Exhibit 10.3




Exhibit 10.3




SECOND AMENDMENT TO
CREDIT AGREEMENT 



        This
Second Amendment to Credit Agreement (this “Second Amendment to Credit
Agreement”) is made as of this 31st day of December, 2003, between ASCENT
ASSURANCE, INC. (the “Borrower”); the several entities identified on the
signature pages to the Credit Agreement (as defined below) as Lenders and each other
person that becomes a Lender (collectively, “Lenders,” and each
individually, a “Lender”); and CREDIT SUISSE FIRST BOSTON MANAGEMENT LLC
(formerly CREDIT SUISSE FIRST BOSTON MANAGEMENT CORPORATION) (“CSFBM”),
as Administrative Agent (in such capacity, the “Administrative Agent”),
and as Arranger (in such capacity, the “Arranger”). 




WITNESSETH 



        WHEREAS,
the Borrower, the Lenders, the Administrative Agent and the Arranger are parties to a
Credit Agreement dated as of April 17, 2001, as amended (the “Credit
Agreement”), providing, subject to the terms and conditions thereof, for
extensions of credit to be made by the Lenders to the Borrower; and 



        WHEREAS,
the parties wish to amend the Credit Agreement to, among other things, reduce the interest
rate payable on, and extend the maturity date of, the loans made thereunder. 



        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 hereby agree as follows: 



        Section
1. Definitions. Except as otherwise defined in this Second Amendment to Credit
Agreement, terms defined in the Credit Agreement are used herein as defined therein. 



        Section
2. Amendments. Upon satisfaction of the conditions set forth in
Section 5 of this Second Amendment to Credit Agreement, the Credit Agreement
shall, effective as of the date hereof, be amended as follows: 



         2.1.       
          Credit Agreement References. References in the Credit Agreement
          (including references to the Credit Agreement as amended hereby) to “this
          Agreement” (and indirect references such as “hereunder”,
          “hereby”, “herein” and “hereof”) shall be deemed
          to be references to the Credit Agreement as amended hereby. 



         2.2.       
          Definitions. (a) Section 1.1 of the Credit Agreement shall be
          amended by adding the following new definitions in alphabetical order : 



	  	        “AFI”
means Ascent Funding, Inc., a Delaware corporation that is a wholly owned subsidiary of
the Borrower. 








	  	        “Frost”
means The Frost National Bank.






	  	        “NCM”
means NationalCare® Marketing, Inc., a Delaware Corporation. 






	  	        “Receivables
Financing Agreements” means the Credit Agreement being entered into as of the
date hereof between AFI and Frost, pursuant to which Frost will loan to AFI from time to
time an aggregate amount at any one time outstanding of up to $3,000,000, the Guaranty
Agreement between the Borrower and Frost, the Guaranty Agreement between NCM and Frost,
the Pledge Agreement between the Borrower and Frost, the Pledge Agreement between NCM and
Frost, the Security Agreement between AFI and Frost and each other agreement to be entered
into in connection therewith. 







          		    (b)       
               Section 1.1 of the Credit Agreement shall be amended by deleting the
               definitions of “Applicable Rate”, “Intercreditor Agreement”
               and “Maturity Date” and replacing them in their entirety with the
               following definitions: 



               




                    “Applicable
Rate” means 6% per annum.  



	  	       “Intercreditor
Agreement” means the Intercreditor and Subordination Agreement, dated as of
December 31, 2003 among Frost and the Administrative Agent on its own behalf and on behalf
of the Lenders. 







                  “Maturity
Date” means March 24, 2010. 



              2.3.       
               Facility Fee. Section 5.13 of the Credit Agreement shall be
               deleted in its entirety. 



              2.4.       
               Permitted Liens. Section 6.4 of the Credit Agreement shall be
               amended to include the following new subsection (h): 



          		    “(h)       
               Liens created in and pursuant to the Receivables Financing Agreements” 



               



              2.5.       
               Guaranties. Section 6.6 of the Credit Agreement shall be amended
               to include the following new subsection (c): 



          		    “(c)       
               Guaranties created in and pursuant to the Receivables Financing Agreements” 



               



              2.6.       
               Senior Debt Limit. Section 6.8(c) of the Credit Agreement shall be
               replaced in its entirety with the following: 



          		    “(c)       
               an investment permitted by any guaranty agreement included in the Receivables
               Financing Agreements” 



               



              2.7.       
               Limitation on Indebtedness. Section 6.10 of the Credit Agreement
               shall be amended to include the following new subsection (e): 



