issued by the appropriate authority of the State of Delaware
is 0944432, in favor of THE FROST NATIONAL BANK, a national banking association
(“Secured Party”), whose address is P.O. Box 1600, San Antonio, Texas 78296.
Debtor hereby agrees with Secured Party as follows: 



     1.    
          Definitions. As used in this Agreement, the following terms
          shall have the meanings indicated below: 



               	 	(a)       

                     “Code” means the Texas Business and Commerce Code as in effect
                    in the State of Texas on the date of this Agreement or as it may hereafter be
                    amended from time to time. 


                    



               		(b)       

                     “Collateral” means all of the personal property of Debtor as
                    set forth below (as indicated), wherever located, and now owned or hereafter
                    acquired: 


                    



               	 	(i)       

                     All “accounts”, as defined in the Code (including all Agent
                    Receivables and health-care-insurance receivables), together with any and all
                    books of account, agent lists and other records relating in any way to the
                    foregoing (including, without limitation, computer software, whether on tape,
                    disk, card, strip, cartridge or any other form), and in any case where an
                    account arises from the sale of goods, the interest of Debtor in such goods. 


                    



               	 	(ii)      

                     All “inventory” as defined in the Code, and all records relating in
                    any way to the foregoing (including, without limitation, any computer software,
                    whether on tape, disk, card, strip, cartridge or any other form). 


                    



               	 	(iii)     

                     All “chattel paper” as defined in the Code, and all records relating
                    in any way to the foregoing (including, without limitation, any computer
                    software, whether on tape, disk, card, strip, cartridge or any other form). 


                    



               	 	(iv)      

                     All “equipment” as defined in the Code, of whatsoever kind and
                    character now or hereafter possessed, held, acquired, leased or owned by Debtor
                    and used or usable in Debtor’s business, and in any event shall include,
                    but shall not be limited to, all machinery, tools, computer software, office
                    equipment, furniture, appliances, furnishings, fixtures, vehicles, motor
                    vehicles, together with all replacements, accessories, additions, substitutions
                    and accessions to all of the foregoing, and all manuals, instructions and
                    records relating in any way to the foregoing (including, without limitation, any
                    computer software, whether on tape, disk, card, strip, cartridge or any other
                    form). To the extent that the foregoing property is located on, attached to,
                    annexed to, related to, or used in connection with, or otherwise made a part of,
                    and is or shall become fixtures upon, real property, such real property and the
                    record owner thereof (if other than Debtor) is described on Schedule 1 attached
                    hereto and made a part hereof. 


                    



               	 	(v)       

                     All “fixtures” as defined in the Code. 


                    



               	 	(vi)      

                     All “instruments” as defined in the Code (including promissory
                    notes), and all records relating in any way to the foregoing (including, without
                    limitation, any computer software, whether on tape, disk, card, strip, cartridge
                    or any other form). 


                    



               	 	(vii)     

                     All “investment property” as defined in the Code, and all records
                    relating in any way to the foregoing (including, without limitation, any
                    computer software, whether on tape, disk, card, strip, cartridge or any other
                    form). 


                    



               	 	(viii)    

                     All “documents” as defined in the Code, and all records relating in
                    any way to the foregoing (including, without limitation, any computer software,
                    whether on tape, disk, card, strip, cartridge or any other form). 


                    



               	 	(ix)      

                     All “deposit accounts” as defined in the Code, and all records
                    relating in any way to the foregoing (including, without limitation, any
                    computer software, whether on tape, disk, card, strip, cartridge or any other
                    form). 


                    



               	 	(x)       

                     All “commercial tort claims” as defined in the Code, including but
                    not limited to all commercial tort claims described on Schedule 8. 


                    



               	 	(xi)      

                     All “letter of credit rights” as defined in the Code, and all records
                    relating in any way to the foregoing (including, without limitation, any
                    computer software, whether on tape, disk, card, strip, cartridge or any other
                    form). 


                    



               	 	(xii)     

                     All “general intangibles” as defined in the Code, and all records
                    relating in any way to the foregoing (including, without limitation, any
                    computer software, whether on tape, disk, card, strip, cartridge or any other
                    form), including all rights in all Agent Contracts and Master General Agent
                    Contracts, permits, regulatory approvals, copyrights, patents, trademarks,
                    service marks, trade names, mask works, goodwill, licenses and all other
                    intellectual property owned by Debtor or used in Debtor’s business. 


                    



               	 	(xiii)    

                     All “supporting obligations” as defined in the Code, and all records
                    relating in any way to the foregoing (including, without limitation, any
                    computer software, whether on tape, disk, card, strip, cartridge or any other
                    form). 


                    



               	 	(xiv)    

                     All Patents, Trademarks, Copyrights, and Licenses. 


                    



               	 	(xv)     

                     Collateral also includes all PRODUCTS and PROCEEDS of all of the foregoing
                    (including without limitation, insurance payable by reason of loss or damage to
                    the foregoing property) and any property, securities, guaranties or monies of
                    Debtor which may at any time come into the possession of Secured Party. The
                    designation of proceeds does not authorize Debtor to sell, transfer or otherwise
                    convey any of the foregoing property except as otherwise provided herein or in
                    the other Loan Documents. 


                    



               	 	(c)       

                     “Copyright License” means any agreement, now or hereafter in
                    effect, granting any right to any third party under any Copyright now or
                    hereafter owned by Debtor or which Debtor otherwise has the right to license, or
                    granting any right to Debtor under any Copyright now or hereafter owned by any
                    third party, and all rights of Debtor under any such agreement. 


                    



               	 	(d)       

                     “Copyrights” means (i) all copyright rights in any work
                    subject to the copyright Laws of any governmental authority, whether as author,
                    assignee, transferee, or otherwise, (ii) all registrations and applications
                    for registration of any such copyright in any governmental authority, including
                    registrations, recordings, supplemental registrations, and pending applications
                    for registration in any jurisdiction, and (iii) all rights to use and/or
                    sell any of the foregoing. 


                    



               	 	(e)       

                     “Credit Agreement” means the Credit Agreement dated as of
                    December 31, 2003, among Debtor, each other Obligor and Secured Party, together
                    with all amendments and restatements thereto. 


                    



               	 	(f)       

                     “Indebtedness” means (i) all indebtedness, obligations
                    and liabilities of Debtor and each other Obligor to Secured Party of any kind or
                    character, now existing or hereafter arising, whether direct, indirect, related,
                    unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint
                    and several (excluding only indebtedness originally payable to or in favor of a
                    Person other than Secured Party and subsequently acquired by Secured Party),
                    including without limitation all indebtedness, obligations and liabilities of
                    Debtor and each other Obligor to Secured Party now existing or hereafter arising
                    by note, draft, acceptance, guaranty, endorsement, letter of credit, assignment,
                    purchase, overdraft, discount, indemnity agreement or otherwise, (ii) all
                    obligations now or hereafter existing of Debtor and each other Obligor under the
                    Credit Agreement and each other Loan Document (including, but not limited to,
                    the Obligations), (iii) all accrued but unpaid interest (including all
                    interest that would accrue but for the existence of a proceeding under any
                    Debtor Relief Laws) on any of the indebtedness described in this definition of
                    “Indebtedness,” (iv) all obligations of Debtor and each other
                    Obligor to Secured Party under any documents evidencing, securing, governing
                    and/or pertaining to all or any part of the indebtedness described in this
                    definition of “Indebtedness,” (v) all costs and expenses incurred
                    by Secured Party in connection with the collection and administration of all or
                    any part of the indebtedness and obligations described in this definition of
                    “Indebtedness” or the protection or preservation of, or realization
                    upon, the collateral securing all or any part of such indebtedness and
                    obligations, including without limitation all reasonable attorneys’ fees,
                    and (vi) all renewals, extensions, modifications and rearrangements of the
                    indebtedness and obligations described in this definition of
                    “Indebtedness”. 


                    



               	 	(g)       

                     “License” means any Patent License, Trademark License,
                    Copyright License, or other similar license or sublicense. 


                    



               	 	(h)       

                     “Patent License” means any agreement, now or hereafter in
                    effect, granting to any third party any right to make, use or sell any invention
                    on which a Patent, now or hereafter owned by Debtor or which Debtor otherwise
                    has the right to license, is in existence, or granting to Debtor any right to
                    make, use or sell any invention on which a Patent, now or hereafter owned by any
                    third party, is in existence, and all rights of Debtor under any such agreement. 


                    



               	 	(i)       

                     “Patents” means (i) all letters patent of any
                    governmental authority, all registrations and recordings thereof, and all
                    applications for letters patent of any governmental authority, and (ii) all
                    reissues, continuations, divisions, continuations-in-part, renewals, or
                    extensions thereof, and the inventions disclosed or claimed therein, including
                    the right to make, use and/or sell the inventions disclosed or claimed therein. 


                    



               	 	(j)       

                     “Trademark License” means any agreement, now or hereafter in
                    effect, granting to any third party any right to use any Trademark now or
                    hereafter owned by Debtor or which Debtor otherwise has the right to license, or
                    granting to Debtor any right to use any Trademark now or hereafter owned by any
                    third party, and all rights of Debtor under any such agreement. 


                    



               	 	(k)       

                     “Trademarks” means (i) all trademarks, service marks,
                    trade names, corporate names, company names, business names, fictitious business
                    names, trade styles, trade dress, logos, other source or business identifiers,
                    designs and general intangibles of like nature, all registrations and recordings
                    thereof, and all registration and recording applications filed with any
                    governmental authority in connection therewith, and all extensions or renewals
                    thereof, (ii) all goodwill associated therewith or symbolized thereby,
                    (iii) all other assets, rights and interests that uniquely reflect or
                    embody such goodwill, and (iv) all rights to use and/or sell any of the
                    foregoing. 


                    



All words and phrases used herein
which are expressly defined in Section 1.201 or Chapter 9 of the Code shall have
the meaning provided for therein. Other words and phrases defined elsewhere in the Code
shall have the meaning specified therein except to the extent such meaning is inconsistent
with a definition in Section 1.201 or Chapter 9 of the Code. Capitalized terms
not otherwise defined herein have the meaning specified in the Credit Agreement. 



     2.    
          Security Interest. As security for the Indebtedness,
          Debtor, for value received, hereby pledges and grants to Secured Party a
          continuing security interest in the Collateral. 



     3.    
          Representations and Warranties. In addition to any
          representations and warranties of Debtor set forth in the Loan Documents, which
          are incorporated herein by this reference, Debtor hereby represents and warrants
          the following to Secured Party: 



               	 	(a)       

                     Authority. The execution, delivery and performance of this Agreement and
                    all of the other Loan Documents by Debtor have been duly authorized by all
                    necessary corporate action of Debtor. 


                    



               	 	(b)       

                     Accuracy of Information. All information contained herein with respect
                    to the Collateral is true and correct. The exact legal name and federal taxpayer
                    identification number of Debtor are correctly shown in the first paragraph
                    hereof. 


                    



               	 	(c)       

                     Enforceability. This Agreement and the other Loan Documents constitute
                    legal, valid and binding obligations of Debtor, enforceable in accordance with
                    their respective terms, except as limited as to enforcement of remedies by
                    bankruptcy, insolvency or similar laws of general application relating to the
                    enforcement of creditors’ rights and except to the extent specific remedies
                    may generally be limited by equitable principles. 


