Exhibit 10.42


Exhibit 10.42



SECOND AMENDMENT TO
SECURITY AGREEMENT 



        This
Second Amendment to Security Agreement (the “Amendment”) is made as of this 27th
day of January, 2003, by and among ASCENT MANAGEMENT, INC. (“AMI”) and LASALLE
BANK NATIONAL ASSOCIATION (the “Bank”). 




W I T N E S S E T H 



        WHEREAS,
AMI executed and delivered that certain Installment Note dated July 20, 1999 in the
original principal amount of $3,300,000 (the “Note”) in favor of the Bank, and,
as security for AMI’s obligations thereunder, AMI granted to the Bank a first
priority security interest in all of AMI’s personal property pursuant to that certain
Security Agreement dated July 20, 1999 between AMI, as debtor, and the Bank, as secured
party, as amended by that certain First Amendment to Security Agreement, dated as of
November 30, 2000 between AMI and the Bank (collectively, the “Security
Agreement”); 



        WHEREAS,
Ascent Funding, Inc. (“AFI”) and the Bank entered into that certain Credit
Agreement dated June 6, 1997 (together with all amendments thereto, collectively, the
“Credit Agreement”), and, contemporaneously herewith, AFI and the Bank are
entering into that certain Eighth Amendment to Credit Agreement (the “Eighth
Amendment”) and in connection therewith, among other things, funds in that certain
Cash Collateral Account (as defined in the Credit Agreement) are being released to be
applied, in substantial part, to the repayment of AMI’s obligations under the Note; 



        WHEREAS,
AFI provided a guaranty in favor of the Bank of all of the obligations of AMI under the
Note, which guaranty is secured by, among other things, the Cash Collateral Account; 



        WHEREAS,
as a condition to the Bank agreeing to enter into the Eighth Amendment and in
consideration of the Bank agreeing to the application of funds in the Cash Collateral
Account to the repayment of AMI’s obligations under the Note, the Bank is requiring
that the Collateral (as defined in the Security Agreement) of AMI continue to secure the
obligations of AFI under the Credit Agreement; 



        WHEREAS,
the parties desire to amend the Security Agreement to provide for the continuation of the
grant of the security interest as security for the obligations of AFI under the Credit
Agreement, as more fully set forth herein. 



        NOW,
THEREFORE, in consideration of the mutual agreements herein contained and other good and
valuable consideration, the adequacy of which is hereby acknowledged, and subject to the
terms and conditions hereof, the parties hereto agree as follows: 



SECTION 1.   DEFINITIONS.  Unless  otherwise  defined  herein,  all  capitalized  terms shall have the meaning
given to them in the Security Agreement.



SECTION 2.   AMENDMENTS TO SECURITY AGREEMENT.



           2.1.    
          All references to “the Borrower” or “Borrower” in the
          Security Agreement are hereby replaced with “AMI”. 



           2.2.    
          The Security Agreement is hereby amended by deleting the first paragraph in
          Section 1 in its entirety and inserting the following in its stead: 



          		    “1.       
               In consideration of a loan made by the Bank as secured party and as security
               therefor, and for the payment of any and all liabilities and obligations of
               Ascent Funding, Inc. to the Bank arising out of or relating thereto, howsoever
               created, arising or evidenced, and howsoever owned, held or acquired, whether
               now or hereafter existing, whether now due or to become due, whether direct or
               indirect, or absolute or contingent, and whether several, joint or joint and
               several (all of which liabilities and obligations are hereinafter collectively
               referred to as the “Obligations”), AMI does hereby assign and pledge,
               and does hereby grant, to the Bank a continuing and unconditional security
               interest in and to any and all property of AMI (except as set forth below), of
               any kind or description, whether tangible or intangible, whether now existing or
               hereafter arising or acquired, including, but not limited to:" 



               



           2.3.    
          The Security Agreement is hereby amended by deleting Paragraph 4 in its
          entirety. 



           2.4.    
          The Security Agreement is amended by deleting Paragraph 7(d) in its entirety and
          inserting the following in its stead: 



               	“(d) 	       

                     the Borrower will not remove or permit the Collateral to be removed from its
                    principal place of business without the prior written consent of the Bank,
                    except for Inventory sold in the usual and ordinary course of the
                    Borrower’s business and except as permitted under paragraph 4(b) of Pledge
                    Agreement of even date herewith between Ascent Assurance, Inc. and the
                    Bank.” 


