Exhibit 10.42


Exhibit 10.42 



EMPLOYMENT AGREEMENT 


This  Employment  Agreement  (this  "Employment  Agreement"),  dated as of  September  1, 2004,  is between  Ascent
Assurance, Inc., a Delaware corporation (the Company"), and Mr. Ben Cutler (the "Employee").



Whereas, the Company desires
to enter into an employment relationship with the Employee and the Employee wishes to
accept such employment, under the terms and conditions set forth in this Employment
Agreement. 



Now, therefore, in
consideration of and in reliance upon the foregoing and the covenants, obligations and
agreements contained herein, the Company and the Employee hereby agree as follows: 




1        Employment Period 



	  	
The
Company will employ the Employee, and the Employee will serve the Company, under the terms
of this Employment Agreement for a term of five years commencing on September 1, 2004
(hereinafter, the “Start  Date”). Notwithstanding the foregoing,
this Employment Agreement and the Employee’s employment hereunder may be earlier
terminated, as provided in Section 4 hereof. The period of time between the commencement
and the termination of the Employee’s employment hereunder shall be referred to
herein as the “Employment Period.” 







2        Duties and Status 



	  	
During
the Employment Period, the Employee shall serve as the President and Chief Executive
Officer (“CEO”) of the Company and be responsible and report to the Board of
Directors of the Company (the “Board”). Further, so long as he shall be a
director of the Company, the Employee shall be appointed as Chairman of the Board. During
the Employment Period, the Employee shall have such authority and perform such duties
which are consistent with the Employee’s title and position as the President and CEO
of the Company, as well as such other duties as may be assigned by the Board from time to
time. The Employee’s duties shall include, without limitation, responsibilities with
respect to strategic development and all business operations of the Company and hiring and
firing authority within guidelines as may be set by the Board or with the advice and
consent of the Board or otherwise as the Board may from time to time prescribe. The
Employee agrees to devote all of his time, efforts and skills exclusively to the
performance of his duties and responsibilities under this Employment Agreement and will
not provide his services to any other person or entity without the prior consent of the
Board; provided, however, that nothing in this Employment Agreement shall preclude
the Employee from devoting reasonable periods required for participating in professional
and appropriate industry associations, educational, philanthropic, public interest,
charitable, social or community activities so long as such activities do not interfere in
any material respect with the Employee’s duties hereunder or involve any manner of
activity that is competitive with or adverse to the best interests of the Company;
provided, further, that if during any regular business day these activities require
the Employee to be off-premises more than four hours during normal business hours, that
day shall be allocated to vacation time. 







3        Compensation 



	  	3.1 	  	
Base Salary During the Employment Period, the Company shall pay the Employee an
annualized base salary of $250,000 payable twice monthly in arrears and in accordance with
the standard payroll practices of the Company; provided, however, that such amount
shall be reviewed by the Board annually, and may, in the sole discretion of the Board, be
increased. The base salary paid to the Employee by the Company shall be referred to herein
as the “Base Salary”. 






	  	3.2 	  	
Performance Bonus In addition to the compensation otherwise payable pursuant to
this Employment Agreement, the Employee shall be eligible to receive an annual performance
bonus (“Annual  Bonus”) for each fiscal year based upon the attainment of
performance criteria hereinafter described. For each fiscal year during the Employment
Period, annual performance criteria shall be developed by management and presented to the
Board (or a designated committee thereof) for approval and/or modification pursuant to or
in connection with the development of a five-year strategic plan. The Employee’s
minimum Annual Bonus in the event the target performance is attained shall be 200% of the
Base Salary in effect on the last day of the applicable fiscal year. Any Annual Bonus of
less than 200% of such Base Salary (upon partial attainment of targeted performance
criteria) or in excess of 200% of such Base Salary (upon exceeding targeted performance
criteria) shall be as set forth in the annual performance criteria. Notwithstanding the
foregoing, a minimum Annual Bonus for the partial calendar year 2004 period shall be paid
in an amount equal to $166,666 and a minimum Annual Bonus for an entire calendar year 2005
period shall be paid in an amount equal to $500,000, regardless of the attainment of the
targeted performance criteria; provided, however, that such minimum Annual Bonus
shall be payable only if (a) the Employment Period continues in effect through the last
day of 2004 and 2005, respectively, or (b) the Employee is terminated by the Company other
than for Cause. 