                    



               	 	(d)       

                     Ownership and Liens. Debtor has good and marketable title to the
                    Collateral free and clear of all Liens or adverse claims, except for Permitted
                    Liens. No dispute, right of setoff, counterclaim or defense exists with respect
                    to all or any part of the Collateral. Debtor has not executed any other security
                    agreement currently affecting the Collateral and no effective financing
                    statement or other instrument similar in effect covering all or any part of the
                    Collateral is on file in any recording office except as may have been executed
                    or filed in favor of Secured Party. Debtor has not been a party to a
                    securitization or similar transaction involving assets of Debtor during the
                    preceding four years. 


                    



               		(e)       

                     No Conflicts or Consents. Neither the ownership, the intended use of the
                    Collateral by Debtor, the grant of the security interest by Debtor to Secured
                    Party herein nor the exercise by Secured Party of its rights or remedies
                    hereunder, will (i) conflict with any provision of (A) any material domestic or
                    foreign law, statute, rule or regulation, (B) the articles or certificate of
                    incorporation or bylaws of Debtor, or (C) any material agreement, judgment,
                    license, order or permit applicable to or binding upon Debtor, or (ii) result in
                    or require the creation of any Lien upon any assets or properties of Debtor or
                    of any Person except as may be expressly contemplated in the Loan Documents.
                    Except as expressly contemplated in the Loan Documents, no consent, approval,
                    authorization or order of, and no notice to or filing with, any court,
                    governmental authority or other Person is required in connection with the grant
                    by Debtor of the security interest herein or the exercise by Secured Party of
                    its rights and remedies hereunder. 


                    



               	 	(f)       

                     Security Interest. Debtor has and will have at all times full right,
                    power and authority to grant a security interest in the Collateral to Secured
                    Party in the manner provided herein, free and clear of any Lien or other charge
                    or encumbrance. This Agreement creates a legal, valid and binding security
                    interest in favor of Secured Party in the Collateral securing the Indebtedness.
                    To the extent permitted in the Code, possession by Secured Party of all
                    certificates, instruments and cash constituting Collateral from time to time
                    and/or the filing of the financing statements delivered prior hereto and/or
                    concurrently herewith by Debtor to Secured Party will perfect and establish the
                    first priority of Secured Party’s security interest hereunder in the
                    Collateral. Upon the filing of a financing statement describing the Collateral
                    with the Uniform Commercial Code central filing officer of the jurisdiction of
                    Debtor’s location, the security interest granted pursuant to this Agreement
                    shall be perfected and prior to all other Liens therein (to the extent such
                    security interest can be perfected by the filing of a financing statement). 


                    



               	 	(g)       

                     Location/Identity. Debtor’s principal place of business and chief
                    executive office (as those terms are used in the Code), as the case may be, is
                    located at the address set forth on the first page hereof. Except as specified
                    elsewhere herein, all Collateral and records concerning the Collateral shall be
                    kept at such address. Debtor’s entity type, state of organization, and
                    organizational identification number issued by the appropriate authority of the
                    State of Delaware (the “Organizational Information”) are as set forth
                    in the first page hereof. Debtor is not organized in more than one jurisdiction.
                    Except as provided herein, the Organizational Information shall not change.
                    During the preceding three years, Debtor has not had or operated under any name
                    other than its name as stated on the signature page of this Agreement, has not
                    been organized under the laws of any jurisdiction other than Delaware, has not
                    been organized as any type of entity other than a corporation and the chief
                    executive office of Debtor has not been located at any address other than as set
                    forth on the first page hereof. 


                    



               	 	(h)       

                     Solvency of Debtor. As of the date hereof, and after giving effect to
                    this Agreement and the completion of all other transactions contemplated by
                    Debtor at the time of the execution of this Agreement Debtor is and will be
                    Solvent. Debtor is not entering into this Agreement or any other Loan Document
                    to which Debtor is a party or its property is subject with the intent of
                    hindering, delaying or defrauding any creditor. 


                    



               	 	(i)       

                     Exclusion of Certain Collateral. Unless otherwise agreed by Secured
                    Party, the Collateral does not include any aircraft, watercraft or vessels,
                    railroad cars, railroad equipment, locomotives or other rolling stock intended
                    for a use related to interstate commerce. 


                    



               	 	(j)       

                     Compliance with Environmental Laws. Except as disclosed in writing to
                    Secured Party: (i) Debtor is conducting Debtor’s businesses in
                    material compliance with all applicable federal, state and local laws, statutes,
                    ordinances, rules, regulations, orders, determinations and court decisions,
                    including without limitation, those pertaining to health or environmental
                    matters such as the Comprehensive Environmental Response, Compensation, and
                    Liability Act of 1980, as amended by the Superfund Amendments and
                    Reauthorization Act of 1986 (collectively, together with any subsequent
                    amendments, hereinafter called “CERCLA”), the Resource Conservation
                    and Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the
                    Solid Waste Disposal Act Amendments of 1980, and the Hazardous Substance Waste
                    Amendments of 1984 (collectively, together with any subsequent amendments,
                    hereinafter called “RCRA”), the Texas Water Code and the Texas Solid
                    Waste Disposal Act; (ii) none of the operations of Debtor is the subject of
                    a federal, state or local investigation evaluating whether any material remedial
                    action is needed to respond to a release or disposal of any toxic or hazardous
                    substance or solid waste into the environment; (iii) Debtor has not filed
                    any notice under any federal, state or local law indicating that Debtor is
                    responsible for the release into the environment, the disposal on any premises
                    in which Debtor is conducting its businesses or the improper storage, of any
                    material amount of any toxic or hazardous substance or solid waste or that any
                    such toxic or hazardous substance or solid waste has been released, disposed of
                    or is improperly stored, upon any premise on which Debtor is conducting its
                    businesses; and (iv) Debtor otherwise does not have any known material
                    contingent liability in connection with the release into the environment,
                    disposal or the improper storage, of any such toxic or hazardous substance or
                    solid waste. The terms “hazardous substance” and “release”,
                    as used herein, shall have the meanings specified in CERCLA, and the terms
                    “solid waste” and “disposal”, as used herein, shall have the
                    meanings specified in RCRA; provided, however, that to the extent that the laws
                    of the State of Texas establish meanings for such terms which are broader than
                    that specified in either CERCLA or RCRA, such broader meanings shall apply. 


                    



               	 	(k)       

                     Inventory. The security interest in the inventory shall continue through
                    all stages of manufacture and shall, without further action, attach to the
                    accounts or other proceeds resulting from the sale or other disposition thereof
                    and to all such inventory as may be returned to Debtor by its account debtors. 


                    



               	 	(l)       

                     Accounts. Each account represents the valid and legally binding
                    indebtedness of a bona fide account debtor arising from the sale or lease by
                    Debtor of goods or the rendition by Debtor of services and is not subject to
                    contra accounts, setoffs, defenses or counterclaims by or available to account
                    debtors obligated on the accounts except as disclosed by Debtor to Secured Party
                    from time to time in writing. The amount shown as to each account on
                    Debtor’s books is the true and undisputed amount owing and unpaid thereon,
                    subject only to discounts, allowances, rebates, credits and adjustments to which
                    the account debtor has a right and which have been disclosed to Secured Party in
                    writing. 


                    



               	 	(m)       

                     Chattel Paper, Documents and Instruments. The chattel paper, documents
                    and instruments of Debtor pledged hereunder have only one original counterpart
                    and no party other than Debtor or Secured Party is in actual or constructive
                    possession of any such chattel paper, documents or instruments. No chattel paper
                    is electronic chattel paper. 


                    



               	 	(n)       

                     Patents. Schedule 2 is a complete and correct list of each Patent in
                    which Debtor has any interest (whether as owner, licensee, or otherwise),
                    including the name of the registered owner, the nature of Debtor’s
                    interest, the Patent registration number, the date of Patent issuance, and the
                    country issuing the Patent. 


                    



               	 	(o)       

                     Patent Applications. Schedule 3 is a complete and correct list of each
                    Patent application in which Debtor has any interest (whether as owner, licensee,
                    or otherwise), including the name of the Person applying to be the registered
                    owner, the nature of Debtor’s interest, the Patent application number, the
                    date of Patent filing, and the country with which the Patent application was
                    filed. 


                    



               	 	(p)       

                     Trademarks. Schedule 4 is a complete and correct list of each Trademark
                    in which Debtor has any interest (whether as owner, licensee, or otherwise),
                    including the name of the registered owner, the nature of Debtor’s
                    interest, the registered Trademark, the Trademark registration number, the
                    international class covered, the goods and services covered, the date of
                    Trademark registration, and the country registering the Trademark. 


                    



               	 	(q)       

                     Trademark Applications. Schedule 5 is a complete and correct list of
                    each Trademark application in which Debtor has any interest (whether as owner,
                    licensee, or otherwise), including the name of the Person applying to be the
                    registered owner, the nature of Debtor’s interest, the Trademark the
                    subject of the application, the Trademark application serial number, the
                    international class covered, the goods and services covered, the date of
                    Trademark application filing, and the country with which the Trademark
                    application was filed. 


                    



               	 	(r)       

                     Copyrights. Schedule 6 is a complete and correct list of each Copyright
                    in which Debtor has any interest (whether as owner, licensee, or otherwise),
                    including the name of the registered owner, the nature of Debtor’s
                    interest, the registered Copyright, the date of Copyright issuance, and the
                    country issuing the Copyright. 


                    



               	 	(s)       

                     Copyright Applications. Schedule 7 is a complete and correct list of
                    each Copyright application in which Debtor has any interest (whether as owner,
                    licensee, or otherwise), including the name of the Person applying to be the
                    registered owner, the nature of Debtor’s interest, the Copyright the
                    subject of the application, the date of Copyright application filing, and the
                    country with which the Copyright application was filed. 


                    



               	 	(t)       

                     Commercial Tort Claims. Schedule 8 is a complete and correct list of all
                    commercial tort claims in which Debtor has any interest, including the complete
                    case name or style, the case number, and the court or other tribunal in which
                    the case is pending. 


                    



               	 	(u)       

                     Deposit Accounts. Schedule 9 is a complete and correct list of all
                    deposit accounts maintained by or in which Debtor has any interest and correctly
                    describes the bank in which such account is maintained (including the specific
                    branch), the street address (including the specific branch) and ABA number of
                    such bank, the account number, and account type. 


                    



               	 	(v)       

                     Commodity Accounts. Schedule 10 is a complete and correct list of all
                    commodity accounts in which Debtor has any interest, including the complete name
                    and identification number of the account, a description of the governing
                    agreement, and the name and street address of the commodity intermediary
                    maintaining the account. 


                    



               	 	(w)       

                     Securities Accounts. Schedule 11 is a complete and correct list of all
                    securities accounts in which Debtor has any interest, including the complete
                    name and identification number of the account, a description of the governing
                    agreement, and the name and street address of the securities intermediary
                    maintaining the account. 


                    



               	 	(x)       

                     Letters of Credit. Schedule 12 is a complete and correct list of all
                    letters of credit in which Debtor has any interest (other than solely as an
                    applicant) and correctly describes the bank which issued the letter of credit,
                    and the letter of credit’s number, issue date, expiry, and face amount. 


                    



     4.    
          Affirmative Covenants. In addition to all covenants and
          agreements of Debtor set forth in the Loan Documents, which are incorporated
          herein by this reference, Debtor will comply with the covenants contained in
          this Section 4 at all times during the period of time this Agreement is
          effective unless Secured Party shall otherwise consent in writing. 



