Document:

Exhibit 10.41

Exhibit 10.41 

FIRST AMENDMENT TO
CREDIT AGREEMENTAND 
SECURITY AGREEMENT 

        This
FIRST AMENDMENT TO CREDIT AGREEMENT AND SECURITY AGREEMENT (this
“Amendment”), dated as of July 6, 2004, is among ASCENT FUNDING, INC., a
Delaware corporation (“Borrower”), ASCENT ASSURANCE, INC., a Delaware
corporation (“AAI”), NATIONALCARE® MARKETING, INC., a Delaware
corporation (“NCM”), AMERICARE BENEFITS INC., a Delaware corporation
(“ABI”), and THE FROST NATIONAL BANK, a national banking association
(“Lender”). 

RECITALS: 

        The
Borrower, AAI, NCM and the Lender have previously entered into the Credit Agreement dated
as of December 31, 2003 (such agreement, together with all amendments and restatements,
the “Credit Agreement”). The Borrower and the Lender have previously
entered into the Security Agreement dated as of December 31, 2003 (such agreement,
together with all amendments and restatements, the “Security Agreement”). 

        The
Borrower, AAI, ABI, NCM and the Lender now desire to amend the Credit Agreement to add ABI
as an Eligible MGA, to amend the Security Agreement and to make other modifications, as
provided in this Amendment. 

AGREEMENT: 

        NOW,
THEREFORE, in consideration of the premises and mutual covenants herein contained, the
parties hereto agree as follows: 

ARTICLE I 

Definitions 

1.1      Definitions.  All capitalized terms not otherwise defined herein have the same meanings as in the Credit Agreement.

ARTICLE II 

Amendments to Credit
Agreement 

2.1 Amendments to Credit
Agreement Section 1.1.

	  	Credit
Agreement Section 1.1 is amended as follows: 

	  	The
following terms are added in alphabetical order: 

	  	“ABI”
means AmeriCare Benefits, Inc., a Delaware corporation. 

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

	  	“Agent
Receivables Collateral Account” means an interest-bearing deposit account owned
by, in the name of and under the exclusive control of the Lender. 

        The
definition of “Borrowing Base” is deleted in its entirety and the following is
substituted in lieu thereof: 

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

        The
definition of “Eligible MGA” is deleted in its entirety and the following is
substituted in lieu thereof: 

	  	“Eligible
MGA” means ABI and NCM. 

        The
definition of “Guarantor” is deleted in its entirety and the following is
substituted in lieu thereof: 

	  	“Guarantor”
means AAI, ABI and NCM. 

        The
definition of “Loan Documents” is deleted in its entirety and the following is
substituted in lieu thereof: 

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

        The
definition of “Master General Agent” is deleted in its entirety and the
following is substituted in lieu thereof: 

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

        The
definition of “Obligor” is deleted in its entirety and the following is
substituted in lieu thereof: 

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

        The
definition of “Receivables Purchase Agreement” is deleted in its entirety and
the following is substituted in lieu thereof: 

	  	
“Receivables
Purchase Agreement” means each of (a) the Third Amended and Restated Receivables
Purchase and Sale Agreement dated as of the Closing Date by and between the Borrower and
NCM, a copy of which is attached as Exhibit N hereto, as amended from time to time
in accordance with the Loan Documents, and (b) the Receivables Purchase and Sale Agreement
dated as of _______, 2004, by and between the Borrower and ABI, a copy of which is
attached as Exhibit N hereto, as amended from time to time in accordance with the
Loan Documents. 

2.2      Amendment  to Credit  Agreement  Article  IV.The  introductory  paragraph  of Credit  Agreement  Article IV is deleted in its
entirety and the following is substituted in lieu thereof:

	  	Each
Obligor hereby represents and warrants, as to itself and its Subsidiaries, as applicable,
the following: 

2.3      Amendment to Credit  Agreement  Section 4.13. The last sentence of Credit  Agreement  Section 4.13 is deleted in its entirety
and the following is substituted in lieu thereof:

	  	
None
of Borrower, ABI and NCM has knowledge of any fact which would impair the validity or
collectibility of aggregate Agent Receivables, net of the allowance for doubtful accounts
established by Borrower in accordance with GAAP, except to the extent that such impairment
could not reasonably be expected to have a Materially Adverse Effect. 

