Exhibit 10.39


Exhibit 10.39



CYNTHIA KOENIG 




EMPLOYMENT AGREEMENT 



        This
Agreement (this “Agreement”), dated as of January 10, 2003, is made by and among
Ascent Assurance, Inc., a Delaware corporation, having its principal offices at 110 West
Seventh Street, Suite 300, Fort Worth, Texas 76102 (“AAI”), Ascent Management,
Inc., a Delaware corporation, having its principal offices at 110 West Seventh Street,
Suite 300, Fort Worth, Texas 76102 (the “Corporation”), and Ms. Cynthia Koenig
(the “Executive”), residing at 6509 Connie Lane, Colleyville, Texas 76034. 




RECITALS 



         1.       
          The Corporation and AAI desire to continue the current employment relationship
          with the Executive as an employee of the Corporation and AAI as a Senior Vice
          President and the Chief Financial Officer of AAI and the Corporation, and to
          provide her with fair and reasonable protection from risks associated with a
          Change in Control (as defined herein) in order to enhance her ability to perform
          her responsibilities and utilize her talents for the benefit of the Corporation
          and AAI, by entering into an agreement embodying the terms of those
          relationships which upon proper execution shall supercede all prior written or
          oral employment agreements between the parties. 



         2.       
          The Executive is willing to serve as a Senior Vice President, and Chief
          Financial Officer of AAI and the Corporation on the terms set forth herein. 




AGREEMENT 



        NOW
THEREFORE, in consideration of the premises and mutual covenants herein contained, and
other good and valuable consideration, the Corporation, AAI, and the Executive hereby
agree as follows: 



         1.       
          Definitions. 



        1.1
“Affiliate” means any person or entity controlling, controlled by or under
common control with AAI or the Corporation. 



        1.2
 “Board” means the Board of Directors of AAI.



        1.3
“Cause” means (a) Executive’s material breach of any term or condition of
this Agreement; (b) Executive’s (i) personal dishonesty, willful misconduct or
intentional breach of fiduciary duty, in each such case involving AAI, the Corporation or
any Affiliate’s property, personnel or business operations, in each case materially
detrimental to the goodwill of AAI, the Corporation or any Affiliate, or materially
damaging to AAI’s, the Corporation’s or any Affiliate’s relationships with
its respective customers, clients or employees; or (ii) intentional failure to perform the
current material duties of her employment or her other material obligations hereunder, or
any other intentional act by Executive which in either case is materially detrimental to
the goodwill of AAI, the Corporation or any Affiliate, or materially damaging to
AAI’s, the Corporation’s or any Affiliate’s relationships with its
customers, clients or employees; (c) Executive’s conviction or entry of a no-contest
plea with respect to a felony; (d) Executive’s material misappropriation (or
attempted material misappropriation) of any of AAI’s, the Corporation’s or any
Affiliate’s, funds or property or of a business opportunity of AAI, the Corporation
or any Affiliate (including attempting to secure or securing any personal profit in
connection with any transaction entered into on behalf of AAI, the Corporation or any
Affiliate) materially detrimental to the goodwill of AAI, the Corporation or any
Affiliate, or materially damaging to AAI’s, the Corporation’s or any
Affiliate’s relationships with its respective customers, clients or employees; or (e)
Executive’s gross negligence in connection with the performance of Executive’s
obligations hereunder which is materially detrimental to the goodwill of AAI and the
Corporation or any Affiliate, or materially damaging to AAI’s, the Corporation’s
or any Affiliate’s relationships with its customers, clients or employees. 



        1.4
“Date of Termination” means (a) in the case of a termination for which a Notice
of Termination is required, the date of actual receipt of such Notice of Termination or,
if later, the date specified therein (in no event, however, shall such date be later than
seven (7) days after the date of actual receipt of such notice), as the case may be, and
(b) in all other cases, the actual date on which the Executive’s employment
terminates during the Term of Employment. 



        1.5
“Disability” means mental or physical impairment or incapacity rendering the
Executive substantially unable to perform her duties under this Agreement for at least 180
days out of any 360 day period during the Term of Employment. 