               	 	(a)       

                     Ownership and Liens. Debtor will maintain good and marketable title to
                    all Collateral free and clear of all Liens or adverse claims, except for the
                    security interest created by this Agreement and the security interests and other
                    encumbrances expressly permitted herein or by the other Loan Documents. Debtor
                    will not permit any dispute, right of setoff, counterclaim or defense to exist
                    with respect to all or any part of the Collateral. Debtor will cause any
                    financing statement or other security instrument with respect to the Collateral
                    to be terminated, except as may exist or as may have been filed in favor of
                    Secured Party. Debtor hereby irrevocably appoints Secured Party as Debtor’s
                    attorney-in-fact, such power of attorney being coupled with an interest, with
                    full authority in the place and stead of Debtor and in the name of Debtor or
                    otherwise, for the purpose of terminating any financing statements currently
                    filed with respect to the Collateral. Debtor will defend at its expense Secured
                    Party’s right, title and security interest in and to the Collateral against
                    the claims of any third party. 


                    



               	 	(b)       

                     Further Assurances. Debtor will from time to time at its expense
                    promptly execute and deliver all further instruments and documents and take all
                    further action necessary or appropriate or that Secured Party may request in
                    order (i) to perfect and protect the security interest created or purported to
                    be created hereby and the first priority of such security interest, (ii) to
                    enable Secured Party to exercise and enforce its rights and remedies hereunder
                    in respect of the Collateral, and (iii) to otherwise effect the purposes of this
                    Agreement, including without limitation: (A) executing (if requested) and filing
                    such financing or continuation statements, or amendments thereto; and (B)
                    furnishing to Secured Party from time to time statements and schedules further
                    identifying and describing the Collateral and such other reports in connection
                    with the Collateral, all in reasonable detail satisfactory to Secured Party. 


                    



               	 	(c)       

                     Inspection of Collateral. Debtor will keep adequate records concerning
                    the Collateral and will, subject to the terms of the Credit Agreement, permit
                    Secured Party and all representatives and agents appointed by Secured Party to
                    inspect any of the Collateral and the books and records of or relating to the
                    Collateral at any time during normal business hours, to make and take away
                    photocopies, photographs and printouts thereof and to write down and record any
                    such information (If no Event of Default exists, Debtor shall not be required to
                    reimburse Secured Party for the related photocopy, photograph and printout costs
                    and expenses). 


                    



               	 	(d)       

                     Payment of Taxes. Debtor (i) will timely pay all property and other
                    taxes, assessments and governmental charges or levies imposed upon the
                    Collateral or any part thereof, (ii) will timely pay all lawful claims
                    which, if unpaid, might become a Lien or charge upon the Collateral or any part
                    thereof, and (iii) will maintain appropriate accruals and reserves for all
                    such liabilities in a timely fashion in accordance with generally accepted
                    accounting principles. Debtor may, however, delay paying or discharging any such
                    taxes, assessments, charges, claims or liabilities so long as the validity
                    thereof is contested in good faith by proper proceedings and provided Debtor has
                    set aside on Debtor’s books adequate reserves therefor; provided, however,
                    Debtor understands and agrees that in the event of any such delay in payment or
                    discharge and upon Secured Party’s written request, Debtor will establish
                    with Secured Party an escrow acceptable to Secured Party adequate to cover the
                    payment of such taxes, assessments and governmental charges with interest, costs
                    and penalties and a reasonable additional sum to cover possible costs, interest
                    and penalties (which escrow shall be returned to Debtor upon payment of such
                    taxes, assessments, governmental charges, interests, costs and penalties or
                    disbursed in accordance with the resolution of the contest to the claimant) or
                    furnish Secured Party with an indemnity bond secured by a deposit in cash or
                    other security acceptable to Secured Party. Notwithstanding any other provision
                    contained in this Subsection, Secured Party may at its discretion exercise its
                    rights under Subsection 6(c) at any time to pay such taxes, assessments,
                    governmental charges, interest, costs and penalties. 


                    



               	 	(e)       

                     Mortgagee’s and Landlord’s Waivers. Debtor shall cause each
                    mortgagee of real property owned by Debtor and each landlord of real property
                    leased by Debtor to execute and deliver agreements satisfactory in form and
                    substance to Secured Party by which such mortgagee or landlord waives or
                    subordinates any rights it may have in the Collateral. 


                    



               	 	(f)       

                     Control Agreements. Debtor will cooperate with Secured Party in
                    obtaining a control agreement in form and substance satisfactory to Secured
                    Party with respect to Collateral consisting of: 


                    


	 	(i)       
          Deposit accounts; 


                    



	 	(ii)      
          Investment property; 


                    



	 	(iii)     
          Letter-of-credit rights; and 


                    



	 	(iv)      
          Electronic chattel paper. 


                    




               	 	(g)       

                     Condition of Goods. Debtor will maintain, preserve, protect and keep all
                    Collateral which constitutes goods in good condition, repair and working order
                    and will cause such Collateral to be used and operated in good and workmanlike
                    manner, in accordance with applicable laws and in a manner which will not make
                    void or cancelable any insurance with respect to such Collateral. Debtor will
                    promptly make or cause to be made all repairs, replacements and other
                    improvements to or in connection with the Collateral which Secured Party may
                    request from time to time. 


                    



               	 	(h)       

                     Insurance. Debtor will, at its own expense, maintain insurance with
                    respect to all Collateral which constitutes goods in such amounts, against such
                    risks, in such form and with such insurers, as shall be satisfactory to Secured
                    Party from time to time. If requested by Secured Party, each policy for property
                    damage insurance shall provide for all losses to be paid directly to Secured
                    Party. If requested by Secured Party, each policy of insurance maintained by
                    Debtor shall (i) name Debtor and Secured Party as insured parties
                    thereunder (without any representation or warranty by or obligation upon Secured
                    Party) as their interests may appear, (ii) contain the agreement by the
                    insurer that any loss thereunder shall be payable to Secured Party
                    notwithstanding any action, inaction or breach of representation or warranty by
                    Debtor, (iii) provide that there shall be no recourse against Secured Party
                    for payment of premiums or other amounts with respect thereto, and
                    (iv) provide that at least thirty (30) days prior written notice of
                    cancellation or of lapse shall be given to Secured Party by the insurer. Debtor
                    will, if requested by Secured Party, deliver to Secured Party original or
                    duplicate policies of such insurance and, as often as Secured Party may
                    reasonably request, a report of a reputable insurance broker with respect to
                    such insurance. Debtor will also, at the request of Secured Party, duly execute
                    and deliver instruments of assignment of such insurance policies and cause the
                    respective insurers to acknowledge notice of such assignment. All insurance
                    payments in respect of loss of or damage to any Collateral shall be paid to
                    Secured Party and applied as Secured Party in its sole discretion deems
                    appropriate. 


                    



               	 	(i)       

                     Accounts and General Intangibles. Debtor will, except as otherwise
                    provided in Subsection 6(e), collect, at Debtor’s own expense,
                    all amounts due or to become due under each of the accounts and general
                    intangibles. In connection with such collections, Debtor may and, at Secured
                    Party’s direction, will take such action not otherwise forbidden by
                    Subsection 5(e)  as Debtor or Secured Party may deem necessary or
                    advisable to enforce collection or performance of each of the accounts and
                    general intangibles. Debtor will also duly perform and cause to be performed all
                    of its obligations with respect to the goods or services, the sale or lease or
                    rendition of which gave rise or will give rise to each account and all of its
                    obligations to be performed under or with respect to the general intangibles.
                    Debtor also covenants and agrees to take any action and/or execute any documents
                    that Secured Party may request in order to comply with the Federal Assignment of
                    Claims Act, as amended. 


                    



               	 	(j)       

                     Chattel Paper, Documents and Instruments. Debtor will take such action
                    as may be requested by Secured Party in order to cause any chattel paper,
                    documents or instruments to be valid and enforceable and will cause all chattel
                    paper to have only one original counterpart. Upon request by Secured Party,
                    Debtor will deliver to Secured Party all originals of chattel paper, documents
                    or instruments and will mark all chattel paper with a legend indicating that
                    such chattel paper is subject to the security interest granted hereunder. 


                    



               	 	(k)       

                     Patents, Trademarks, and Copyrights. 


                    



               	 	(i)       

                     Debtor shall ensure that fully executed security agreements in the form of this
                    Agreement and containing a description of all Collateral consisting of Patents,
                    Trademarks, Copyrights, and Licenses shall have been received and recorded by
                    the United States Patent and Trademark Office within three months after the
                    execution of this Agreement with respect to United States Patents and Trademarks
                    and by the United States Copyright Office within one month after the execution
                    of this Agreement with respect to United States registered Copyrights, and
                    otherwise as may be required pursuant to the laws of any other necessary
                    jurisdiction, to protect the validity of and to establish a legal, valid, and
                    perfected security interest in favor of Secured Party in respect of all
                    Collateral consisting of Patents, Trademarks, Copyrights, and Licenses in which
                    a security interest may be perfected by filing, recording, or registration in
                    the United States and its territories and possessions, or in any other necessary
                    jurisdiction, and no further or subsequent filing, refiling, recording,
                    rerecording, registration, or reregistration is necessary (other than such
                    actions as are necessary to perfect the security interest with respect to any
                    Collateral consisting of Patents, Trademarks, Copyrights, and Licenses (or
                    registration or application for registration thereof) acquired or developed
                    after the date hereof). 


                    



               	 	(ii)      

                     Debtor (either itself or through licensees or sublicensees) will not do any
                    act, or omit to do any act, whereby any Patent which is material to the conduct
                    of Debtor’s business may become invalidated or dedicated to the public, and
                    shall continue to mark any products covered by a Patent with the relevant patent
                    number as necessary and sufficient to establish and preserve its maximum rights
                    under applicable laws. 


                    



               	 	(iii)     

                     Debtor (either itself or through licensees or sublicensees) will, for each
                    Trademark material to the conduct of Debtor’s business, (A) maintain
                    such Trademark in full force free from any claim of abandonment or invalidity
                    for non-use, (B) maintain the quality of products and services offered
                    under such Trademark, (C) display such Trademark with notice of United
                    States federal or foreign registration to the extent necessary and sufficient to
                    establish and preserve its maximum rights under applicable law, and (D) not
                    use or permit the use of such Trademark in violation of any third party rights. 


                    



               	 	(iv)      

                     Debtor (either itself or through licensees or sublicensees) will, for each work
                    covered by a Copyright material to the conduct of Debtor’s business,
                    continue to publish, reproduce, display, adopt, and distribute the work with
                    appropriate copyright notice as necessary and sufficient to establish and
                    preserve its maximum rights under applicable laws. 


                    



               	 	(v)       

                     In no event shall Debtor, either itself or through any agent, employee,
                    licensee, or designee, file an application for any Patent, Trademark, or
                    Copyright (or for the registration of any Patent, Trademark or Copyright) with
                    the United States Patent and Trademark Office, United States Copyright Office,
                    or any governmental authority in any jurisdiction, unless it promptly informs
                    Secured Party, and, upon request of Secured Party, executes and delivers any and
                    all agreements, instruments, documents, and papers as Secured Party may request
                    to evidence Secured Party’s security interest in such Patent, Trademark, or
                    Copyright, and Debtor hereby appoints Secured Party as its attorney-in-fact to
                    execute and file such writings for the foregoing purposes. 


                    



     5.    
          Negative Covenants. Debtor will comply with the covenants
          contained in this Section 5 at all times during the period of time this
          Agreement is effective, unless Secured Party shall otherwise consent in writing. 