          		    “(e)       
               Indebtedness of the Borrower created in and pursuant to the Receivables
               Financing Agreements, in a maximum principal amount not to exceed
               $10,000,000" 



               



              2.8.       
               Events of Default. Section 7.1 of the Credit Agreement shall be amended to
               include the following new subsection (j): 



          		    “(j)       
               The Borrower shall fail to effect the Charter Amendment contemplated by the
               Exchange Agreement among Ascent Assurance, Inc., Credit Suisse First Boston
               Management, LLC and Special Situations Holdings, Inc. — Westbridge, dated
               as of December 31, 2003 (such agreement, as it may be amended from time to time,
               the “Exchange Agreement”), by June 30, 2004, other than if such
               failure is the direct or indirect result of any action taken or failed to be
               taken by Credit Suisse First Boston Management, LLC or Special Situations
               Holdings, Inc. — Westbridge or any of their affiliates (as such term is
               defined in the Exchange Agreement).” 



               



              2.9.       
               Intercreditor Agreement. Section 8.10 of the Credit Agreement
               shall be replaced in its entirety with the following: 



	  	    “8.10
Intercreditor Agreement. Each Lender hereby irrevocably instructs the
Administrative Agent to enter into the Intercreditor Agreement on behalf of that Lender
and to take and refrain from taking all actions provided for therein in accordance with
the terms of that agreement. Each Lender confirms that it is bound by the terms of the
Intercreditor Agreement, acknowledging that it provides for the subordination of such
Lender’s claims hereunder and under the other Loan Documents to certain claims of
Frost identified in the Intercreditor Agreement.” 







         2.10.       
          Forms of Notes. The forms of Notes attached as Exhibit A-1 and
          Exhibit A-2 to the Credit Agreement shall be deleted and replaced in
          their entirety, respectively, with the forms of Notes attached hereto as
          Exhibit A-1 and Exhibit A-2. 




         2.11.       
          Notes. The Notes issued by Borrower to each Lender in connection with the
          Credit Agreement shall be replaced with Notes of the same denominations, in the
          Forms attached hereto as Exhibit A-1 and Exhibit A-2, as
          applicable. 



        Section
3. Consent to Receivables Financing. The Lenders, the Administrative Agent and the
Arranger hereby consent to the execution, delivery and performance by AFI, the Borrower
and certain of their affiliates of each of the Receivables Financing Agreements (as
defined in Section 2.2 above). Notwithstanding anything in the Credit Agreement,
the Guaranty Agreement or any of the related agreements to the contrary, the execution,
delivery and performance of the Receivables Financing Agreements shall not constitute a
Default or an Event of Default under the Credit Agreement, the Guaranty Agreement or any
of the related agreements. 



        Section
4. Reaffirmation of the Borrower. The Borrower hereby represents and warrants to
CSFBM that upon execution hereof no Event of Default has occurred and is continuing under
the Credit Agreement and the Credit Agreement, as so amended, shall remain in full force
and effect, subject to the execution and delivery of the First Amendment and Waiver to
Guaranty and Security Agreement being entered into on the date hereof among Foundation
Financial Services, Inc., NationalCare® Marketing, Inc., Lifestyles Marketing Group.
Inc., Precision Dialing Services, Inc., Senior Benefits, L.L.C., and Westbridge Printing
Services, Inc., each as Grantor; each Lender which is a Beneficiary thereunder from time
to time; and CSFBM, as Administrative Agent and Secured Party and no Event of Default will
occur as a result of the transactions contemplated hereby. 



        Section
5. Conditions Precedent. The effectiveness of this Second Amendment to Credit
Agreement is expressly conditioned upon CSFBM having received one or more counterparts of
this Second Amendment to Credit Agreement duly executed by the Borrower. 



        Section
6. Miscellaneous. Except as herein provided, the Credit Agreement and each other
Loan Document shall remain unchanged and in full force and effect. This Second Amendment
to Credit Agreement 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.
This Second Amendment to Credit Agreement shall be governed by, and construed in
accordance with, the law of the State of New York. 



        [The
remainder of this page is intentionally left blank] 









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




BORROWER: 


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

          Chief Executive Officer 










ADMINISTRATIVE AGENT AND
ARRANGER: 


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

          President 









LENDERS: 


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

          President 



















EXHIBIT A-1 




FORM OF NOTE 

	$________________*   	 New York, New York
December __, 2003 




        FOR
VALUE RECEIVED, the undersigned promises to pay to the order of   (the
“Lender”), the principal amount of ____________ DOLLARS ($ ____________ )
or such lesser aggregate principal amount of the Loans of the Lender that may be
outstanding from time to time under the Credit Agreement referred to below, payable as
hereinafter set forth. The undersigned promises to pay interest on the principal amount
hereof remaining unpaid from time to time from the date hereof until the date of payment
in full, payable as hereinafter set forth. 