2.4      Amendment  to Credit  Agreement  Article  V. The  introductory  paragraph  of Credit  Agreement  Article V is  deleted  in its
entirety and the following is substituted in lieu thereof:

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

2.5      Amendment to Credit  Agreement  Section  5.8. The  introductory  paragraph to Credit  Agreement  Section 5.8 is deleted in its
entirety and the following is substituted in lieu thereof:

	  	The
Borrower, AAI, ABI and NCM, as appropriate, shall furnish to the Lender: 

2.6      Amendment to Credit Agreement  Section 5.8(c).  Credit  Agreement  Section 5.8(c) is deleted in its entirety and the following
is substituted in lieu thereof:

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

2.7      Amendment to Credit  Agreement  Section 5.9(a).  The introductory  paragraph of Credit Agreement  Section 5.9(a) is deleted in
its entirety and the following is substituted in lieu thereof:

	  	
Simultaneously
with each delivery of financial statements and information pursuant to Sections
5.8(a), (b), (c) and (d), the Obligors shall deliver to the
Lender: 

2.8      Amendment to Credit  Agreement  Section  5.9(a)(ii).  Credit Agreement  Section  5.9(a)(ii) is deleted in its entirety and the
following is substituted in lieu thereof:

	  	
A
Compliance Certificate for the period covered by the financial statements then being
delivered; provided, no Obligor is required to deliver a Compliance Certificate
with the financial information required by Section 5.8(d). 

2.9      Amendment to Credit  Agreement  Section 6.8.  Credit  Agreement  Section 6.8 is amended by deleting clause (c) in its entirety
and substituting the following in lieu thereof.

	  	(c)
          intercompany advances made by the Borrower to an Eligible MGA from time to time,
          and 

                    

2.10     Amendments to Credit  Agreement  Section 7.2.  Credit  Agreement  Section 7.2  is deleted in its entirety and the following is
substituted in lieu thereof:

	  	Section
7.2. Remedies. 

                    

               	 	(a) 

                     Without limiting any other rights or remedies of the Lender provided for
                    elsewhere in the Loan Documents, or by applicable law, or in equity, or
                    otherwise, if any Event of Default described in Section  7.1(a),
                    (b) (as to any failure to perform or observe any term, covenant, or
                    agreement in Article VI), (f), (g), (h) or
                    (l) shall occur and be continuing, each Eligible MGA shall deliver to the
                    Lender all payments and other amounts due and payable by such Eligible MGA
                    pursuant to its respective Receivables Purchase Agreement, all of which amounts
                    shall be deposited by Lender into the Agent Receivables Collateral Account and
                    held as collateral. If an Event of Default exists, the Lender may exercise any
                    remedy available to it under the Loan Documents or applicable law with respect
                    to all property in the Agent Receivables Collateral Account and apply the
                    proceeds in accordance with the Security Agreement. If prior to any such
                    exercise of remedies by the Lender, each Default and Event of Default is cured
                    or waived to the satisfaction of the Lender pursuant to its written agreement,
                    or as may otherwise be agreed to by the Lender, the Lender shall deliver all
                    property in the Agent Receivables Collateral Account (including any accrued
                    interest thereon) to the Borrower. 

                    

               	 	(b) 

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

                    

               	 	(c) 

                     The remedies herein provided are cumulative and not exclusive of any remedies
                    provided by law. 

                    

2.11 Exhibits. 

     	 	(a)       
          Exhibit B to the Credit Agreement is amended by adding the form of Agent
          Contract for ABI, in the form of Exhibit B attached hereto, to Exhibit
          B to the Credit Agreement. 

          

     	 	(b)       
          Exhibit C to the Credit Agreement is amended by adding the form of the
          Master General Agent Contract between ABI and NFL and the Master General Agent
          Contract between ABI and FLICA, in the form of Exhibit C attached hereto,
          to Exhibit C to the Credit Agreement. 