               	 	(a)       

                     Transfer or Encumbrance. Debtor will not (i) sell, assign (by
                    operation of law or otherwise), transfer, exchange, lease or otherwise dispose
                    of any of the Collateral, (ii) grant a Lien or security interest in or
                    execute, authorize, file or record any financing statement or other security
                    instrument with respect to the Collateral to any party other than Secured Party,
                    or (iii) deliver actual or constructive possession of any of the Collateral
                    to any party other than Secured Party, except for (A) sales and leases of
                    inventory in the ordinary course of business, (B) the sale or other
                    disposal of any item of equipment which is worn out or obsolete and which has
                    been replaced by an item of equal suitability and value, owned by Debtor and
                    made subject to the security interest under this Agreement, but which is
                    otherwise free and clear of any Lien or adverse claim, and (C) the
                    withdrawal of amounts on deposit in deposit accounts and the use of cash as
                    permitted in the Credit Agreement; provided, however, the exceptions permitted
                    in clauses (A) and (B) above shall automatically terminate upon the occurrence
                    of an Event of Default and the exception permitted in clause (C) above shall
                    automatically terminate upon the occurrence of an Event of Default and the
                    exercise of control by Secured Party with respect to a deposit account or other
                    exercise of Secured Party’s remedies with respect to cash or a deposit
                    account. 


                    



               	 	(b)       

                     Impairment of Security Interest. Debtor will not take or fail to take
                    any action which would in any manner impair the value or enforceability of
                    Secured Party’s security interest in any Collateral. 


                    



               	 	(c)       

                     Possession of Collateral. Debtor will not cause or permit the removal of
                    any Collateral from its possession, control and risk of loss, nor will Debtor
                    cause or permit the removal of any Collateral (or records concerning the
                    Collateral) from the address on the first page hereof other than (i) as
                    permitted by Subsection 5(a), or (ii) in connection with the
                    possession of any Collateral by Secured Party or by its bailee. If any
                    Collateral is in the possession of a third party, Debtor will join with Secured
                    Party in notifying the third party of Secured Party’s security interest
                    therein and obtaining an acknowledgment from the third party that it is holding
                    the Collateral for the benefit of Secured Party. 


                    



               	 	(d)       

                     Goods. Debtor will not permit any Collateral which constitutes goods to
                    at any time (i) be covered by any document except documents in the
                    possession of the Secured Party, (ii) become so related to, attached to or
                    used in connection with any particular real property so as to become a fixture
                    upon such real property, or (iii) be installed in or affixed to other goods
                    so as to become an accession to such other goods unless such other goods are
                    subject to a perfected first priority security interest under this Agreement. 


                    



               	 	(e)       

                     Compromise of Collateral. Debtor will not adjust, settle, compromise,
                    amend or modify any Collateral, except an adjustment, settlement, compromise,
                    amendment or modification in good faith and in the ordinary course of business;
                    provided, however, this exception shall automatically terminate upon the
                    occurrence of an Event of Default or upon Secured Party’s written request.
                    Debtor shall provide to Secured Party such information concerning (i) any
                    adjustment, settlement, compromise, amendment or modification of any Collateral,
                    and (ii) any claim asserted by any account debtor for credit, allowance,
                    adjustment, dispute, setoff or counterclaim, as Secured Party may request from
                    time to time. 


                    



               	 	(f)       

                     Financing Statement Filings. Debtor recognizes that financing statements
                    pertaining to the Collateral have been or may be filed in one or more of the
                    following jurisdictions: the location of Debtor’s principal place of
                    business, the location of Debtor’s chief executive office, or other such
                    place as the Debtor may be “located” under the provisions of the Code
                    or where Debtor maintains any Collateral, or has its records concerning any
                    Collateral, as the case may be. Without limitation of any other covenant herein,
                    Debtor will neither cause or permit any change in the location of (i) any
                    Collateral, (ii) any records concerning any Collateral, or
                    (iii) Debtor’s principal place of business, or the location of
                    Debtor’s chief executive office, as the case may be, to a jurisdiction
                    other than as represented in Subsection 3(g), nor will Debtor change
                    its name or the Organizational Information as represented in
                    Subsection 3(g), unless Debtor shall have notified Secured Party in
                    writing of such change at least thirty (30) days prior to the effective date of
                    such change, and shall have first taken all actions required by Secured Party
                    for the purpose of further perfecting or protecting the security interest in
                    favor of Secured Party in the Collateral. In any written notice furnished
                    pursuant to this Subsection, Debtor will expressly state that the notice is
                    required by this Agreement and contains facts that may require additional
                    filings of financing statements or other notices for the purpose of continuing
                    perfection of Secured Party’s security interest in the Collateral. 


                    



        Without
limiting Secured Party’s rights hereunder, Debtor authorizes Secured Party to file
financing statements and continuations and amendments thereto under the provisions of the
Code (or other applicable law) as amended from time to time. 



               	 	(g)       

                     Marking of Chattel Paper. Debtor will not create any chattel paper
                    without placing a legend on the chattel paper acceptable to Secured Party
                    indicating that Secured Party has a security interest in the chattel Paper.
                    Debtor will not permit any chattel paper to be electronic chattel paper. 


                    



               	 	(h)       

                     Deposit Accounts, Investment Property. Debtor shall not establish or
                    maintain, or have any interest in, any (i) deposit account not listed on
                    Schedule 9, (ii) commodity account not listed on
                    Schedule 10, or (iii) securities account not listed on
                    Schedule 11. 


                    



     6.    
          Rights of Secured Party. Secured Party shall have the
          rights contained in this Section 6 at all times during the period of time this
          Agreement is effective. 



               	 	(a)       

                     Additional Financing Statements Filings. Debtor hereby authorizes
                    Secured Party to file, without the signature or further authentication of
                    Debtor, one or more financing or continuation statements, and amendments
                    thereto, relating to the Collateral. Debtor further agrees that a carbon,
                    photographic or other reproduction of this Security Agreement or any financing
                    statement describing any Collateral is sufficient as a financing statement and
                    may be filed in any jurisdiction Secured Party may deem appropriate. 


                    



               	 	(b)       

                     Power of Attorney. Debtor hereby irrevocably appoints Secured Party as
                    Debtor’s attorney-in-fact, such power of attorney being coupled with an
                    interest, with full authority in the place and stead of Debtor and in the name
                    of Debtor or otherwise, after the occurrence of an Event of Default, to take any
                    action and to execute any instrument which Secured Party may deem necessary or
                    appropriate to accomplish the purposes of this Agreement, including without
                    limitation: (i) to obtain and adjust insurance required by Secured Party
                    hereunder; (ii) to demand, collect, sue for, recover, compound, receive and
                    give acquittance and receipts for moneys due and to become due under or in
                    respect of the Collateral; (iii) to receive, endorse and collect any drafts
                    or other instruments, documents and chattel paper in connection with clause (i)
                    or (ii) above; and (iv) to file any claims or take any action or institute
                    any proceedings which Secured Party may deem necessary or appropriate for the
                    collection and/or preservation of the Collateral or otherwise to enforce the
                    rights of Secured Party with respect to the Collateral. 


                    



               	 	(c)       

                     Performance by Secured Party. If Debtor fails to perform any agreement
                    or obligation provided herein, Secured Party may itself perform, or cause
                    performance of, such agreement or obligation, and the expenses of Secured Party
                    incurred in connection therewith shall be a part of the Indebtedness, secured by
                    the Collateral and payable by Debtor on demand. 


                    



               	 	(d)       

                     Debtor’s Receipt of Proceeds. All amounts and proceeds (including
                    instruments and writings) received by Debtor in respect of Collateral other than
                    accounts constituting Agent Receivables or general intangibles shall be received
                    in trust for the benefit of Secured Party hereunder and, upon request of Secured
                    Party, shall be segregated from other property of Debtor and shall be forthwith
                    delivered to Secured Party in the same form as so received (with any necessary
                    endorsement). All amounts and proceeds of accounts constituting Agent
                    Receivables and general intangibles shall only be deposited in a deposit account
                    described in Schedule 9 or otherwise agreed to by Secured Party. 


                    



               	 	(e)       

                     Notification of Account Debtors. Secured Party may at its discretion
                    from time to time if an Event of Default exists, (i) notify any or all
                    obligors under any accounts or general intangibles of Secured Party’s
                    security interest in such accounts or general intangibles and direct such
                    obligors to make payment of all amounts due or to become due to Debtor
                    thereunder directly to Secured Party, and (ii) at the expense of Debtor,
                    enforce collection of any such accounts or general intangibles and adjust,
                    settle or compromise the amount or payment thereof, in the same manner and to
                    the same extent as Debtor. Secured Party may at its discretion from time to
                    time, subject to the reasonable restrictions and conditions of Debtor, contact
                    any or all obligors under any accounts or general intangibles to verify the
                    accounts or general intangibles with such obligors. 


                    



               	 	(f)       

                     Licenses. For purposes of enabling Secured Party to exercise rights and
                    remedies under this Agreement, Debtor grants to Secured Party an irrevocable,
                    nonexclusive license (exercisable without payment of royalty or other
                    compensation to Debtor or any other Person, provided, that if the license
                    granted to Secured Party is a sublicense, Debtor shall be solely responsible
                    for, and indemnify Secured Party against, any royalty or other compensation
                    payable to Debtor’s licensor or other Person) to use all of Debtor’s
                    software, and including in such license reasonable access to all media in which
                    any of the licensed items may be recorded and all related manuals. For the
                    purpose of enabling Secured Party to exercise rights and remedies under this
                    Agreement, Debtor grants to Secured Party an irrevocable, nonexclusive license
                    (exercisable without payment of royalty or other compensation to Debtor or any
                    other Person) to use, license, or sub-license any of the Collateral consisting
                    of Patents, Trademarks, Copyrights, and Licenses and wherever the same may be
                    located, and including in such license reasonable access to all media in which
                    any of the licensed items may be recorded or stored and to all software used for
                    the use, compilation, or printout thereof. The use of such license by Secured
                    Party shall be exercised, at the option of Secured Party, if an Event of Default
                    exists; provided that any license, sub-license, or other transaction entered
                    into by Secured Party in accordance herewith shall be binding upon Debtor
                    notwithstanding any subsequent cure of an Event of Default. 


                    



     7.    
          Events of Default. Each of the following constitutes an
          “Event of Default” under this Agreement: 



               	 	(a)       

                     Default in Payment. The failure, refusal or neglect of Debtor or any
                    other of Obligor to make any payment of principal or interest on the
                    Indebtedness, or any portion thereof, as the same shall become due and payable
                    after giving effect to any applicable grace period; or 


                    



               	 	(b)       

                     Non-Performance of Covenants. The failure of Debtor or any other Obligor
                    to timely and properly observe, keep or perform any covenant, agreement,
                    warranty or condition required herein or in any of the other Loan Documents and
                    after giving effect to any applicable grace period; or 


                    



               	 	(c)       

                     Default Under other Loan Documents. The occurrence of an Event of
                    Default (as defined in the Credit Agreement) under any of the other Loan
                    Documents; or 


                    



               	 	(d)       

                     False Representation. Any representation contained herein or in any of
                    the other Loan Documents made by Debtor, any other Obligor or any Insurance
                    Affiliate is not true and correct in any material respect; or 


                    



               	 	(e)       

                     Execution on Collateral. If Debtor fails to have discharged within a
                    period of sixty (60) days any attachment, sequestration or similar writ levied
                    upon any property (other than the Collateral) of Debtor, or the Collateral or
                    any portion thereof is taken on execution or other process of law in any action
                    against Debtor; or any attachment, sequestration or similar writ is levied upon
                    any Collateral; or 


                    



               	 	(f)       

                     Abandonment. Debtor abandons the Collateral or any portion thereof; or 


                    



               	 	(g)       

                     Action by Other Lienholder. The holder of any Lien on the Collateral
                    (without hereby implying the consent of Secured Party to the existence or
                    creation of any such Lien on the Collateral) or any other asset of Debtor having
                    a value of $100,000 or greater declares a default thereunder or institutes
                    foreclosure or other proceedings for the enforcement of its remedies thereunder;
                    or 


                    



               	 	(h)       

                     Liquidation and Related Events. The liquidation, dissolution, merger or
                    consolidation of Debtor, any other Obligor or any Insurance Affiliate; or 


                    



               	 	(i)       

                     Search Report. If Secured Party shall have elected to file any financing
                    statement with respect to the Collateral, Secured Party shall receive at any
                    time following the execution of this Agreement a search report indicating that
                    Secured Party’s security interest is not prior to all other Liens, security
                    interests or other interests reflected in the report and Secured Party does not
                    receive within twenty days after the date of notice to Debtor of such Lien, a
                    file stamped termination statement of each financing statement related to such
                    Lien, the written release of such Lien in form and substance satisfactory to
                    Secured Party, and a search report indicating the filing of each such
                    termination statement. 