        1.6
“Good Reason” means and shall be deemed to exist if, without the prior express
written consent of the Executive, (a) the Executive is assigned any duties or
responsibilities inconsistent in any material respect with the scope of the duties or
responsibilities associated with the Executive’s titles or positions, as set forth
and described in Section 4 of this Agreement; (b) the Executive suffers a reduction in the
duties, responsibilities, titles, positions, or effective authority associated with such
titles and positions, as set forth and described in Section 4 of this Agreement; (c) the
Executive is not appointed to, or is removed from, the offices or positions provided for
in Section 4 of this Agreement; (d) the Executive’s Base Salary is decreased , or the
Executive’s benefits under employee benefit or health or welfare plans or programs
are decreased, or the Executive fails to timely receive her Base Salary, any applicable
annual bonus, LTIP Award, expense reimbursement, or any other benefit to which she is
entitled under this Agreement; (e) AAI and the Corporation fail to maintain, or cause to
be maintained, adequate directors and officers liability insurance coverage for the
Executive or fail to comply with Section 4.3 of this Agreement; or (f) AAI and the
Corporation purport to terminate the Executive’s employment for Cause and such
purported termination of employment is not effected in accordance with the requirements of
this Agreement. 



        1.7
 “Term of Employment”has the meaning ascribed to it in Section 3.



        1.8
 “Change in Control”means



     	(a) 	
          the acquisition, during the Term of Employment, by an individual, entity or
          group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
          Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial
          ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
          of 34% or more of (A) the outstanding shares of common stock of AAI, (the
          “Common Stock”), or (B) the combined voting power of the voting
          securities of AAI entitled to vote generally in the election of directors (the
          “Voting Securities”); provided, however, the following
          acquisitions shall not constitute a Change in Control: (x) any acquisition by
          any employee benefit plan (or related trust) sponsored or maintained by the
          Corporation or AAI or Affiliate, or (y) any acquisition by any corporation if,
          immediately following such acquisition, more than 66% of the then outstanding
          shares of common stock of such corporation and the combined voting power of the
          then outstanding voting securities of such corporation (entitled to vote
          generally in the election of directors) is beneficially owned, directly or
          indirectly, by all or substantially all of the individuals and entities who,
          immediately prior to such acquisition, were the beneficial owners of the Common
          Stock and the Voting Securities in substantially the same proportions,
          respectively, as their ownership, immediately prior to such acquisition, of the
          Common Stock and Voting Securities; or 



          



     	(b) 	
          circumstances occurring, during the Term of Employment, whereby individuals who
          constitute the Board (the “Incumbent Board”) cease for any reason to
          constitute at least a majority of the Board; provided, however, that any
          individual becoming a director subsequent to the date of this Agreement whose
          election, or nomination for election by AAI’s shareholders, was approved by
          a vote of at least a majority of the directors then serving and comprising the
          Incumbent Board shall be considered as though such individual were a member of
          the Incumbent Board, but excluding, for this purpose, any such individual whose
          initial assumption of office occurs as a result of either an actual or
          threatened election contest or other actual or threatened solicitation of
          proxies or consents; or 



          



     	(c) 	
          approval, during the Term of Employment, by the shareholders of AAI of a plan of
          reorganization, merger or consolidation, other than a reorganization, merger, or
          consolidation with respect to which all or substantially all of the individuals
          and entities who were the beneficial owners of the Common Stock and Voting
          Securities immediately prior to such reorganization, merger or consolidation who
          continue to beneficially own immediately after such reorganization, merger or
          consolidation, more than 66% of the then outstanding common stock and voting
          securities (entitled to vote generally in the election of directors) of the
          corporation resulting from such reorganization, merger or consolidation in
          substantially the same proportions as their respective ownership, immediately
          prior to such reorganization, merger or consolidation, of the Common Stock and
          Voting Securities, or 



          



     	(d) 	
          approval, during the Term of Employment, by the shareholders of AAI of (i) a
          complete liquidation or dissolution AAI, or (ii) the sale or other disposition
          of all or substantially all of the assets of AAI, other than to a direct or
          indirect wholly-owned subsidiary of AAI. For purposes of this Agreement and
          without limiting the generality of the preceding sentence, the sale or other
          disposition of more than 50% of the common stock or Voting Securities (entitled
          to vote generally in the election of directors) of AAI shall be deemed to
          constitute a sale or other disposition of substantially all of the assets of
          AAI. 