        Reference
is made to the Agreement dated as of April 17, 200l (as it may be amended, restated,
supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Ascent Assurance, Inc., a Delaware corporation, as borrower,
Credit Suisse First Boston Management LLC (formerly Credit Suisse First Boston Management
Corporation), as Administrative Agent (in that capacity, the “Administrative
Agent”) and Arranger, and the Lenders from time to time party thereto. Terms
defined in the Credit Agreement and not otherwise defined herein are used herein with the
meanings given those terms in the Credit Agreement. This is one of the Notes referred to
in the Credit Agreement, and any holder hereof is entitled to all of the rights, remedies,
benefits and privileges provided for in the Credit Agreement as originally executed or as
it may from time to time be supplemented, modified or amended. The Credit Agreement, among
other things, contains provisions for acceleration of the maturity hereof, and the
optional and mandatory prepayment in whole or in part hereof, upon the happening of
certain stated events upon the terms and conditions therein specified. 



        This
Note is secured by Collateral and Pledged Collateral as more fully set forth in the
Security Documents. 



        The
outstanding principal indebtedness evidenced by this Note shall be payable as provided in
the Credit Agreement and in any event on the Maturity Date. 



        Interest
shall be payable hereunder on the outstanding daily unpaid principal amount of each Loan
hereunder, and, to the extent permitted by applicable law, on any unpaid interest payable
hereon, from the date that Loan is made or, in the case of interest, from the date it
falls due, shall accrue at the rate of 6% per annum and shall be payable on the dates set
forth in the Credit Agreement until each such amount of principal and interest is paid in
full (both before and after judgment). 



        The
amount of each payment due hereunder shall be made to the Administrative Agent at the
Administrative Agent’s Office for the account of the Lender in immediately available
funds not later than 12: 00 noon (New York City time) on the day the payment is due. All
payments received after 12: 00 noon (New York City time) on any particular Business Day
shall be deemed received on the next succeeding Business Day. All payments shall be made
in lawful money of the United States of America, provided however, that interest hereon
may be paid in the form of PIK Interest Notes in the circumstances permitted in the Credit
Agreement. 



        The
holder of this Note is authorized to record the date and amount of each Loan of the Lender
and the date and amount of each payment or prepayment of principal thereof on the
schedules annexed hereto and made a part hereof, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded absent manifest error;
provided that the failure of the holder to make such recordation (or any error in such
recordation) shall not affect the obligations of the Borrower hereunder or under the
Credit Agreement. 



        The
undersigned hereby promises to pay all reasonable costs and expenses of any rightful
holder hereof incurred in collecting the undersigned’s obligations hereunder or in
enforcing or attempting to enforce any of such holder’s rights hereunder, including
reasonable attorneys’ fees and disbursements as contemplated in the Credit Agreement,
whether or not an action is filed in connection therewith. 





___________________________
* Commitment
of relevant Lender 




        Upon
the occurrence of any one or more of the Events of Default specified in the Credit
Agreement, all amounts remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable all as provided therein. 



        All
parties now and hereafter liable with respect to this Note, whether maker, principal,
surety, guarantor, endorser or otherwise, hereby waive presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and (except to the extent
expressly required in the Credit Agreement) any other notice or formality, to the fullest
extent permitted by applicable laws. 



        THIS
NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF (OTHER
THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). 



	 	ASCENT ASSURANCE, INC.
	 
	 
	 	By:                      
	 	          NAME

          TITLE 













Schedule to Note






LOANS AND 
PAYMENTS 


	 Date 	 Amount of Loan Made 	 Amount of Principal Repaid
 or Prepaid 	 Unpaid Amount of 
Principal 	 Notation Made by 
	 	 	 	 	 
	 	 	 	 	





















EXHIBIT A-2 




FORM OF PIK INTEREST
NOTE 


	$________________*   	 New York, New York
December __, 2003 





        FOR
VALUE RECEIVED, the undersigned promises to pay to the order of   (the
“Lender”), the principal amount of _____________ ($______________ ) or such
lesser amount as equals the aggregate outstanding amount of PIK
Interest (as defined in the Credit Agreement referred to below) that has been paid through
its conversion to the principal amount of a Loan of the Lender pursuant to Section 2.6(d)
of the Credit Agreement, payable as hereinafter set forth. The undersigned promises to pay
interest on each amount of PIK Interest that remains unpaid from time to time from the
date such amount of PIK Interest becomes principal as provided in Section 2.6(d) of the
Credit Agreement (the “Increase Date” for such PIK Interest) until the date of
payment in full, payable as hereinafter set forth. 