	  	3.3 	  	
Equity Award The Employee shall receive options (the “Initial
Options”) to purchase 9.9% of the common stock of the Company (on a fully-diluted
basis as of the Start Date), at an exercise price equal to the fair market value of such
shares on the Early Exercise Date (as defined below), as determined by the Board in good
faith based on generally accepted industry valuation methodologies. The Initial Options
shall vest in five equal installments on each of the first five anniversaries of the Start
Date, provided the Employee is still an employee of the Company on each applicable vesting
date. Notwithstanding the foregoing, the Initial Options shall be exercisable before the
applicable vesting dates, on or after June 30, 2005, or such earlier date as the Company
may specify (in either case the “Early Exercise Date”), in which case the
shares issuable upon any such earlier exercise shall be restricted shares which shall be
subject to the same vesting schedule as applicable under the Initial Options and shall not
be transferable unless and until such shares become vested. The parties agree that the
obligation to grant the Initial Options may be partially satisfied by an option granted
with respect to up to 10% of the fully-diluted shares of common stock of the Company
beneficially owned by Credit Suisse Boston Management LLC and its affiliates (excluding
such affiliation solely by virtue of ownership and involvement with the Company or its
subsidiaries, the “CSFB Entities”), with the remainder being granted with
respect to reserved shares of the Company; provided, however, that any Initial
Option granted by the CSFB Entities shall also be honorable by the Company. Upon exercise
of any Initial Options within one week of the Early Exercise Date, the Company shall pay
to the Employee an amount equal to 57.36% of the excess, if any, of the fair market value
of the shares on the exercise date, as determined for federal income tax purposes, over
the exercise price. An additional equity pool of 20.1% (subject to adjustment to 20% in
the event of certain transactions) of the fully-diluted shares of the Company as of the
Start Date shall be reserved for options and/or other equity awards to be granted to other
employees as recommended by management and approved by the Board (or a designated
committee thereof). In the event that such additional pool is not entirely allocated to
grants made to other employees, the Employee shall be eligible to receive additional
options and/or other equity awards with respect to such unallocated shares available in
such pool, up to a maximum level of 15% (including the shares subject to the Initial
Options) of the fully-diluted shares of common stock of the Company as of the Start Date.
If such additional pool is allocated to grants made to other employees, then the Employee
shall not receive any options or other equity awards in addition to the Initial Options. 






	  	
The
Initial Options and any other stock options granted to the Employee (collectively, with
the Initial Options, hereinafter referred to as the “Options”) shall have
a duration of ten years, except that (i) if the Employee’s employment with the
Company terminates for any reason other than for Cause (as defined in Section 4.1 hereof),
Disability (as defined in Section 4.2 hereof) or death, any then vested but unexercised
Options shall be exercisable for three months following such termination, (ii) if the
Employee’s employment with the Company terminates due to Disability or death, any
then vested but unexercised Options shall be exercisable for six months following such
termination, and (iii) if the Employee’s employment with the Company terminates for
Cause, all unexercised Options (including any vested Options) shall terminate immediately
upon such termination. In no event shall any Options continue to be exercisable for a
period of more than ten years following the date of grant. The exercise price payable for
the purchase of shares under all Options shall be paid in cash, at the time of exercise of
the respective Option. All shares issued pursuant to the exercise of any Options shall be
subject to a right of first refusal from and after such time as they become transferable,
and to repurchase rights (but not obligations) in the event of a termination of the
Employee’s employment with the Company. The purchase price payable to repurchase
shares from the Employee shall be (i) with respect to vested shares, the greater of the
fair market value (as determined by the Board in good faith based on generally accepted
industry valuation methodologies) of the shares on the date of repurchase or the purchase
price paid by the Employee, or (ii) with respect to non-vested shares, the purchase price
paid by the Employee. Repurchase rights shall extend for the longer of (i) seven months
after the issuance of the applicable shares, (ii) seven months after the Employee is
terminated by the Company other than for Cause or (iii) three months after a termination
of the Employee’s employment with the Company due to any other reason. The right of
first refusal shall extend until the shares of the Company’s common stock issued
under such Options are publicly traded. All Options and any other equity awards granted to
the Employee shall be evidenced by a separate agreement entered into with the Employee, in
such form as shall be provided by the Company or the CSFB Entities, as applicable. 