          



         2.       
          Employment. Subject to the terms and provisions set forth in this
          Agreement, AAI and the Corporation hereby agree that the Executive shall be the
          Chief Financial Officer of each respectively and Executive shall report
          exclusively to the Chairman of the Board, President and Chief Executive Officer
          of AAI and the Corporation, respectively, with the title of Senior Vice
          President and Chief Financial Officer during the Term of Employment and each of
          AAI and the Corporation agrees during the Term of Employment to employ the
          Executive as Senior Vice President and Chief Financial Officer of each of AAI
          and the Corporation, and the Executive hereby accepts such employment. 



         3.       
          Term of Employment. The term of employment under this Agreement shall
          commence on January 10, 2003, (the “Commencement Date”) and shall
          continue until the earlier to occur of January 10, 2005 (the “Expiration
          Date”) or the date on which the Executive is terminated or resigns pursuant
          to Section 6 hereof (the “Term of Employment”). 



         4.       
          Positions, Responsibilities and Duties. 



        4.1
Positions. During the Term of Employment, the Executive shall be employed and serve
as a Senior Vice President and the Chief Financial Officer of each of AAI and the
Corporation, as well as the equivalent or higher title and position of each of the
subsidiaries of AAI. Notwithstanding the foregoing, Executive shall serve from time to
time as a “loaned employee” or “borrowed employee” of National
Foundation Life Insurance Company, Freedom Life Insurance Company of America, American
Insurance Company of Texas and National Financial Insurance Company in accordance with the
administrative services agreement executed by such insurance companies and the
Corporation. In such positions with AAI, the Executive shall have the duties,
responsibilities and authority normally associated with the office and position of senior
vice president and chief financial officer of a publicly-traded corporation. The Executive
shall report solely and directly to the President and Chief Executive Officer. The
Executive shall perform her duties and responsibilities hereunder at her current office
located at 110 West Seventh Street, Suite 300, Fort Worth, Texas 76102, or at such other
home office of AAI and the Corporation situated in or reasonably near the City of Fort
Worth, Texas. Notwithstanding the above, the Executive shall not be required to perform
any duties and responsibilities which would be likely to result in a non-compliance with
or violation of any applicable law or regulation. 



        4.2
Duties. During the Term of Employment, the Executive shall use her best efforts to
perform faithfully and efficiently the duties and responsibilities contemplated by this
Agreement, including, without limitation, the responsibilities normally associated with
the highest ranking financial officer and shall devote substantially all of her business
time, skill and attention to such services, including the service as a “loaned
employee” or “borrowed employee” of National Foundation Life Insurance
Company, Freedom Life Insurance Company of America, American Insurance Company of Texas
and National Financial Insurance Company; provided, however, that the Executive shall be
allowed, to the extent other activities do not substantially interfere with the full
performance by the Executive of her duties and responsibilities hereunder, to (a) manage
the Executive’s personal, financial and legal affairs, which may include
non-competing, passive business activities and (b) serve on civic or charitable boards or
committees. The Executive shall at all times comply with and be subject to AAI’s and
the Corporation’s policies, procedures, directives, and regulations as may be
reasonably established by the Board from time to time. 



        4.3
Working Conditions. AAI and the Corporation will provide the Executive with a
private office, secretarial and stenographic services, and any other facilities and
services as are currently in place or otherwise suitable to the Executive’s position
or required for the performance of her duties 



         5.       
          Compensation, Other Benefits and Payment of Certain Wages. 



        5.1
Base Salary. During the Term of Employment, the Executive shall receive a base
salary of no less than $175,000.00 per annum (“Base Salary”) payable in equal
semi-monthly installments. Such Base Salary shall be reviewed annually for increase in the
sole discretion of the Board or the Compensation Committee thereof. Any such salary
increase shall then be the “Base Salary” for purposes of this Agreement. 



        5.2
Short-Term Incentive. For each fiscal year of AAI during the Term of Employment ,
the Executive shall be eligible to receive (in addition to the Base Salary) an annual cash
bonus as reasonably determined by the Board or the Compensation Committee thereof. Such
additional annual bonus shall be payable to the Executive at the same time as such bonuses
or similar bonuses are paid to other members of the Corporation’s or AAI’s
senior management. 



        5.3
Retirement Plans. During the Term of Employment, the Executive shall be entitled to
participate in all incentive, pension, retirement, savings, 401(k) and other employee
pension benefit plans and programs maintained by AAI and/or the Corporation from time to
time for the benefit of senior executives and/or other employees. 