                    



     8.    
          Remedies and Related Rights. If an Event of Default shall
          have occurred, and without limiting any other rights and remedies provided
          herein, under any of the other Loan Documents or otherwise available to Secured
          Party, Secured Party may exercise one or more of the rights and remedies
          provided in this Section. 



               	 	(a)       

                     Remedies. Secured Party may from time to time at its discretion, without
                    limitation and without notice except as expressly provided in any of the Loan
                    Documents and as required by law: 


                    



               	 	(i)       

                     exercise in respect of the Collateral all the rights and remedies of a secured
                    party under the Code (whether or not the Code applies to the affected
                    Collateral); 


                    



               		(ii)      

                     require Debtor to, and Debtor hereby agrees that it will at its expense and
                    upon request of Secured Party, assemble the Collateral as directed by Secured
                    Party and make it available to Secured Party at a place to be designated by
                    Secured Party which is reasonably convenient to both parties; 


                    



               	 	(iii)     

                     reduce its claim to judgment or foreclose or otherwise enforce, in whole or in
                    part, the security interest granted hereunder by any available judicial
                    procedure; 


                    



               	 	(iv)      

                     after notice to Debtor as provided in the last paragraph of this
                    Section 8, sell or otherwise dispose of, at its office, on the
                    premises of Debtor or elsewhere, the Collateral, as a unit or in parcels, by
                    public or private proceedings, and by way of one or more contracts (it being
                    agreed that the sale or other disposition of any part of the Collateral shall
                    not exhaust Secured Party’s power of sale, but sales or other dispositions
                    may be made from time to time until all of the Collateral has been sold or
                    disposed of or until the Indebtedness has been paid and performed in full), and
                    at any such sale or other disposition it shall not be necessary to exhibit any
                    of the Collateral; 


                    



               	 	(v)       

                     buy the Collateral, or any portion thereof, at any public sale; 


                    



               	 	(vi)      

                     buy the Collateral, or any portion thereof, at any private sale if the
                    Collateral is of a type customarily sold in a recognized market or is of a type
                    which is the subject of widely distributed standard price quotations; 


                    



               	 	(vii)     

                     apply for the appointment of a receiver for the Collateral, and Debtor hereby
                    consents to any such appointment; and 


                    



               	 	(viii)    

                     at its option, retain the Collateral in satisfaction of the Indebtedness
                    whenever the circumstances are such that Secured Party is entitled to do so
                    under the Code or otherwise, to the full extent permitted by the Code, Secured
                    Party shall be permitted to elect whether such retention shall be in full or
                    partial satisfaction of the Indebtedness. 


                    



        In
the event Secured Party shall elect to sell the Collateral, Secured Party may sell the
Collateral without giving any warranties and shall be permitted to specifically disclaim
any warranties of title or the like (other than warranties that Secured Party has not
created any Lien in the Collateral to be sold). Further, if Secured Party sells any of the
Collateral on credit, Debtor will be credited only with payments actually made by the
purchaser, received by Secured Party and applied to the Indebtedness. In the event the
purchaser fails to pay for the Collateral, Secured Party may resell the Collateral and
Debtor shall be credited with the proceeds of the sale. Debtor agrees that in the event
Debtor or any Obligor is entitled to receive any notice under the Uniform Commercial Code,
as it exists in the state governing any such notice, of the sale or other disposition of
any Collateral, reasonable notice shall be deemed given when such notice is deposited in a
depository receptacle under the care and custody of the United States Postal Service,
postage prepaid, at such party’s address set forth on the first page hereof, ten (10)
days prior to the date of any public sale, or after which a private sale, of any of such
Collateral is to be held. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured Party 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. 


		(b)       
          Private Sale; Further Approvals. 


                    



               	 	(i)       

                     Debtor recognizes that Secured Party may be unable to effect a public sale of
                    all or any part of the Collateral because of restrictions in applicable
                    insurance laws and regulations and contractual restrictions and that Secured
                    Party may, therefore, determine to make one or more private sales of any such
                    Collateral to a restricted group of purchasers who will be obligated to agree,
                    among other things, to acquire such Collateral subject to applicable insurance
                    laws and regulations and contractual restrictions. Debtor acknowledges that any
                    such private sale may be at prices and other terms less favorable than what
                    might have been obtained at a public sale and, notwithstanding the foregoing,
                    agrees that each such private sale shall be deemed to have been made in a
                    commercially reasonable manner. 


                    



               	 	(ii)      

                     In connection with the exercise by Secured Party of its rights hereunder that
                    effects the disposition of or use of any Collateral, it may be necessary to
                    obtain the prior consent or approval of governmental authorities (including any
                    Insurance Commissioner) and other Persons to a transfer or assignment of
                    Collateral. 


                    



               	 	(iii)     

                     Debtor agrees, if an Event of Default exists, to execute, deliver, and file,
                    and authorizes Secured Party pursuant to the power of attorney herein granted,
                    to execute, deliver, and file on Debtor’s behalf and in Debtor’s name,
                    all applications, certificates, filings, instruments, and other documents
                    (including without limitation any application for an assignment or transfer of
                    control or ownership) that may be necessary or appropriate, in Secured
                    Party’s opinion, and to obtain such consents, waivers, and approvals under
                    applicable laws and agreements prior to an Event of Default. Debtor acknowledges
                    that there is no adequate remedy at law for failure by it to comply with the
                    provisions of this Section and that such failure would not be adequately
                    compensable in damages, and therefore agrees that this Section may be
                    specifically enforced. 


                    



               	 	(c)       

                     Application of Proceeds. If any Event of Default exists, Secured Party
                    may at its discretion apply or use any cash held by Secured Party as Collateral,
                    and any cash proceeds received by Secured Party in respect of any sale or other
                    disposition of, collection from, or other realization upon, all or any part of
                    the Collateral as follows in such order and manner as Secured Party may elect: 


                    



               	 	(i)       

                     to the repayment or reimbursement of the reasonable costs and expenses
                    (including, without limitation, reasonable attorneys’ fees and expenses)
                    incurred by Secured Party in connection with (A) the administration of the
                    Loan Documents, (B) the custody, preservation, use or operation of, or the
                    sale of, collection from, or other realization upon, the Collateral, and
                    (C) the exercise or enforcement of any of the rights and remedies of
                    Secured Party hereunder; 


                    



               	 	(ii)      

                     to the payment or other satisfaction of any Liens and other encumbrances upon
                    the Collateral; 


                    



               	 	(iii)     

                     to the satisfaction of the Indebtedness; 


                    



               	 	(iv)      

                     by holding such cash and proceeds as Collateral prior to application to the
                    Indebtedness if required by applicable law or any court or governmental
                    authority; 


                    



               	 	(v)       

                     to the payment of any other amounts required by applicable law (including
                    without limitation, Section 9.615(a)(3) of the Code or any other applicable
                    statutory provision); and 


                    



               	 	(vi)      

                     by delivery to Debtor or any other party lawfully entitled to receive such cash
                    or proceeds whether by direction of a court of competent jurisdiction or
                    otherwise. 


                    



               	 	(d)       

                     Deficiency. In the event that the proceeds of any sale of, collection
                    from, or other realization upon, all or any part of the Collateral by Secured
                    Party are insufficient to pay all amounts to which Secured Party is legally
                    entitled, Debtor and each other Obligor who guaranteed or is otherwise obligated
                    to pay all or any portion of the Indebtedness shall be liable for the
                    deficiency, together with interest thereon as provided in the Loan Documents, to
                    the full extent not prohibited by law. 


                    



               	 	(e)       

                     Non-Judicial Remedies. In granting to Secured Party the power to enforce
                    its rights hereunder without prior judicial process or judicial hearing, Debtor
                    expressly waives, renounces and knowingly relinquishes any legal right which
                    might otherwise require Secured Party to enforce its rights by judicial process.
                    Debtor recognizes and concedes that non-judicial remedies are consistent with
                    the usage of trade, are responsive to commercial necessity and are the result of
                    a bargain at arm’s length. Nothing herein is intended to prevent Secured
                    Party or Debtor from resorting to judicial process at either party’s
                    option. 


                    



               	 	(f)       

                     Other Recourse. Debtor waives any right to require Secured Party to
                    proceed against any third party, exhaust any Collateral or other security for
                    the Indebtedness, or to have any third party joined with Debtor in any suit
                    arising out of the Indebtedness or any of the Loan Documents, or pursue any
                    other remedy available to Secured Party. Debtor further waives any and all
                    notice of acceptance of this Agreement and of the creation, modification,
                    rearrangement, renewal or extension of the Indebtedness. Debtor further waives
                    any defense arising by reason of any disability or other defense of any third
                    party or by reason of the cessation from any cause whatsoever of the liability
                    of any third party. Until all of the Indebtedness shall have been paid in full,
                    Debtor shall have no right of subrogation and Debtor waives the right to enforce
                    any remedy which Secured Party has or may hereafter have against any third
                    party, and waives any benefit of and any right to participate in any other
                    security whatsoever now or hereafter held by Secured Party. Debtor authorizes
                    Secured Party, and without notice or demand and without any reservation of
                    rights against Debtor and without affecting Debtor’s liability hereunder or
                    on the Indebtedness to (i) take or hold any other property of any type from any
                    third party as security for the Indebtedness, and exchange, enforce, waive and
                    release any or all of such other property, (ii) apply such other property and
                    direct the order or manner of sale thereof as Secured Party may in its
                    discretion determine, (iii) renew, extend, accelerate, modify, compromise,
                    settle or release any of the Indebtedness or other security for the
                    Indebtedness, (iv) waive, enforce or modify any of the provisions of any of the
                    Loan Documents executed by any third party, and (v) release or substitute any
                    third party. 