	  	3.4 	  	
Liquidity Performance Bonus In the event of the consummation of a Qualifying
Liquidity Event (as defined below) while the Employee is still employed by the Company,
the Employee shall be eligible to receive a one-time liquidity performance bonus,
calculated as the sum of the following: (i) 10% of the dollar amount of consideration
allocable to the CSFB Entities in respect of debt obligations and/or securities of the
Company and its subsidiaries (before giving effect to payment of such liquidity
performance bonus) in the Qualifying Liquidity Event in excess of the amount required for
the CSFB Entities to achieve a 25% Rate of Return (as defined below) up to a 32.5% Rate of
Return; (ii) 25% of the dollar amount of consideration allocable to the CSFB Entities in
respect of debt obligations and/or securities of the Company and its subsidiaries (before
giving effect to payment of such liquidity performance bonus) in the Qualifying Liquidity
Event in excess of the amount required for the CSFB Entities to achieve a 32.5% Rate of
Return up to a 40% Rate of Return; and (iii) 50% of the dollar amount of consideration
allocable to the CSFB Entities in respect of debt obligations and/or securities of the
Company and its subsidiaries (before giving effect to payment of such liquidity
performance bonus) in a Qualifying Liquidity Event in excess of the amount required for
the CSFB Entities to achieve a 40% Rate of Return. Any liquidity performance bonus payable
hereunder shall be paid in-kind, in the same form of consideration as received by the CSFB
Entities in respect of debt obligations and/or securities of the Company and its
subsidiaries (before giving effect to payment of such liquidity performance bonus) in the
Qualifying Liquidity Event, and shall be paid at the same time as such consideration is
received by the CSFB Entities; provided, however, that any portion of such
liquidity performance bonus may be payable in cash, in the sole discretion of the Board.
In the event (i) that the Rate of Return achieved by the CSFB Entities does not exceed
25%, or (ii) if as of the date of the consummation of a Qualifying Liquidity Event the
Employee is not employed by the Company due to either (a) the Employee having been
terminated by the Company for Cause or (b) the Employee having terminated his employment
on his own initiative, then no liquidity performance bonus shall be payable to the
Employee hereunder. Notwithstanding the foregoing, in the event that the Employee is
terminated by the Company other than for Cause, the right of the Employee to receive such
liquidity performance bonus shall continue with respect to a Qualifying Liquidity Event
that is the subject of a definitive written agreement subject only to customary closing
conditions entered into before July 1, 2010; provided, however, that the Company
shall retain the option to purchase such right from the Employee at fair market value
(such option exercisable by written notice to the Employee at any time after the
termination and before September 2009), as determined by the Board assuming the
consummation of a Qualifying Liquidity Event as of the date of purchase. Any valuation to
be conducted hereunder shall be performed by the Board in good faith based on generally
accepted industry valuation methodologies, whose determination shall be final. 






	  	
For
purposes of this Employment Agreement, a “Qualifying Liquidity Event”
shall mean the voluntary sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all the property or
assets of the Company to, or the consolidation or merger of the Company with, one or more
other corporations or other entities (other than subsidiaries of the Company), where the
stockholders of the Company immediately prior to such transaction receive the same
proportionate consideration for their shares and thereafter do not beneficially own,
collectively, shares of capital stock representing at least a majority of the voting power
of all outstanding securities entitled to vote generally in the election of directors or
persons performing a similar function of the surviving or successor corporation or other
entity. 