        5.4
Welfare Benefit Plans. During the Term of Employment, the Executive, the
Executive’s spouse, if any, and their eligible dependents, if any, shall be entitled
to participate in and be covered under all the welfare benefit plans or programs
maintained by the Corporation and AAI from time to time including, without limitation, all
medical hospitalization, dental, disability, life, accidental death and dismemberment and
travel accident insurance plans and programs. 



        5.5
Long-Term Incentive Plan. The Executive shall be entitled to participate in any
long-term incentive plan or program adopted by the boards of AAI and the Corporation
(“LTIP Award”) based on the achievement of reasonable corporate objectives
determined in good faith by AAI or the Corporation. An LTIP Award may be in the form of
performance shares, performance units, stock options, restricted stock, or other types of
awards deemed appropriate by the Board, the Executive Committee or such other committees
of the Board. 



        5.6
Expense Reimbursement. During the Term of Employment, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by the
Executive in promoting AAI and/or its Affiliates and in otherwise performing her duties
and responsibilities hereunder. 



         6.       
          Termination. 



        6.1
Termination Due to Death or Disability. A determination of whether the Executive is
Disabled shall be made by AAI, the Corporation or any Affiliate in its sole, but good
faith, discretion upon its own initiative after obtaining certification from a duly
licensed physician or upon request of the Executive or a person acting on her behalf. The
Executive shall cooperate with any necessary medical examination in connection with a
determination of Disability. Upon seven (7) days prior written notice to the Executive,
AAI and the Corporation may terminate the Executive’s employment hereunder due to
Disability. In the event of the Executive’s death or a termination of the
Executive’s employment by AAI and the Corporation due to Disability, the Executive,
her estate or her legal representative, as the case may be, shall be entitled to receive
from AAI and the Corporation without duplication the following: 



          		    (a)       
               a lump sum payment of any accrued but unpaid Base Salary through the Date of
               Termination; 



               



          		    (b)       
               a lump sum payment of any annual bonus and LTIP Award awarded but not yet paid
               as of the Date of Termination; 



               



          		    (c)       
               a lump sum payment of accrued but unused vacation through the Date of
               Termination; 



               



          		    (d)       
               reimbursement of all expenses incurred, but not yet paid prior to such death or
               Disability; 



               



          		    (e)       
               in the case of death, any other compensation and benefits, including life
               insurance, as may be provided in accordance with the terms and provisions of any
               applicable plans and programs of 



               


                  AAI or the Corporation; and


          		    (f)       
               in the case of Disability, (i) continuation of the Executive’s health and
               welfare benefits (as described in Section 5.4 of this Agreement) at the level in
               effect (as provided for by Section 5.4) on the Date of Termination through the
               end of the one year period following the Date of Termination of the
               Executive’s employment due to Disability (or the Corporation and/or AAI
               shall provide the economic equivalent thereof), and (ii) any other compensation
               and benefits as may be provided in accordance with the terms and provisions of
               any applicable plans and programs of AAI and the Corporation. 



               



        6.2
Termination by AAI and the Corporation for Cause, by AAI and the Corporation without
Cause either prior to or more than one year after a Change in Control or by the Executive
voluntarily. AAI and the Corporation may terminate the Executive’s employment
hereunder immediately for Cause as provided in this Section 6.2. Moreover, upon seven (7)
days prior written notice to the Executive, AAI and the Corporation may also terminate the
Executive’s employment hereunder without Cause, other than due to death or
Disability. The Executive, upon fourteen (14) days notice to AAI and the Corporation, may
also terminate employment hereunder voluntarily (i.e. on Executive’s own initiative
other than a termination due to death or Disability. Any voluntary termination with such
notice shall not be a breach of this Agreement. If AAI and the Corporation terminate the
Executive’s employment hereunder either (i) for Cause or (ii) without Cause prior to
the date of a Change in Control or more than one year after the date of any Change in
Control, or If the Executive terminates employment hereunder voluntarily, then the
Executive shall be entitled to receive from AAI and the Corporation without duplication
the following: 



          		    (a)       
               a lump sum payment of any accrued but unpaid Base Salary through the Date of
               Termination; 



               



          		    (b)       
               a lump sum payment of any annual bonus and LTIP Award awarded but not yet paid
               as of the Date of Termination; 



               



          		    (c)       
               a lump sum payment of accrued but unused vacation through the Date of
               Termination; 



               



          		    (d)       
               reimbursement for all expenses incurred, but not yet paid prior to such
               termination of employment; and 



               




          		    (e)       
               any other compensation and benefits as may be provided in accordance with the
               terms and provisions of any applicable plans and programs of AAI and the
               Corporation. 