        Reference
is made to the Credit Agreement dated as of April 17,200l (as it may be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”)
among Ascent Assurance, Inc., a Delaware corporation, as borrower, Credit Suisse First
Boston Management LLC (formerly Credit Suisse First Boston Management Corporation), as
Administrative Agent (in that capacity, the “Administrative Agent”) and
Arranger, and the Lenders from time to time party thereto. Terms defined in the Credit
Agreement and not otherwise defined herein are used herein with the meanings given those
terms in the Credit Agreement. This Note is one of the PIK Interest Notes and Notes
referred to in the Credit Agreement, and any holder hereof is entitled to all of the
rights, remedies, benefits and privileges provided for in the Credit Agreement as
originally executed or as it may from time to time be supplemented, modified or amended.
The Credit Agreement, among other things, contains provisions for acceleration of the
maturity hereof, and the optional and mandatory prepayment in whole or in part hereof,
upon the happening of certain stated events upon the terms and conditions therein
specified. 



        This
Note has been issued to evidence interest paid in kind under the Credit Agreement, and all
amounts due hereunder shall be treated as additional amounts of principal due in respect
of the Loans of the Lender. 



        This
Note is secured by Collateral and Pledged Collateral as more fully set forth in the
Security Documents. 



        The
outstanding principal indebtedness evidenced by this Note shall be payable as provided in
the Credit Agreement and in any event on the Maturity Date. 



        Interest
shall be payable hereunder on the outstanding daily unpaid principal amount hereof, and,
to the extent permitted by applicable law, on any unpaid interest payable hereon, from the
Increase Date for such PIK Interest, shall accrue at the rate of 6% per annum and shall be
payable dates set forth in the Credit Agreement until each such amount of principal and
interest is paid in full (both before and after judgment). 



        The
amount of each payment due hereunder shall be made to the Administrative Agent at the
Administrative Agent’s Office for the account of the Lender in immediately available
funds not later than 12:00 noon (New York City time) on the day the payment is due. All
payments received after 12:00 noon (New York City time) on any particular Business Day
shall be deemed received on the next succeeding Business Day. All payments shall be made
in lawful money of the United States of America, provided however, that interest hereon
may be paid in the form of PIK Interest Notes in the circumstances permitted in the Credit
Agreement. 



        The
holder of this Note is authorized to record the date and amount of each of its Loans
consisting of PIK Interest added to the principal hereof and the date and amount of each
payment or prepayment of principal thereof on the schedules annexed hereto and made a part
hereof, and any such recordation shall constitute prima facie evidence of the accuracy of
the information so recorded absent manifest error; provided that the failure of the holder
to make such recordation (or any error in such recordation) shall not affect the
obligations of the Borrower hereunder or under the Credit Agreement. 




_________________________
* PIK Interest Note amount
of relevant Lender. Aggregate amount of interest due to Lender under Credit Agreement
assuming full amount of Commitment is borrowed on the Closing Date and each amount of
interest thereon and on the principal of this PIK Interest Note is paid through increase
of the principal of this PIK Interest Note (total amount for all PIK Interest Notes for
all Lenders will be $4,738,457.00) 


        The
undersigned hereby promises to pay all reasonable costs and expenses of any rightful
holder hereof incurred in collecting the undersigned’s obligations hereunder or in
enforcing or attempting to enforce any of such holder’s rights hereunder, including
reasonable attorneys’ fees and disbursements as contemplated in the Credit Agreement,
whether or not an action is filed in connection therewith. 



        Upon
the occurrence of any one or more of the Events of Default specified in the Credit
Agreement, all amounts remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable all as provided therein. 



        All
parties now and hereafter liable with respect to this Note, whether maker, principal,
surety, guarantor, endorser or otherwise, hereby waive presentment, demand for payment,
dishonor, notice of dishonor, protest, notice of protest and (except to the extent
expressly required in the Credit Agreement) any other notice or formality, to the fullest
extent permitted by applicable laws. 









        THIS
NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF , LAWS THEREOF
(OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). 



	 	ASCENT ASSURANCE, INC.
	 
	 
	 	By:                      
	 	          NAME

          TITLE 
















LOANS AND 


PAYMENTS 


	 Date 	 Amount of PIK Intereste
Increase to Outstanding 
Note Principal 	 Amount of Principal Repaid
or Prepaid	 Unpaid Amount of 
Principal 	 Notation 
Made by