	  	
For
purposes of this Employment Agreement, “Rate of Return” shall mean the
return, calculated on a one-time basis upon the occurrence of a Qualifying Liquidity
Event, on a base value equal to the principal amount outstanding as of the Start Date of
the loans made under that certain Credit Agreement, dated as of April 27, 2001, as amended
or relieved from time to time, between the Company, as borrower, and Credit Suisse First
Boston Management LLC, as administrative agent, arranger and lender (the “CSFB
Debt”); provided, however, that the Rate of Return shall not include any
interest paid or payable on the CSFB Debt. 






	  	3.5 	  	
Liquidation Sharing Plan In the event of the consummation of (i) a Qualifying
Liquidity Event or (ii) any paydown of the CSFB Debt, the Employee shall be eligible to
receive a one-time liquidation sharing amount of either $2,000,000 or a pro-rata share of
any such paydown of the CSFB Debt, respectively, in either case ranking pari passu to the
amounts which are able to be retained by the CSFB Entities in respect of the CSFB Debt,
including after giving effect to the subordination of such debt. Any such amount shall be
payable in-kind, in the same form of consideration as received by the CSFB Entities, and
shall be paid at the same time as such consideration is received by the CSFB Entities
(including pursuant to distributions on escrows or similar arrangements); provided,
however, that any portion of such liquidation sharing amount may be payable in cash,
in the sole discretion of the Board. If the Employee is not still employed by the Company
on the date of the consummation of a Qualifying Liquidity Event or such paydown of the
CSFB Debt, then the liquidation sharing amount shall continue to be payable to the
Employee as provided above. Any amounts due and payable to the Employee under this Section
3.5 shall also include an additional amount equal to the proportionate amount of interest
which would be paid relative to a notional principal amount of $2,000,000, if the CSFB
Debt were increased by $2,000,000 as of the Start Date, such additional amount to be paid
to the Employee at the same time as interest is paid on the CSFB Debt. Notwithstanding the
foregoing, and without prejudice with respect to the conditions set out in Section 7.3,
the terms set out in this Section 3.5 shall not be effective before the Company shall have
procured the consents necessary to obtain waivers of certain negative covenants contained
in certain credit agreements to which the Company is a party. The Company hereby agrees
that it will use its best efforts to procure all such consents. 






	  	3.6 	  	
Benefits During the Employment Period, the Employee shall be invited to
participate, to the extent permitted by applicable law and the terms and eligibility
requirements of any such plan or program, in all employee benefit plans and programs that
are maintained by the Company from time to time generally for the Company’s similarly
situated senior executives. The Employee’s participation in or entitlement to
benefits under any such benefit plan or program shall at all times be subject to the terms
and conditions of the applicable plan documents, as amended from time to time, or the
Company policies governing such employee benefits. The Company will not, however, by
reason of this Section 3.6, be obligated either (i) to institute, maintain, or refrain
from modifying or terminating any employee benefit plans or programs, or fringe benefits,
that it may adopt from time to time or (ii) to provide the Employee with all benefits
provided to any other person or individual employed by the Company. During the Employment
Period, the Employee shall be eligible to receive 20 days of paid vacation per calendar
year, pro rated for 2004 from the Start Date through December 31, 2004, in accordance with
the Company’s vacation policies (as maybe revised from time to time). All vacation
and other time off must be scheduled for the mutual convenience of the Employee and the
Company and so as not to interfere with the operation of the Company. 






	  	3.7 	  	
Expense Reimbursement The Company shall reimburse the Employee for all reasonable
business expenses incurred by the Employee during the Employment Period for promoting the
Company’s business, upon the Employee’s periodic presentation of an itemized
account of such expenditures, in accordance with the Company’s business expense
reimbursement policy. In addition, the Employee will receive a monthly allowance for
reasonable personal living expenses as agreed to by the Board. 