               



        6.3
Termination within one year after a Change in Control that is either without Cause or
for Good Reason. Upon seven (7) days prior written notice to the Executive, AAI and
the Corporation may terminate the Executive’s employment hereunder within one year
following the date of a Change in Control without Cause, and upon thirty (30) days notice
to AAI and the Corporation, the Executive may terminate her employment hereunder within
one year following the date of a Change in Control for Good Reason. If AAI and the
Corporation terminate the Executive’s employment hereunder within one year following
the date of a Change in Control without Cause, other than due to death or Disability, or
if the Executive terminates her employment hereunder within one year following the date of
a Change in Control for Good Reason, the Executive shall be entitled to receive from AAI
and the Corporation without duplication the following: 



          		    (a)       
               a lump sum payment equal in amount to 100% of the Executive’s Base Salary
               (as provided for by Section 5.1 of this Agreement); 



               



          		    (b)       
               a lump sum payment of any accrued but unpaid Base Salary through the Date of
               Termination and any annual bonus and LTIP Award awarded but not yet paid as of
               the Date of Termination; 



               



          		    (c)       
               a lump sum payment of accrued but unused vacation through the Date of
               Termination; 



               



          		    (d)       
               reimbursement of all expenses incurred, but not yet paid prior to such
               termination of employment; 



               



          		    (e)       
               any other compensation and benefits as may be provided in accordance with the
               terms and provisions of any applicable plans or programs of the Corporation and
               AAI, except any other severance benefit of AAI or the Corporation. 



               



Notwithstanding the foregoing, the
Executive shall be entitled to receive the Change in Control payments as provided in
Section 6.3 (a), (b), (c), (d) and (e) if the Executive’s employment with the
Corporation and AAI is terminated for any reason during the Term of Employment, but prior
to the date on which a Change in Control occurs, if the Executive can reasonably
demonstrate that such termination (i) was at the request or suggestion of a third party
who has taken steps reasonably calculated to effect a Change in Control or (ii) otherwise
arose in connection with or in anticipation of a Change in Control. 



        In
the case of termination by Executive for Good Reason pursuant to this Section 6.3, AAI and
the Corporation shall be given written notice that the Executive intends to terminate her
employment hereunder for Good Reason following a Change in Control. Such written notice,
given in accordance with Section 6.5 of this Agreement, shall specify the particular act
or acts, or failure to act, which is or are the basis for the decision to so terminate the
Executive’s employment for Good Reason. Upon failure of AAI and the Corporation, as
fairly and reasonably determined by the Executive, within the thirty (30) day notice
period referred to above, to correct such act or failure to act, or if AAI and the
Corporation fail to meet with the Executive after being provided an opportunity to do so,
the Executive’s employment by AAI and the Corporation shall be automatically
terminated under this Section 6.3 for Good Reason as of the date determined under Section
1.4 of this Agreement. 



        6.4
No Mitigation; No Offset. In the event of any termination of employment, the
Executive shall be under no obligation to seek other employment and there shall be no
offset against any amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that the Executive may obtain. Any
amounts due under this Section 6 are in the nature of severance payments, or liquidated
damages, or both, and in no event are either such severance payments or liquidated damages
in the nature of a penalty. 



        6.5
Notice of Termination. Any termination by AAI and the Corporation for Cause or by
the Executive for Good Reason shall be communicated by a notice of termination to the
other party hereto given in accordance with Section 13.3 of this Agreement (the
“Notice of Termination”). The Notice of Termination shall be given, in the case
of a termination for Cause, within ninety (90) business days after the Chief Executive
Officer, President, or a director of the Corporation (excluding the Executive) knew or
should have known of the events giving rise to such purported termination, and in the case
of a termination by the Executive within one year of the date of a Change in Control for
Good Reason, within ninety (90) days of the Executive having actual knowledge of the
events giving rise to such Good Reason termination. Such notice shall (a) indicate the
specific termination provision in this Agreement relied upon, (b) set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated, and (c) if the termination
date is other than the date of receipt of such notice, specify the date on which the
Executive’s employment is to be terminated (which date shall not be earlier than the
date on which such notice is actually given). 