                    



     9.    
          Indemnity. DEBTOR HEREBY INDEMNIFIES AND AGREES TO HOLD
          HARMLESS SECURED PARTY, AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND
          REPRESENTATIVES (EACH AN “INDEMNIFIED PERSON”) FROM AND AGAINST ANY
          AND ALL LIABILITIES, OBLIGATIONS, CLAIMS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
          JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE
          (COLLECTIVELY, THE “CLAIMS”) WHICH MAY BE IMPOSED ON, INCURRED BY, OR
          ASSERTED AGAINST, ANY INDEMNIFIED PERSON ARISING IN CONNECTION WITH THE LOAN
          DOCUMENTS, THE INDEBTEDNESS OR THE COLLATERAL (INCLUDING WITHOUT LIMITATION, THE
          ENFORCEMENT OF THE LOAN DOCUMENTS AND THE DEFENSE OF ANY INDEMNIFIED
          PERSON’S ACTIONS AND/OR INACTIONS IN CONNECTION WITH THE LOAN DOCUMENTS).
          THE INDEMNIFICATION PROVIDED FOR IN THIS SECTION SHALL SURVIVE THE TERMINATION
          OF THIS AGREEMENT AND SHALL EXTEND AND CONTINUE TO BENEFIT EACH INDIVIDUAL OR
          ENTITY WHO IS OR HAS AT ANY TIME BEEN AN INDEMNIFIED PERSON HEREUNDER. 




10.  Miscellaneous. 



               	 	(a)       

                     Entire Agreement. This Agreement contains the entire agreement of
                    Secured Party and Debtor with respect to the Collateral. If the parties hereto
                    are parties to any prior agreement, either written or oral, relating to the
                    Collateral, the terms of this Agreement shall amend and supersede the terms of
                    such prior agreements as to transactions on or after the effective date of this
                    Agreement, but all security agreements, financing statements, guaranties, other
                    contracts and notices for the benefit of Secured Party shall continue in full
                    force and effect to secure the Indebtedness unless Secured Party specifically
                    releases its rights thereunder by separate release. 


                    



               	 	(b)       

                     Amendment. No modification, consent or amendment of any provision of
                    this Agreement or any of the other Loan Documents shall be valid or effective
                    unless the same is authenticated by the party against whom it is sought to be
                    enforced, except to the extent of amendments specifically permitted by the Code
                    without authentication by the Debtor or Obligor. 


                    



               	 	(c)       

                     Actions by Secured Party. The Lien and other security rights of Secured
                    Party hereunder shall not be impaired by (i) any renewal, extension,
                    increase or modification with respect to the Indebtedness, (ii) any
                    surrender, compromise, release, renewal, extension, exchange or substitution
                    which Secured Party may grant with respect to the Collateral, or (iii) any
                    release or indulgence granted to any Obligor, endorser, guarantor or surety of
                    the Indebtedness. The taking of additional security by Secured Party shall not
                    release or impair the Lien, security interest or other security rights of
                    Secured Party hereunder or affect the obligations of Debtor hereunder. 


                    



               	 	(d)       

                     Waiver by Secured Party. Secured Party may waive any Event of Default
                    without waiving any other prior or subsequent Event of Default. Secured Party
                    may remedy any default without waiving the Event of Default remedied. Neither
                    the failure by Secured Party to exercise, nor the delay by Secured Party in
                    exercising, any right or remedy upon any Event of Default shall be construed as
                    a waiver of such Event of Default or as a waiver of the right to exercise any
                    such right or remedy at a later date. No single or partial exercise by Secured
                    Party of any right or remedy hereunder shall exhaust the same or shall preclude
                    any other or further exercise thereof, and every such right or remedy hereunder
                    may be exercised at any time. No waiver of any provision hereof or consent to
                    any departure by Debtor therefrom shall be effective unless the same shall be in
                    writing and signed by Secured Party and then such waiver or consent shall be
                    effective only in the specific instances, for the purpose for which given and to
                    the extent therein specified. No notice to or demand on Debtor in any case shall
                    of itself entitle Debtor to any other or further notice or demand in similar or
                    other circumstances. 


                    



               	 	(e)       

                     Costs and Expenses. Debtor will upon demand pay to Secured Party the
                    amount of any and all costs and expenses (including without limitation,
                    attorneys’ fees and expenses), which Secured Party may incur in connection
                    with (i) the transactions which give rise to the Loan Documents (subject to
                    Section 8.3 of the Credit Agreement), (ii) the preparation of this Agreement
                    (subject to Section 8.3 of the Credit Agreement) and the perfection and
                    preservation of the security interests granted under the Loan Documents, (iii)
                    the administration of the Loan Documents, (iv) the custody, preservation, use or
                    operation of, or the sale of, collection from, or other realization upon, the
                    Collateral, (v) the exercise or enforcement of any of the rights of Secured
                    Party under the Loan Documents, or (vi) the failure by Debtor to perform or
                    observe any of the provisions hereof. 


                    



               	 	(f)       

                     GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
                     ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL
                    LAWS,  EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR
                     NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN RESPECT OF
                    ANY  PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION
                    OTHER THAN  THE STATE OF TEXAS. 


                    



               	 	(g)       

                     Venue. This Agreement has been entered into in the county in Texas where
                    Secured Party’s address for notice purposes is located, and it shall be
                    performable for all purposes in such county. Courts within the State of Texas
                    shall have jurisdiction over any and all disputes arising under or pertaining to
                    this Agreement and venue for any such disputes shall be in the county or
                    judicial district where this Agreement has been executed and delivered. 


                    



               	 	(h)       

                     Severability. If any provision of this Agreement is held by a court of
                    competent jurisdiction to be illegal, invalid or unenforceable under present or
                    future laws, such provision shall be fully severable, shall not impair or
                    invalidate the remainder of this Agreement and the effect thereof shall be
                    confined to the provision held to be illegal, invalid or unenforceable. 


                    



               	 	(i)       

                     No Obligation. Nothing contained herein shall be construed as an
                    obligation on the part of Secured Party to extend or continue to extend credit
                    to Debtor or any other Obligor. 


                    



               	 	(j)       

                     Notices. All notices, requests, demands or other communications required
                    or permitted to be given pursuant to this Agreement shall be in writing and
                    given by (i) personal delivery, (ii) expedited delivery service with
                    proof of delivery, or (iii) United States mail, postage prepaid, registered
                    or certified mail, return receipt requested, sent to the intended addressee at
                    the address set forth on the first page hereof or to such different address as
                    the addressee shall have designated by written notice sent pursuant to the terms
                    hereof and shall be deemed to have been received either, in the case of personal
                    delivery, at the time of personal delivery, in the case of expedited delivery
                    service, as of the date of first attempted delivery at the address and in the
                    manner provided herein, or in the case of mail, upon deposit in a depository
                    receptacle under the care and custody of the United States Postal Service.
                    Either party shall have the right to change its address for notice hereunder to
                    any other location within the continental United States by notice to the other
                    party of such new address at least thirty (30) days prior to the effective date
                    of such new address. 


                    



               	 	(k)       

                     Binding Effect and Assignment. This Agreement (i) creates a continuing
                    security interest in the Collateral, (ii) shall be binding on Debtor and the
                    heirs, executors, administrators, personal representatives, successors and
                    assigns of Debtor, and (iii) shall inure to the benefit of Secured Party and its
                    successors and assigns. Without limiting the generality of the foregoing,
                    Secured Party may pledge, assign or otherwise transfer the Indebtedness and its
                    rights under this Agreement and any of the other Loan Documents to any other
                    party. Debtor’s rights and obligations hereunder may not be assigned or
                    otherwise transferred without the prior written consent of Secured Party. 


                    



               	 	(l)       

                     Cumulative Rights. All rights and remedies of Secured Party hereunder
                    are cumulative of each other and of every other right or remedy which Secured
                    Party may otherwise have at law or in equity or under any of the other Loan
                    Documents, and the exercise of one or more of such rights or remedies shall not
                    prejudice or impair the concurrent or subsequent exercise of any other rights or
                    remedies. Further, except as specifically noted as a waiver herein, no provision
                    of this Agreement is intended by the parties to this Agreement to waive any
                    rights, benefits or protection afforded to Secured Party under the Code. 


                    



               	 	(m)       

                     Gender and Number. Within this Agreement, words of any gender shall be
                    held and construed to include the other gender, and words in the singular number
                    shall be held and construed to include the plural and words in the plural number
                    shall be held and construed to include the singular, unless in each instance the
                    context requires otherwise. 


                    



               	 	(n)       

                     Descriptive Headings. The headings in this Agreement are for convenience
                    only and shall in no way enlarge, limit or define the scope or meaning of the
                    various and several provisions hereof. 


                    


















        EXECUTED
as of the date first written above. 




	 	DEBTOR:
	 
	 
	 	ASCENT FUNDING, INC.
	 
	 
	 	By: /s/ Cynthia B. Koenig
	 	Print Name: Cynthia B. Koenig
	 	Print Title: SVP & CFO
	 
	 
	 	SECURED PARTY:
	 
	 
	 	THE FROST NATIONAL BANK, 
a national banking association
	 
	 
	 	By: J. Carey Womble
	 	Print Name: J. Carey Womble
	 	Print Title: Senior Vice president
	 


















		
	

	Schedule 1	Real Property
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	





















		
	

	Schedule 2	Registered Patents
	






					
	
	
	
	
	

	Registered Owner	Nature of Debtor's Interest (e.g. owner, licensee)	Registered Patent No.	Issue Date	Country of Issue
	
	
	
	
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	






















		
	

	Schedule 3	Patent Applications
	







					
	

	        Registered Owner	Nature of Debtor's Interest (e.g. owner, licensee)	Serial No.	Filing Date	Country of Issue
	                                       
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	





















		
	

	Schedule 4	Registered Trademarks
	






								
	

	Registered 
Owner	Nature of Debtor's Interest (e.g. owner, licensee)	Registered Trademark	Registration No.	Int'l Class Covered	Goods or Services Covered	Date Registered	Country of Registration
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	





















		
	

	Schedule 5	Trademark Applications
	







								
	

	Registered 
Owner 	Nature of Debtor's Interest (e.g. owner, licensee)	Trademark Application relates to following Trademark	Serial No.	Int'l Class Covered	Goods or Services Covered	Date of Application	Country of Application
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	






















		
	

	Schedule 6	Registered Copyrights
	






						
	

	     Registered Owner	Nature of Debtor's Interest 
(e.g. owner, licensee)	Serial No.	Copyright	Issue Date	Country of Issue
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	






















		
	

	Schedule 7	Copyright Applications
	






						
	

	Registered Owner	Nature of Debtor's Interest 
(e.g. owner, licensee)	Registration No.	Copyright	Application Date	Country of Application
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	






















		
	

	Schedule 8	Commercial Tort Claims
	






			
	

	Case Name or Style	Case Number	Court in Which Pending
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	






















		
	

	Schedule 9	Deposit Accounts
	






						
	

	Bank      	Branch Name,        
Street Address        	ABA No.            	Account No.          	Account Name        	Account Type      
	

	LaSalle Bank	135 South LaSalle Street
Chicago, Illinois 60603	071000505	5800083270	Ascent Funding, Inc.	Operating
	

	LaSalle Bank	135 South LaSalle Street
Chicago, Illinois 60603	071000505	03-8611-50-5	Ascent Funding, Inc.	Money Market
	

	Frost Bank	777 Main Street
Fort Worth, Texas 76102	114000093	650003255	Ascent Funding, Inc.	Depository
	

	Frost Bank	777 Main Street
Fort Worth, Texas 76102	114000093	299993509	Ascent Funding, Inc.	Controlled Disbursement
	

	Frost Bank	777 Main Street
Fort Worth, Texas 76102	114000093	W00053400	Ascent Funding, Inc.	Money Market
	

	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	























		
	

	Schedule 10	Commodity Accounts
	








					
	

	Commodity Intermediary	Street Address	Account Name	Account Number	Commodity Contract Description
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	













		
	

	Schedule 11	Securities Accounts
	






					
	

	Securities Intermediary	Street Address	Account Name	Account Number	Securities Contract Description
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	






















		
	

	Schedule 12	Letters of Credit
	








						
	

	Bank Issuer	Branch Name, 
Street Address	Letter of Credit No.	Issue Date	Expiry	Face Amount
	

	 
	NONE
	 
	

	THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
	










WAIVER OF JURY TRIAL
AND NOTICE OF FINAL AGREEMENT 


To:    ASCENT FUNDING, INC.