4        Termination 



	  	
Either
the Company or the Employee may terminate this Employment Agreement and the
Employee’s employment at any time for any reason upon 7 days’ prior written
notice to the other. Upon any termination of this Employment Agreement, the Employment
Period and all rights and entitlements of the Employee pursuant to this Employment
Agreement shall forthwith cease and terminate, and the Company shall have no liability or
obligations whatsoever to the Employee, except as provided for in Sections 3.5 and 4.4
hereof. 






	  	4.1 	  	
Termination For Cause The Company may terminate this Employment Agreement and the
Employee’s employment at any time for “Cause,” as determined by the
Board For purposes of this Employment Agreement, “Cause” shall mean the
occurrence of any of the following: (i) the Employee for any reason, other than by reason
of his death or Disability (as defined below in Section 4.2 hereof), fails to perform the
Employee’s duties for the Company to the reasonable satisfaction of the Company, and
the Employee fails to correct his performance to the satisfaction of the Company after
written notice by the Company and a reasonable opportunity to cure; (ii) the Employee
materially breaches any of his obligations under this Employment Agreement, and the
Employee fails to correct such breach (if correctable) after notice by the Company and a
reasonable opportunity to cure; (iii) the Employee materially violates the policies or
procedures of the Company as such policies and procedures are adopted or modified from
time to time, or fails to follow directives of the Board, after notice by the Company and
a reasonable opportunity to cure or to follow such a directive to the satisfaction of the
Company; (iv) the Employee engages in gross negligence, a breach of fiduciary duty and/or
duty of loyalty, or misconduct in connection with the performance of the Employee’s
duties for the Company; (v) the Employee engages in improper conduct or misconduct or any
act that violates any law, rule, or regulation, and that, in the view of the Board, would
adversely affect the business, reputation or public image of the Company, including but
not limited to any act of fraud, theft, embezzlement, or any act involving moral
turpitude; or (vi) the Employee pleas to, or is convicted of, any misdemeanor involving
moral turpitude or any felony. 






	  	4.2 	  	
Termination on Account of Disability In the event of a physical or mental infirmity
which renders the Employee unable to perform his duties, services and responsibilities
hereunder for a total of 120 calendar days in any 12-month period (a
“Disability”), Employee’s employment and this Employment Agreement
shall automatically terminate on such 120th calendar day, without any further or
additional action on the part of the Company. 






	  	4.3 	  	
Termination on Account of Death In the event of the Employee’s death during
the Employment Period, the Employee’s employment and this Employment Agreement shall
automatically terminate on the date of the Employee’s death. 






	  	4.4 	  	
Accrued Obligations Upon any termination of the Employee’s employment with the
Company, the Company shall pay the Employee as soon as practicable, a lump sum cash
payment equal to the sum of: (i) the Employee’s accrued but unused vacation as of the
effective date of his termination of employment; (ii) any accrued but unpaid Base Salary
for the period prior to the effective date of the Employee’s termination of
employment; (iii) the amount of any earned but unpaid Annual Bonus earned for the calendar
year prior to the calendar year in which the Employee’s termination of employment
occurs; (iv) any unreimbursed business expenses incurred by the Employee that are
reimbursable in accordance with Section 3.3 hereof; or (v), in the event of termination of
the Employment Agreement and the Employee’s employment for reasons other than Cause,
any amounts payable under Section 3.3 and 3.4 hereof (collectively, the “Accrued
 Obligations”). Upon payment in full of the Accrued Obligations, and
except as provided under Section 3.5 hereof, the Company shall have no further obligations
or liabilities whatsoever to the Employee pursuant to this Employment Agreement (except
that the treatment of Options, including, without limitation, the Company’s
repurchase rights, shall be as provided in Section 3.3 hereof and, if applicable, Section
5 hereof). 






	  	4.5 	  	
Resignation from Board In the event the Employee’s employment with the Company
is terminated for any reason, the Employee agrees to tender his resignation from the Board
and any other board or officer positions held with the Company and its affiliates,
effective no later than the date of termination, or at such other mutually agreeable time. 