        6.6
Certain Other Payments. Notwithstanding any other provisions of this Agreement, in
the event that any payment or benefit received or to be received by the Executive in
connection with the termination of the Executive’s employment, whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with AAI and the
Corporation or any of their Affiliates (all such payments and benefits being hereinafter
called the “Total Payments”) would subject the Executive to the excise tax
imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the
“Code”) or any successor section thereto (the “Excise Tax”), and if,
and only if, such Total Payments less the Excise Tax is less than the maximum amount of
the Total Payments which could be payable to the Executive without the imposition of the
Excise Tax, then and only then, and only to the extent necessary to eliminate the
imposition of the Excise Tax (and after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in any such other plan,
arrangement or agreement), (A) any cash payments hereunder shall first be reduced (if
necessary, to zero), and (B) all other non-cash payments hereunder shall next be reduced.
For purposes of this limitation (i) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have effectively waived in writing prior to the
Date of Termination shall be taken into account, (ii) no portion of the Total Payments
shall be taken into account which in the opinion of tax counsel selected by AAI’s
independent auditors and reasonably acceptable to the Executive does not constitute a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code,
including by reason of Section 280G(b)(4)(A) of the Code, (iii) all payments shall be
reduced only to the extent necessary so that the Total Payments (other than those referred
to in clauses (i) or (ii)) in their entirety constitute reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions under Code Section 280G, in the
opinion of the tax counsel referred to in clause (ii); and (iv) the value of any non-cash
benefit or any deferred payment or benefit included in the Total Payments shall be
determined by AAI’s independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. 



        6.7
Payment. Except as otherwise provided in this Agreement, any payments to which the
Executive shall be entitled to under this Section 6, including, without limitation, any
economic equivalent of any benefit, shall be made immediately on the Date of Termination.
If the amount of any payment due to the Executive cannot be finally determined within
thirty (30) days after the Date of Termination, such amount shall be estimated on a good
faith basis by AAI and the estimated amount shall be paid no later than thirty (30) days
after such Date of Termination. As soon as practicable thereafter, the final determination
of the amount due shall be made and any adjustment requiring a payment to or from the
Executive shall be made as promptly as practicable. 



         7.       
          Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
          limit the Executive’s continuing or future participation in any benefit,
          bonus, incentive or other plan or program provided or maintained by AAI and/or
          the Corporation for which the Executive may qualify, nor shall anything herein
          limit or otherwise prejudice such rights as the Executive may have under any
          other existing or future agreements with the Corporation, AAI, and/or any
          Affiliate of either, including, without limitation, any stock option agreements
          or plans. Amounts which are vested benefits or which the Executive is otherwise
          entitled to receive under any plans or programs of the Corporation, AAI and/or
          any Affiliate of either at or subsequent to the Date of Termination shall be
          payable in accordance with such plans or programs. Notwithstanding the
          foregoing, payments to the Executive under Section 6.3 hereof shall be in lieu
          of payments under any severance plan or program. 



         8.       
          Settlement. AAI’s and the Corporation’s obligation to make the
          payments provided for in this Agreement and otherwise to perform its obligations
          hereunder shall not be affected by any circumstances, including, without
          limitation, any set-off (except set-off for a fixed and liquidated obligation),
          counterclaim, recoupment, defense or other right which AAI and/or the
          Corporation and/or any Affiliates may have against the Executive or others.
          Notwithstanding anything contained herein to the contrary, the obligations of
          AAI and the Corporation hereunder for the payment of severance under Section 6.3
          (a) shall be subject to Executive having executed and delivered an instrument to
          AAI and the Corporation on the date of the receipt of such severance payment
          irrevocably waiving and releasing AAI, the Corporation, and each Affiliate from
          any and all obligations or liabilities to Executive and her heirs and assigns
          (i) for the specific severance payments called for in Section 6.3 (a), (ii)
          arising from or in connection with Executive’s employment with AAI and the
          Corporation or (iii) the termination of such employment and any and all claims
          Executive may have under federal, state or local statutes, regulations or
          ordinances or under any common law principles or breach of contract or the
          covenant of good faith and fair dealing, defamation, wrongful discharge,
          intentional infliction of emotional distress or promissory estoppel. 