                    



           2.5.    
          Effective as of December 31, 2002, the Security Agreement is hereby amended by
          deleting Paragraph 8 in its entirety. 



           2.6.    
          The Security Agreement is hereby amended by deleting Paragraph 9 in its entirety
          and inserting the following in its stead: 



               	“9. 	       

                     Within sixty (60) days after the close of each of its fiscal quarters and not
                    later than one hundred twenty (120) days after the close of each of its fiscal
                    years, the Borrower shall deliver to the Bank financial statements consisting of
                    a balance sheet as of the end of each such period, and income statement, and
                    reconciliation of stockholders’ equity, and a statement of changes in cash
                    flow, prepared in accordance with generally accepted accounting principles
                    applied in a manner consistent with prior years, and such other information
                    (including non-financial information) as the Bank may, from time to time,
                    reasonably request. The Borrower represents and warrants to the Bank that the
                    financial statements delivered or to be delivered by it to the Bank at or prior
                    to the execution and delivery of this Agreement and at all times subsequent
                    hereto accurately reflect and will reflect the financial condition of the
                    Borrower as of the date thereof. The Bank will be immediately advised by the
                    Borrower of any material adverse change in the financial condition, the
                    operations or any other status of the Borrower.” 


                    



           2.7.    
          The Security Agreement is hereby amended by deleting Paragraph 11(a) in its
          entirety and inserting the following in its stead: 



          		    “(a)       
               any Default or Event of Default occurs under that certain Credit Agreement (the
               “Credit Agreement”), dated as of June 6, 1997 between Ascent Funding,
               Inc. and the Bank, including any amendments thereto, as such terms are defined
               in the Credit Agreement.” 



               



           2.8.    
          The Security Agreement is hereby amended by deleting Paragraph 11(f) in its
          entirety. 



SECTION 3.    CONDITIONS PRECEDENT
TO EFFECTIVENESS OF AMENDMENT. The effectiveness of this Amendment is
expressly conditioned upon satisfaction of the following conditions precedent: 



           3.1.    
          The Bank shall have received copies of this Amendment duly executed by AMI. 



           3.2.    
          The Bank shall have received authorizing resolutions of AMI with respect to the
          transaction contemplated by this Amendment. 



           3.3.    
          The Bank shall have received such other documents, certificates and assurances
          as it shall reasonably request, all of which shall have been delivered on or
          prior to the date hereof. 



SECTION 4.    REAFFIRMATION OF
AMI. AMI hereby represents and warrants to the Bank that (i) the warranties
set forth in Section 7 of the Security Agreement are true and correct on and as of the
date hereof, except to the extent (a) that any such warranties relate to a specific date,
or (b) changes thereto are a result of transactions for which the Bank has granted its
consent; (ii) AMI is on the date hereof in compliance with all of the terms and
provisions set forth in the Security Agreement as hereby amended; and (iii) upon execution
hereof no Default has occurred and is continuing or has not previously been waived. 



SECTION 5.    REAFFIRMATION OF
GRANT OF SECURITY INTEREST. AMI expressly acknowledges and agrees that all
collateral, security interests, liens, and pledges heretofore, under this Amendment, or
hereafter granted to the Bank and all supplements thereto, extend to and secure all of the
obligations of AFI to the Bank, now existing or hereafter arising, upon the terms set
forth in such agreements, all of which security interests, liens, and pledges are hereby
ratified, reaffirmed, confirmed and approved. 



SECTION 6.   
EXPENSES. AMI shall pay, upon demand, all reasonable attorneys’
fees and out-of-pocket costs of the Bank in connection with this Amendment and the
agreements, documents and other items contemplated hereunder. 



SECTION 7.    FULL FORCE AND
EFFECT. Except as herein amended, the Security Agreement shall remain in
full force and effect. 



SECTION 8.   
COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same document. 




[SIGNATURE PAGE FOLLOWS] 









        IN
WITNESS WHEREOF, the parties hereto have executed this Amendment on the day and year
specified above. 


	 	ASCENT MANAGEMENT, INC. 
	 	By: /Patrick J. Mitchell/
	 	Name: Patrick J. Mitchell
	 	Title: Chairman of the Board and CEO
	 
	 
	 	LASALLE BANK NATIONAL ASSOCIATION 
	 	By: /Bradley Kronland/
	 	Name: Bradley Kronland   
	 	Title: Assistant Vice President