5        Change of Control 



	  	
In
the event of a Change of Control (as defined below) that (i) occurs earlier than the fifth
anniversary of the Start Date and while the Employee is still employed by the Company or
(ii) results from a Qualifying Liquidity Event that is the subject of a definitive written
agreement subject only to customary closing conditions entered into within nine months
after the Employee is terminated by the Company other than for Cause, then all Options
and/or restricted stock then held by the Employee shall become fully vested, unless
comparable positions in the successor entity have been offered to the Employee or the
Employee becomes engaged or rehired by the successor entity in a comparable capacity upon
the consummation of the Change of Control or at any reasonable period of time thereafter.
The determination of whether comparable positions have been offered, or whether the
Employee becomes engaged or rehired by the successor entity in a comparable capacity upon
or at a reasonable period of time after the Change of Control, shall be made by the Board
in its sole discretion, whose determination shall be final. For purposes of this
Employment Agreement, a Change of Control shall mean the occurrence of (i) a Qualifying
Liquidity Event, or (ii) the liquidation or dissolution of the Company; provided,
however,  that a Change of Control shall not include any leveraged buy-out transaction
which is sponsored by the Employee or in which the Employee acquires an equity interest
materially in excess of his equity interest in the Company immediately prior to such
transaction. 







6        Confidentiality,
Non-Solicitation and Non-Competition 



	  	6.1 	  	
During the Employment Period and thereafter, Employee shall not, except as may be required
to perform his duties hereunder or as required by applicable law, disclose to others or
use, whether directly or indirectly, any Confidential Information. For purposes of this
Employment Agreement, “Confidential Information” shall mean information
about any of the Company, or its respective subsidiaries and affiliates (collectively, the
“Group”), and their respective clients, suppliers, customers and
employees that is not available to the general public and that was learned by Employee in
the course of his employment by the Company, including (without limitation) any
proprietary knowledge, trade secrets, data, formulae, information, client, and customer
lists, pricing lists or information, former or existing suppliers, contractors, purchasing
information, distribution methods, marketing research, information regarding other
employees of the Group, and all papers, resumes, records (including computer records) and
the documents containing such Confidential Information. Employee acknowledges that such
Confidential Information is specialized, unique in nature and of great value to the
Company, and that such information gives the Company a competitive advantage. Upon the
termination of his employment for any reason whatsoever, Employee shall promptly deliver
to the Company all documents, computer tapes and disks (and all copies thereof) containing
any Confidential Information. 






	  	6.2 	  	
During the Employment Period and for one year thereafter, Employee shall not, directly or
indirectly in any manner or capacity (e.g., as an advisor, principal, agent, partner,
officer, director, shareholder, employee, member of any association or otherwise) engage
in, work for, consult, provide advice or assistance or otherwise participate in any
activity that competes with the Group in the business of insurance in the United States,
unless as otherwise set forth in a written waiver provided by the Board. Employee further
agrees that during such period he will not assist or encourage any other person in
carrying out any activity that would be prohibited by the foregoing provisions of this
Section 6 if such activity were carried out by Employee and, in particular, Employee
agrees that he will not induce any employee of the Group to carry out any such activity;
provided, however, that the “beneficial ownership” by Employee,
either individually or as a member of a “group”, as such terms are used
in Sections 13(d) and 14(d)(2) and Rule 13d-3, respectively, under the Exchange Act, of
less than 2% of the voting stock of any publicly held corporation shall not be a violation
of this Employment Agreement. The foregoing provisions of this Section 6.2 shall not apply
if the Employee is terminated by the Company other than for Cause. It is further expressly
agreed that the Company will or would suffer irreparable injury if Employee were to
compete with the Group in violation of this Employment Agreement and that the Company
would by reason of such competition be entitled to injunctive relief in a court of
appropriate jurisdiction, and Employee further consents and stipulates to the entry of
such injunctive relief in such a court prohibiting Employee from competing with the Group
in violation of this Employment Agreement. 