            (collectively,
whether one or more, “Borrower”) 



As of the effective date of this
Notice, Borrower and THE FROST NATIONAL BANK, a national banking association
(“Lender”) have consummated a transaction pursuant to which Lender has
agreed to make a loan or loans to Borrower, and/or to otherwise extend credit or make
financial accommodations to or for the benefit of Borrower, in an aggregate amount at any
time outstanding of up to $3,000,000.00 (collectively, whether one or more, the
“Loan”). 




FACSIMILE DOCUMENTS
AND SIGNATURES  



For purposes of negotiating and
finalizing the Written Loan Agreement (as hereinafter defined), if this document or any
document executed in connection with the Loan is transmitted by facsimile machine
(“fax”), it shall be treated for all purposes as an original document.
Additionally, the signature of any party on this document transmitted by way of a
facsimile machine shall be considered for all purposes as an original signature. Any such
faxed document shall be considered to have the same binding legal effect as an original
document. At the request of any party, any faxed document shall be re-executed by each
signatory party in an original form. 




WAIVER OF RIGHT TO
TRIAL BY JURY 



THE PARTIES TO THIS AGREEMENT
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF
THE PARTIES HERETO AGAINST THE OTHER TO ENFORCE THIS AGREEMENT, TO COLLECT DAMAGES FOR THE
BREACH OF THIS AGREEMENT, OR WHICH IN ANY OTHER WAY ARISE OUT OF, ARE CONNECTED TO OR ARE
RELATED TO THIS AGREEMENT OR THE SUBJECT MATTER OF THIS AGREEMENT. ANY SUCH ACTION SHALL
BE TRIED BY THE JUDGE WITHOUT A JURY. 




NOTICE OF FINAL
AGREEMENT 



In connection with the Loan, Borrower
and Lender and the undersigned guarantors (collectively, whether one or more,
“Other Obligors”) have executed and delivered and may hereafter
execute and deliver certain agreements, instruments and documents (collectively herein
referred to as the “Written Loan Agreement”). 



It is the intention of Borrower,
Lender and Other Obligors that this Notice be incorporated by reference into each of the
written agreements, instruments and documents comprising the Written Loan Agreement. 



THE WRITTEN LOAN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. 




THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES. 













Executed effective as of
December __, 2003. 




	 
	 	THE FROST NATIONAL BANK, 
a national banking association
	 
	 
	 	By: /s/ J. Carey Womble
	 	Print Name: J. Carey Womble
	 	Print Title: Senior Vice president
	 











ACKNOWLEDGED AND AGREED: 




BORROWER: 




ASCENT FUNDING, INC. 


By: /s/ Cynthia B. Koenig

Print Name: Cynthia B. Koenig

Print Title: SVP & CFO     






OTHER OBLIGORS: 




ASCENT ASSURANCE, INC. 


By: /s/ Cynthia B. Koenig   

Print Name: Cynthia B. Koenig   

Print Title: SVP & CFO    






NATIONALCARE®
MARKETING, INC. 


By: /s/ Cynthia B. Koenig  

Print Name: Cynthia B. Koenig     

Print Title: SVP & CFO   









INTERCREDITOR AND
SUBORDINATION AGREEMENT 




among 




THE FROST NATIONAL
BANK, 




CREDIT SUISSE FIRST
BOSTON MANAGEMENT LLC, 


as Administrative Agent, 


for itself and for the Lenders parties to the 


Ascent Holdings Credit Agreement referred to herein 


and 


ASCENT ASSURANCE, INC., 


and its subsidiaries a
party hereto 






Dated as of December 31,
2003 












        INTERCREDITOR
AND SUBORDINATION AGREEMENT dated as of December 31, 2003, among THE FROST NATIONAL
BANK (the “Bank”), CREDIT SUISSE FIRST BOSTON MANAGEMENT LLC
(“CSFBM”), as Administrative Agent under the Ascent Holdings Credit
Agreement referred to below (the “Administrative Agent”), for itself as
such and as Agent for each of the Lenders party to that Agreement (each a
“Lender”), ASCENT ASSURANCE, INC., a Delaware corporation
(“Holdings”), and the subsidiaries of Holdings a party hereto (each a
“Subsidiary”). 




Preliminary Statement 



             A.       
          The Bank has provided financing to Ascent Funding, Inc. a Delaware corporation
          and subsidiary of Holdings (“Funding”), pursuant to the
          agreements and instruments identified in Schedule 2 hereto (such
          agreements, together with all amendments and restatements, the
          “Receivables Financing Agreements”). 



             B.       
          The Lenders have provided financing to Holdings, pursuant to a Credit Agreement
          dated as of April 17, 2001, among Holdings, the Administrative Agent, the
          Lenders and CSFBM, as arranger (such agreement, together with all amendments and
          restatements, the “Ascent Holdings Credit Agreement”) and the
          agreements and instruments identified in Schedule 1 hereto (such
          agreements, together with all amendments and restatements, the “Holdings
          Agreements”). 



             C.       
          As of the date hereof, neither CSFBM nor any of its affiliates shall be the
          holder of any shares of Series A Convertible Preferred Stock of Holdings, all of
          which shares of Series A Convertible Preferred Stock held by CSFBM or its
          affiliates shall have been exchanged on the date hereof for shares of Series B
          Convertible Participating Preferred Stock (such Series B Convertible
          Participating Preferred Stock and the Certificate of Designation and other
          agreements governing the rights of holders thereof, and all applicable laws
          related thereto, together with all amendments and restatements of the same, the
          “Holdings Equity Agreements”). 



             D.       
          The Bank has agreed to consent to the creation by Holdings and one of its
          subsidiaries of certain liens in favor of the Lenders and the Administrative
          Agent under the security documents described in Schedule 1 (the
          “Security Documents”) subject to certain conditions, which
          include the execution and delivery by the Lenders, the Administrative Agent,
          Holdings and the subsidiaries of Holdings of this Agreement relating to
          circumstances in which payments of amounts due to (i) the Lenders and the
          Administrative Agent under the Ascent Holdings Credit Agreement and all other
          Loan Documents referred to therein (collectively, such agreements, together with
          all amendments and restatements, the “Ascent Holdings Loan
          Documents”) may not be made, or if made, may not be retained, if at the
          time an Event of Default (as that term is defined in the Funding Credit
          Agreement) exists, and (ii) CSFBM under or in respect of the Holdings Equity
          Agreements may be made. 



             E.       
          In consideration of that consent, CSFBM, the Lenders and the Administrative
          Agent are willing to enter into this Agreement with the Bank relating to amounts
          that may become due from time to time to the Lenders and the Administrative
          Agent under the Ascent Holdings Loan Documents referred to therein, and to CSFBM
          under or in respect of any stock or other equity interest of Holdings. 




AGREEMENT: 



        NOW,
THEREFORE, in consideration of the agreement of the parties set forth herein and to induce
the Bank to provide the consent referred to above, the parties hereto agree as follows: 



             1.       
          All obligations of Holdings and each subsidiary of Holdings, including, but not
          limited to, Funding (singly, a “Company,” and collectively, the
          “Companies”), 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 Receivables Financing Agreements are called
          “Senior Liabilities”; and all Liabilities to the Lenders and
          the Administrative Agent under, or, in connection with, the Ascent Holdings Loan
          Documents, and all liabilities to CSFBM under, or in connection with, the
          Holdings 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 any
          Company or anyone else, to collect such interest. Senior Liabilities shall not
          include principal of the Loans (as that term is defined in the Receivables
          Financing Agreements) in excess of $10,000,000. All amounts due or payable to
          the Bank pursuant to this Agreement shall be applied first to all amounts
          constituting Senior Liabilities until all Senior Liabilities are finally paid in
          full in cash. Notwithstanding the exclusion of principal of such Loans in excess
          of $10,000,000 from Senior Liabilities, CSFBM, Administrative Agent and Lenders
          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.       
          Except as expressly otherwise provided herein, or as the Bank may hereafter
          otherwise expressly consent in writing, the payment of all Junior Liabilities
          shall be postponed and subordinated to the payment in full in cash of all Senior
          Liabilities, and no payment or other distribution whatsoever in respect of any
          Junior Liabilities shall be made, nor shall any property or assets of the
          Companies be applied to the purchase of other acquisition or retirement of any
          Junior Liabilities until all Senior Liabilities have been paid in full in cash;
          provided, that (a) Holdings may (i) pay PIK Interest (as that term is
          defined in the Ascent Holdings Credit Agreement) in accordance with the terms of
          the Ascent Holdings Credit Agreement as it exists on the date of this Agreement,
          and (ii) so long as no Event of Default exists immediately prior to or after
          giving effect thereto, make, and the Lenders may retain, cash interest payments
          on the Loans (as defined in the Ascent Holdings Credit Agreement), if such
          interest is (A) accrued at the interest rate provided for in the Ascent Holdings
          Credit Agreement (without giving effect to any amendment or restatement of any
          Ascent Holdings Loan Document after the date of this Agreement), and (B) paid on
          the scheduled payment date stated in the Ascent Holdings Credit Agreement
          (without giving effect to any amendment or restatement of any Ascent Holdings
          Loan Document after the date of this Agreement), and (b) Holdings may issue
          shares in exchange for or conversion of Junior Liabilities and may pay dividends
          in respect of stock of Holdings if all of such dividends are payable solely in
          either common stock or in Series B Convertible Participating Preferred Stock of
          Holdings. 



             3.       
          In the event of any dissolution, winding up, liquidation, reorganization or
          other similar proceeding relating to any Company 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
          such Company, or any sale of all or substantially all of the assets of such
          Company, or otherwise), other than such transactions solely among the Companies
          and their Subsidiaries, all Senior Liabilities shall first be paid in full in
          cash before the undersigned shall be entitled to receive and to retain any
          payment or distribution in respect of any of the Junior Liabilities, and, in
          order to implement the foregoing: 



                         a.       
          all payments and distributions of any kind or character in respect of the Junior
          Liabilities to which CSFBM, the Lenders and the Administrative Agent would be
          entitled, if the Junior Liabilities were not subordinated pursuant to this
          Agreement, shall be made directly to the Bank, 



                         b.       
          CSFBM, the Lenders and the Administrative Agent shall promptly file a claim or
          claims, in the form required in such proceeding, for the full outstanding amount
          of the Junior Liabilities, and shall cause said claim or claims to be approved
          and all payments and other distributions in respect thereof to be made directly
          to the Bank, and 



                         c.       
          CSFBM, the Lenders and the Administrative Agent hereby irrevocably agree that
          the Bank may, at its sole discretion, in the name of CSFBM, the Lenders and the
          Administrative Agent, or any one of them, or otherwise, demand, sue for,
          collect, receive and receipt of any and all such payments or distributions, and
          file and prove, and, to the extent permitted by applicable law, vote or consent
          in any such proceedings with respect to, any and all claims of CSFBM, the
          Lenders and the Administrative Agent relating to the Junior Liabilities. 