         9.       
          Legal Fees and Other Expenses. In the event that a claim for payment or
          benefits under this Agreement is disputed, the Executive shall be reimbursed for
          all attorney fees and expenses incurred by the Executive in pursuing such claim,
          provided that the Executive is successful as to at least part of the disputed
          claim by reason of litigation, arbitration or settlement. In addition, the
          Executive shall be paid or reimbursed for all legal fees and expenses incurred
          by the Executive in connection with the review, preparation and negotiation of
          this Agreement and/or any other agreements or plans referenced herein. The
          Executive shall also be entitled to recover pre-judgment interest at the rate of
          10% per annum on the amount of any past due payment obligations under Sections
          6.3 from the date any such payment was due until the earlier of the date of
          payment in full of such obligation or the date of entry of a final judgment
          against AAI and/or the Corporation. 



         10.       
          Confidential Information and Nonsolicitation. 



        10.1
Confidential Information. The Executive shall not, during the Term of Employment
and thereafter, without the prior express written consent of AAI and/or the Corporation,
disclose any confidential information, knowledge or data relating to AAI, the Corporation,
or any Affiliate of either and their respective businesses, which (a) was obtained by the
Executive in the course of the Executive’s employment with AAI and the Corporation,
and (b) which is not information, knowledge or data otherwise in the public domain (other
than by reason of a breach of this provision by the Executive), unless required to do so
by a court of law or equity or by any governmental agency or other authority. 



        10.2
No Solicitation. The Executive hereby agrees that, if her employment hereunder is
terminated by AAI and the Corporation for Cause or by the Executive within one year
following the date of a Change in Control for Good Reason, she shall not, for twelve (12)
months after the Date of Termination, directly or indirectly, divert, solicit or take away
the patronage of (a) any customers or agents of the Corporation, AAI or any Affiliate of
either as of the relevant Date of Termination, or (b) any prospective customers or agents
of the Corporation, AAI or any Affiliate whose business the Corporation and/or AAI was
actively soliciting on the relevant Date of Termination, and with which the Executive had
business contact while employed by the Corporation and AAI. The Executive agrees that,
under the circumstances and conditions described above and for the same period of time,
the Executive shall not, directly or indirectly, induce or solicit any employees or agents
of the Corporation, AAI or any Affiliate of either to leave or terminate their employment
or agency relationship with the Corporation or AAI. The Corporation and AAI agrees that
(i) any announcement made by the Executive, at any press conference or in any press
release or through individual notices, shall not, in and of itself, constitute an attempt
directly or indirectly to induce, divert, solicit or take away customers or employees,
(ii) any such announcement creates no presumption with respect to any such inducement,
diversion, solicitation or taking, and (iii) in all cases both the burden of production of
evidence and the ultimate burden of persuasion with respect to any allegations or claims
that this Section 10.2 has been breached or violated by the Executive shall be borne by
AAI and the Corporation. Executive agrees that all restrictions and agreements contained
in this Section 10, including without limitation, those relating to duration and
restricted territory, are necessary and fundamental to the protection of the business of
AAI, the Corporation or any Affiliate, and are reasonable and valid, and all defenses to
the strict enforcement thereof by Executive are hereby waived. Executive agrees that the
remedy at law for such breach of this Agreement will be inadequate, and that the damages
from such breach are not readily susceptible to being measured in monetary terms.
Accordingly, Executive agrees that upon breach of this Section 10, AAI, the Corporation or
any Affiliate shall be entitled to immediate injunctive relief and may obtain a temporary
order restraining any threatened further breach. Nothing in this Agreement shall be deemed
to limit AAI’s, the Corporation’s or any Affiliate’s remedies at law or in
equity for any breach by Executive or any of the provisions of this Agreement that may be
pursued or availed of by AAI, the Corporation or any Affiliate. 



         11.       
Successors. 



        11.1
The Executive. This Agreement is personal to the Executive and, without the prior
express written consent of AAI and the Corporation, shall not be assignable by the
Executive, except that the Executive’s rights to receive any compensation or benefits
under this Agreement may be transferred or disposed of pursuant to testamentary
disposition, intestate succession or pursuant to a domestic relations order. This
Agreement shall inure to the benefit of and be enforceable by the Executive’s heirs,
beneficiaries and/or legal representatives. 



        11.2
AAI and the Corporation. This Agreement shall inure to the benefit of and be
binding upon AAI, the Corporation, and their respective successors and assigns. AAI shall
require any successor to all or substantially all of the Corporation’s and its
Affiliates’ business and/or assets, whether direct or indirect, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent as AAI and the Corporation would be required to
perform if no such succession had taken place. 