	  	6.3 	  	
During the Employment Period and for one year thereafter, Employee shall not, directly or
indirectly, either as principal, agent, independent contractor, consultant, director,
officer, employee, employer, advisor (whether paid or unpaid), stockholder, partner,
member or in any other individual or representative capacity whatsoever, either for his
own benefit or for the benefit of any other Person, solicit, divert or take away or accept
as a customer or client any Person that is or has been a customer or client of the Group
as of the date hereof or at any time during the Employment Period. 






	  	6.4 	  	
Employee recognizes that he will possess confidential information about other employees of
the Company relating to their education, experience, skills, abilities, compensation and
benefits, and interpersonal relationships with customers of the Company. Employee
recognizes that the information he will possess about these other employees is not
generally known, is of substantial value to the Company in developing its business and in
securing and retaining customers, and will be acquired by him because of his business
position with the Company. Employee agrees that, during the Employment Period, and for a
period of one year thereafter, he will not, (i) solicit, raid, entice or induce any Person
that is or has been an employee, officer, consultant or agent of the Group as of the date
hereof or at any time during the Employment Period, to become employed by him or any
Person, (ii) approach any such employee, officer or agent for such purpose or authorize or
participate in the taking of such actions by any other Person, or assist or participate
with any such Person in taking such action or (iii) in any way interfere with any
relationship between the Group and any of their customers, suppliers or distributors;
provided, however, that, in the event the Employee is terminated by the Company
other than for Cause, the foregoing provisions of this Section 6.4 shall apply only in
respect of Persons who have been an employee, officer, consultant or agent of the Group
for a period of at least three years prior to the date of termination. As used in Section
6.3 and 6.4, “Person” shall be construed broadly to include an
individual, a partnership, a corporation, an association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization and a
governmental entity or any department, agency or political subdivision thereof. 






	  	6.5 	  	
Employee acknowledges that he was informed of the time, territory, scope and other
essential requirements of the restrictions in this Section 6 when he agreed to become
employed with the Company under the terms set forth in this Agreement, and Employee
further acknowledges that he has received sufficient and valuable consideration for his
agreement to such restrictions. 






	  	6.6 	  	
The provisions of this Section 6 shall remain in full force and effect notwithstanding the
termination of the Employee’s employment regardless of the circumstances, which
result in such termination. This provision shall not be construed to limit the survival of
any other provisions that also survive the termination of this Employment Agreement by the
express or implied terms of such provisions. The existence of any claim or cause of action
that the Employee may have against the Company shall not constitute a defense or a reason
to invalidate any of the provisions of this Section 6. 







7        Miscellaneous 



	  	7.1 	  	
Withholding Tax All payments required to be made by the Company to the Employee
under this Employment Agreement shall be subject to the withholding of such amounts
relating to tax (including federal and state income tax and withholdings, employment tax
and withholdings, and excise tax) and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law or regulation. 






	  	7.2 	  	
Waiver Failure of the Company at any time to enforce any provision of this
Employment Agreement or to require performance by the Employee of any provisions hereof
shall in no way affect the validity of this Employment Agreement or any part hereof or the
right of the Company thereafter to enforce its rights hereunder; nor shall it be taken to
constitute a condonation or waiver by the Company of that default or any other or
subsequent default or breach. 






	  	7.3 	  	
Shareholder Consent Notwithstanding any other provisions of this Employment
Agreement, the Company and the Employee hereby acknowledge and agree that the provisions
of Section 3.4, Section 3.5 and Section 5 shall only take effect upon their due
ratification and approval by the shareholders of the Company in accordance with the
requirements of Section 1.280G-1 of the Income Tax Regulations. The Company hereby further
agrees that it will use its best efforts in order to secure such approval of the
shareholders of the Company. 






	  	7.4 	  	
Notices All notices or other communications hereunder shall not be binding on
either party hereto unless in writing (including facsimile or similar writing), and
delivered to the other party thereto at the following address: 




	 	If to the Company:	Ascent Assurance, Inc.