             4.       
          In the event that CSFBM, the Lenders and the Administrative Agent receive any
          payment or other distribution of any kind or character from any Company 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 CSFBM, the Lenders and the Administrative Agent to the Bank. CSFBM, the
          Lenders and the Administrative Agent will cause to be clearly inserted in any
          agreement, promissory note, certificate 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.
          CSFBM, the Lenders and the Administrative Agent will execute such further
          documents or instruments and take such further action as the Bank may
          reasonably, from time to time, request to carry out the intent 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 upon any of
          the Junior Liabilities, or any security therefore, and any balance thereof
          shall, solely as among CSFBM, the Lenders and the Administrative Agent 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 the Company 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, CSFBM, the Lenders and the Administrative Agent 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 CSFBM, the Administrative Agent and Lenders hereby waives: 



                         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.       
          CSFBM, the Lenders and the Administrative Agent will not, without the prior
          written consent of the Bank: 



                         a.       
          transfer or assign (other than (i) transfers or assignments of Ascent Holdings
          Loan Documents to an entity which is an Affiliate (as that term is defined in
          the Ascent Holding Credit Agreement) of a Lender, and (ii) transfers and
          assignments of Holding Equity Agreements to any such Affiliate; provided
          that prior to each such transfer or assignment, such Affiliate has agreed in
          writing to be bound by the terms of this Agreement), or attempt to collect, or
          subordinate to any Liabilities other than the Senior Liabilities, any Junior
          Liabilities or any rights in respect therefore; 



                         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 Holdings if (i)
          none of such stock or other equity interest matures or can be redeemed 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,
          (iii) no dividends, other than dividends payable solely in stock or other equity
          interests of Holdings, are payable prior to final payment in full in cash of all
          Senior Liabilities, and (iv) Holdings delivers to the Bank, not later than
          fourteen days prior to the proposed effective date of such conversion or
          exchange, an opinion (either addressed to or expressly providing that such
          opinion can be relied upon by the Bank) of counsel reasonably satisfactory tot
          he Bank stating that such exchange will not result in any tax liability with
          respect to which Holdings will be required to make any cash payment or transfer
          any other property of Holdings; or 



                         d.       
          commence, or join with any other creditor in commencing, any bankruptcy,
          reorganization or insolvency proceeding with respect to any Company. 



             8.       
          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 Commitment
          under and as defined in the Receivables Financing Agreement shall have
          terminated. 



             9.       
          The Bank may, from time to time, at its sole discretion and without notice to
          CSFBM, the Lenders and the Administrative Agent, 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.       
          increase the Commitment to an amount not greater than $10,000,000; 



                         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 Receivables Financing
          Agreements. 



             10.       
          The Bank may, from time to time, without notice to CSFBM, the Lenders and the
          Administrative Agent, assign or transfer its interest in any or all of the
          Senior Liabilities; and, 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 of this
          Agreement to the same extent as the applicable assignor or transferor. 



             11.       
          The Bank shall not be prejudiced in its rights under this Agreement by any act
          or failure to act of any Company, CSFBM, the Lenders or the Administrative
          Agent, or any noncompliance of any Company, CSFBM, the Lenders or the
          Administrative Agent 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 CSFBM, the
          Lenders, the Administrative Agent or Companies under this Agreement. 



             12.       
          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. 



             13.       
          The Lenders and the Administrative Agent represent and warrant to Bank that: 



                         a.       
          Attached as Schedule 1 is a complete and correct description of all
          Ascent Holdings Loan Documents. 



                         b.       
          The undersigned Lender is the sole Lender and legal and beneficial owner of all
          of the loans under the Ascent Holdings Credit Agreement. 



                         c.       
          The execution, delivery and performance by the Lenders and the Administrative
          Agent of this Agreement have been duly authorized by all necessary limited
          liability company action. 



                         d.       
          This Agreement is a legal, valid and binding obligation of the Lenders and the
          Administrative Agent, enforceable against the Lenders and the Administrative
          Agent 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). 



             14.       
          CSFBM represents and warrants to the Bank that: 



                         a.       
          As of the execution of this Agreement, CSFBM and its Affiliates do not own any
          equity interest of Holdings other than common stock and Series B Convertible
          Participating Preferred Stock. 



                         b.       
          As of the execution of this Agreement, neither CSFBM nor any of its affiliates
          holds any shares of Series A Convertible Preferred Stock of Holdings. 



                         c.       
          The execution, delivery and performance by CSFBM of this Agreement have been
          duly authorized by all necessary limited liability company action. 



                         d.       
          This Agreement is a legal, valid and binding obligation of CSFBM, enforceable
          against CSFBM 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.       
          Holdings represents and warrants to the Bank that: 



                         a.       
          As of the execution of this Agreement, all Series A Convertible Preferred Stock
          of Holdings has been cancelled. 



                         b.       
          Bank has been provided with a complete and correct copy of the Certificate of
          Designation of Series B Convertible Participating Preferred Stock of Holdings,
          as filed with the Delaware Secretary of State on December 31, 2003. 



             16.       
          This Agreement shall be binding upon the Companies, CSFBM, the Lenders and the
          Administrative Agent and upon the successors and assigns of the Companies,
          CSFBM, the Lenders and the Administrative Agent; and all references herein to
          the Companies, CSFBM, the Lenders and the Administrative Agent, respectively,
          shall be deemed to include any successor or assign to such entity. 



             17.       
          Companies join herein to acknowledge the terms of this Agreement, waive notice
          of acceptance hereof by the Bank, and agree to be bound by the terms and
          provisions hereof, to make no payments or distributions contrary to the terms
          and provisions hereof, and to do every other act and thing necessary or
          appropriate to carry out such terms and provisions. 



             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:
	
	  	The Frost National Bank

    P.O. Box 1600

    San Antonio , Texas 78296

    Attn:  Ms. Kathy Hargrave

    Facsimile:  (210) 220-4258

	
	 	and to
	
	 	The Frost National Bank

    777 Main Street

    Fort Worth, Texas 76102

    Attn:  Mr. Adam Palmer

    Facsimile: (817) 420-5250

	
	 	If to the Administrative Agent: 
	
	 	Credit Suisse First Boston Management Corporation

    11 Madison Avenue, 16th Floor

    New York, NY  10010

    Attention: Mr. Alan Freudenstein

    Facsimile:  (212) 538-0424

	
	 	If to any Lender:
	
	 	c/o Credit Suisse First Boston Management Corporation

    11 Madison Avenue, 16th Floor

    New York, NY  10010

    Attention: Mr. Alan Freudenstein

    Facsimile:  (212) 538-0424

	
	 	If to CFSB:
	
	 	c/o Credit Suisse First Boston Management Corporation

    11 Madison Avenue, 16th Floor

    New York, NY  10010

    Attention: Mr. Alan Freudenstein

    Facsimile:  (212) 538-0424

	
	 	If to any Company:
	
	 	Ascent Assurance, Inc.

    3100 Burnett Plaza, Unit 33

    801 Cherry Street

    Fort Worth, Texas 76102

    Attention: Chief Financial Officer

    Facsimile:  (817) 878-3880





             19.       
          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. 



             20.       
          CSFBM, THE LENDERS AND THE ADMINISTRATIVE ASSISTANT (AND, BY ACCEPTING THE
          BENEFITS HEREOF, THE BANK) EXPRESSLY WAIVES 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, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES. 




[SIGNATURES FOLLOW] 









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


	 	THE FROST NATIONAL BANK
	 
	 
	 	By:    Alan Freudenstein                  
	 	          Alan Freudenstein

          President 






	 	CREDIT SUISSE FIRST BOSTON MANAGEMENT LLC,

as Administrative Agent

	 
	 
	 	By:    Alan Freudenstein                  
	 	          Alan Freudenstein

          President 






	 	CREDIT SUISSE FIRST BOSTON MANAGEMENT LLC,

as Lender

	 
	 
	 	By:    Alan Freudenstein                  
	 	          Alan Freudenstein

          President 






	 	CREDIT SUISSE FIRST BOSTON MANAGEMENT LLC
	 
	 
	 	By:    Alan Freudenstein                  
	 	          Alan Freudenstein

          President 














        Special
Situations Holdings, Inc. — Westbridge (“Westbridge”) joins herein
to (a) acknowledge the terms of this Agreement, (b) represent and warrant to Bank that
Westbridge is the sole owner of legal and equitable title to all Series B Convertible
Participating Preferred Stock of Holdings and that all representations and warranties of
CSFBM in this Agreement are, as to and as if made by Westbridge, true and correct, and (c)
agree to be bound by all obligations of CSFBM pursuant to this Agreement with respect to
the Holdings Equity Agreements and, if at any time Westbridge has any interest in any
other Junior Liabilities, all Junior Liabilities. 




	 	SPECIAL SITUATIONS HOLDINGS, INC. - WESTBRIDGE
	 
	 
	 	By:    Alan Freudenstein                  
	 	          Alan Freudenstein

          President 






	 	ASCENT ASSURANCE, INC.
	 
	 
	 	By:    Patrick J. Mitchell                  
	 	          Name:  Patrick J. Mitchell

          Title:  Chairman of the Board 






	 	FOUNDATION FINANCIAL SERVICES, INC.
	 
	 
	 	By:    Patrick J. Mitchell                  
	 	          Name: Patrick J. Mitchell

          Title: Chairman of the Board 






	 	NATIONALCARE®MARKETING, INC.
	 
	 
	 	By:    Patrick J. Mitchell                  
	 	          Name: Patrick J. Mitchell

          Title: Chairman of the Board 






	 	PRECISION DIALING SERVICES, INC.
	 
	 
	 	By:    Patrick J. Mitchell                  
	 	          Name: Patrick J. Mitchell

          Title: Chairman of the Board 






	 	SENIOR BENEFITS, L.L.C.
	 
	 
	 	By:    Patrick J. Mitchell                  
	 	          Name: Patrick J. Mitchell

          Title: Chairman of the Board 







	 	WESTBRIDGE PRINTING SERVICES, INC.
	 
	 
	 	By:    Patrick J. Mitchell                  
	 	          Name: Patrick J. Mitchell

          Title: Chairman of the Board 






	 	ASCENT FUNDING, INC.
	 
	 
	 	By:    Patrick J. Mitchell                  
	 	          Name: Patrick J. Mitchell

          Title: Chairman of the Board 
















SCHEDULE 1 




HOLDINGS AGREEMENTS 




1.     Ascent Holdings Credit
Agreement 

2.     Pledge Agreement between Ascent Assurance, Inc. and CSFBM dated April 17, 2001.

3.     Guaranty and Security Agreement among NationalCare Marketing, Inc., Foundation Financial
Services, Inc., Precision Dialing Service, Inc., Senior Benefits, L.L.C., and Westbridge Printing Services, Inc. and CSFBM dated April 17, 2001, as amended.













SCHEDULE 2 




RECEIVABLES FINANCING
AGREEMENTS 



     1.    
          Credit Agreement among Ascent Funding, Inc., Ascent Assurance, Inc. and
          NationalCare® Marketing, Inc. and The Frost National Bank dated as of
          December 31, 2003. 



     2.    
          Security Agreement by Ascent Funding, Inc. for the benefit of The Frost National
          Bank dated as of December 31, 2003. 



     3.    
          Pledge and Security Agreement between Ascent Assurance, Inc. and The Frost
          National Bank dated as of December 31, 2003. 



     4.    
          Guaranty Agreement by Ascent Assurance, Inc. in favor of The Frost National Bank
          dated as of December 31, 2003. 



     5.    
          Pledge and Security Agreement between NationalCare® Marketing, Inc. and The
          Frost National Bank dated as of December 31, 2003. 



     6.    
          Guaranty Agreement by NationalCare® Marketing, Inc. in favor of The Frost
          National Bank dated as of December 31, 2003.