         12.       
          Indemnification. AAI and the Corporation agree that if the Executive is
          made a party or is threatened to be made a party to any action, suit or
          proceeding, whether civil, criminal, administrative or investigative (a
          “Proceeding”), by reason of the fact that she is or was a director or
          officer of AAI, the Corporation, and/or any Affiliate of either or is or was
          serving at the request of the Corporation, AAI and/or any Affiliate as a
          director, officer, member, employee or agent of another corporation or of a
          partnership, joint venture, trust or other enterprise, including, without
          limitation, service with respect to employee benefit plans, whether or not the
          basis of such Proceeding is alleged action in an official capacity as a
          director, officer, member, employee or agent while serving as a director,
          officer, member, employee or agent, she shall be indemnified and held harmless
          by AAI and the Corporation to the fullest extent authorized by applicable law,
          as the same exists or may hereafter be amended, against all Expenses incurred or
          suffered by the Executive in connection therewith, and such indemnification
          shall continue as to the Executive even if the Executive has ceased to be an
          officer, director or agent, or is no longer employed by AAI and the Corporation
          and shall inure to the benefit of her heirs, executors and administrators;
          provided, however, that Executive shall not be indemnified for any act or
          omission that constitutes gross negligence or willful misconduct. 



         13.       
Miscellaneous. 



        13.1
Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, applied without reference to the principles of
conflict of laws. 



        13.2
Amendments. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors and legal
representatives. 



        13.3
Notices. All notices and other communications hereunder shall be in writing and shall be
given by hand-delivery to the other parties or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows: 

	    If to the Executive:  	Ms. Cynthia Koenig
	 	6509 Connie Lane
	 	Colleyville, Texas 76034
	
	    If to the Corporation: 	Ascent Management, Inc.
	 	110 West Seventh Street, Suite 300
	 	Fort Worth, Texas 76102
	 	Attention:  President and Chief Operating Officer
	
	    If to AAI: 	Ascent Assurance, Inc.
	 	110 West Seventh Street, Suite 300
	 	Fort Worth, Texas 76102
	 	Attention:  President and Chief Operating Officer






or to such other address as any party
hereto shall have furnished to the others in writing in accordance herewith. Notices and
communications shall be effective when actually received by the addressee. 



        13.4
Withholding. AAI and the Corporation may withhold from any amounts payable under
this Agreement such federal, state or local income taxes as shall be required to be
withheld pursuant to any applicable law or regulation. 



        13.5
Severability. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement. 



        13.6
Captions.  The captions of this Agreement are not part of the  provisions  hereof and shall have no force or
effect. 



        13.7
Beneficiaries/References. The Executive shall be entitled to select (and change) a
beneficiary or beneficiaries to receive any compensation or benefit payable hereunder
following the Executive’s death, and may change such election, in either case by
giving AAI or the Corporation written notice thereof. In the event of the Executive’s
death or a judicial determination of her incompetence, reference in this Agreement to the
Executive shall be deemed, where appropriate, to refer to her beneficiary(ies), estate or
other legal representative(s). 



        13.8
Entire Agreement. This Agreement contains the entire agreement between the parties
concerning the subject matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between the parties
with respect thereto. 



        13.9
Representations. AAI and the Corporation each represents and warrants that it is
fully authorized and empowered to enter into this Agreement. The Executive represents and
warrants that the performance of the Executive’s duties under this Agreement will not
violate any agreement between the Executive and any other person, firm, partnership,
corporation, or organization. 



        13.10
Survivorship. The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement or the Executive’s Term of Employment
hereunder for any reason to the extent necessary to the intended provision of such rights
and the intended performance of such obligations. 



        IN
WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and AAI, as well
as the Corporation have each caused this Agreement to be executed in its name on its
behalf, and attested to by their respective Secretaries, all as of the day and year first
above written. 


	 	Ascent Management, Inc.
	Attest: 	 By:  /s/ Patrick J. Mitchell       
              
	 	        Patrick J. Mitchell
	 	        Title:   President and CEO
	______________________ 
	 	Ascent Assurance, Inc.
	Attest: 	 By:  /s/ Patrick J. Mitchell       
              
	 	        Patrick J. Mitchell
	 	        Title:  President and CEO
	______________________ 
	 	 
	 	          /s/ Cynthia Koenig       
                   
	 	         Cynthia Koenig
	 	         Senior Vice President and Chief Financial Officer