                                                  Attention: Board of Directors

                                                  3100 Burnett Plaza

                                                  801 Cherry Street, Unit 33

                                                  Fort Worth, TX 76102
	 
	 	If to the Employee:	Mr.Ben Cutler 


                                            6600 East Bluebird Lane

                                            Paradise Valley, AZ 85253

                                            (480) 922-3716







	  	
Each
such notice, request or other communication shall be effective (a) if given by facsimile,
when such facsimile is transmitted to the facsimile number specified in this Section and
receipt is confirmed, (b) if given by mail, three business days after such communication
is deposited in the mail registered or certified, return receipt requested, with postage
prepaid, addressed as aforesaid, (c) if given by an overnight delivery service, one
business day after such communication is deposited with a reputable, overnight delivery
service, postage or delivery charges prepaid, addressed as aforesaid, or (d) if given by
any other means, when delivered at the address as specified in this Section. Either party
may change its address for notice by delivery of written notice thereof in the manner
provided. 






	  	7.5 	  	
Assignment Except as set forth herein, no rights of any kind under this Employment
Agreement shall, without the prior consent of the Company, be transferable to or
assignable by the Employee or any other person, or, except as provided by applicable law,
be subject to alienation, encumbrance, garnishment, attachment, execution or levy of any
kind, voluntary or involuntary. This Employment Agreement shall be binding upon and shall
inure to the benefit of the Company and its successors and assigns. 






	  	7.6 	  	
Governing Law; Jurisdiction; No Jury Trial This Employment Agreement shall be
governed by and construed in accordance with the substantive laws of the State of New York
without regard to the conflicts of law principles thereof. Each party hereby irrevocably
submits to the jurisdiction of the state and federal courts sitting in the State of New
York, for the adjudication of any dispute hereunder (except as hereinafter provided). EACH
PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY FOR THE ADJUDICATION OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS EMPLOYMENT
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE OR AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
EMPLOYMENT AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS IN THIS SECTION. If, for
any reason, the foregoing jury trial waiver is not enforceable at the time of any dispute
hereunder, then such dispute shall be resolved by binding arbitration in accordance with
the then current National Rules for the Resolution of Employment Disputes of the American
Arbitration Association. Such arbitration, if necessary, shall be convened in the Borough
of Manhattan of the City of New York, State of New York. Notwithstanding any other
provision hereof, the Company shall be entitled to seek a restraining order or injunction
in any court of competent jurisdiction to prevent any continuation of any violation of the
provisions of Section 7 of this Employment Agreement, and Employee consents that such
restraining order or injunction may be granted without the necessity of the Company’s
posting any bond, except to the extent otherwise required by applicable law. 






	  	7.7 	  	
Counterparts This Employment Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and all of which together shall constitute one
and the same document. 






	  	7.8 	  	
Headings The headings in this Employment Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Employment Agreement. 






	  	7.9 	  	
Entire Agreement THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE READ THIS EMPLOYMENT
AGREEMENT, UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS. This Employment Agreement
constitutes the entire understanding and agreement between the parties hereto concerning
the subject matter hereof and fully supersedes all prior agreements, understandings,
representations and warranties both written and oral, among the parties with respect to
the subject matter hereof. All negotiations by the parties hereto concerning the subject
matter hereof are merged into this Employment Agreement, and there are no representations,
warranties, covenants, understandings or agreements, oral or otherwise, in relation
thereto by the parties hereto other than those incorporated herein. No supplement,
modification or amendment of this Employment Agreement shall be binding unless executed in
writing by the parties hereto. 












In Witness Whereof, each of
the parties hereto has executed this Employment Agreement as of the date first above
written. 




ASCENT ASSURANCE, INC. 




By: /Patrick H.
O’Neill 


       Name:
Patrick H. O’Neill


       Title:
Executive Vice President, General Counsel and Secretary




EMPLOYEE 




By: Benjamin M. Cutler 
       Name:
Benjamin M. Cutler
       Title: President and Chief Executive Officer