          

     	 	(c)       
          Exhibit N to the Credit Agreement is amended by adding the form of
          Receivables Purchase Agreement between ABI and the Borrower, in the form of
          Exhibit N attached hereto, to Exhibit N to the Credit
          Agreement. 

          

     	 	(d)       
          Exhibit O (Compliance Certificate) to the Credit Agreement is deleted in
          its entirety and a new Exhibit O, in the form of Exhibit O
          attached hereto, is substituted in lieu thereof. 

          

     	 	(e)       
          A new Exhibit Q (ABI Guaranty), in the form of Exhibit Q attached
          hereto, is added to the Credit Agreement. 

          

ARTICLE III 

Amendments to
Security Agreement 

3.1      Amendment to Security Agreement  Section 6(b).  Security  Agreement  Section 6(b) is deleted in its entirety and the following
is substituted in lieu thereof:

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

               

3.2      Amendment to Security Agreement  Section 6(d).  Security  Agreement  Section 6(d) is deleted in its entirety and the following
is substituted in lieu thereof:

		(d)       
          Debtor’s Receipt of Proceeds. 

               

          		(i)        
               All amounts and proceeds (including instruments and writings) received by Debtor
               in respect of Collateral (other than amounts of and accounts constituting Agent
               Receivables, proceeds of Agent Receivables or general intangibles) shall be
               received in trust for the benefit of Secured Party hereunder and, upon request
               of Secured Party, shall be segregated from other property of Debtor and shall be
               forthwith delivered to Secured Party in the same form as so received (with any
               necessary endorsement). 

               

          		(ii)        
               If no Default or Event of Default exists, all amounts and proceeds of accounts
               constituting Agent Receivables, proceeds of Agent Receivables and general
               intangibles shall only be deposited in a deposit account described in
               Schedule 9 or otherwise agreed to by Secured Party. If an Event of
               Default described in Credit Agreement Section 7.1(a), (b) (as to any failure to
               perform or observe any term, covenant, or agreement in Credit Agreement Article
               VI), (f), (g), (h) or (l) exists, all amounts of and proceeds of accounts
               constituting Agent Receivables, proceeds of Agent Receivables and general
               intangibles shall be segregated from other property of Debtor and shall be
               forthwith delivered to Secured Party in the same form as so received (with any
               necessary endorsement). 

               

3.3      Amendment to Security  Agreement Section 8(c).  Security  Agreement  Section 8(c) is deleted in its entirety and the following
is substituted in lieu thereof:

		(c)       
          Application of Proceeds. 

               

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

               

               	(A) 	  	
                    to the repayment or reimbursement of the reasonable costs and expenses
                    (including, without limitation, reasonable attorneys’ fees and expenses)
                    incurred by Secured Party in connection with (1) the administration of the Loan
                    Documents, (2) the custody, preservation, use or operation of, or the sale of,
                    collection from, or other realization upon, the Collateral, and (3) the exercise
                    or enforcement of any of the rights and remedies of Secured Party hereunder; 

                    

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

                    

               	(C) 	  	
                    to the satisfaction of the Indebtedness; 

                    

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

                    

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

                    

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

                    

          		(ii)        
               If an Event of Default exists, Secured Party shall apply all amounts in the
               Agent Receivables Collateral Account in the order provided in
               Section 8(c)(i) upon the first to occur of (A) the election by the
               Secured Party to so apply such amount, and (B) receipt by the Secured Party of
               written notice from the Debtor instructing the Secured Party to so apply such
               amounts. 

               

ARTICLE IV 

Conditions Precedent 

4.1      Conditions.  The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:

     	 	(a)       
          Documents. The Lender shall have received all of the following, each
          dated (unless otherwise indicated) the date of this Amendment, and the following
          shall have occurred, in form and substance satisfactory to the Lender: 

          

     		(i)        
          This Amendment executed by the Borrower, ABI, each other Obligor, and the
          Lender. 

          

     		(ii)       
          the ABI Guaranty duly executed by ABI. 

          

     		(iii)      
          the First Restated Guaranty, in the form of Exhibit W hereto, duly
          signed by NCM. 

          

     		(iv)      
          the Receivables Purchase Agreement duly executed and delivered by the Borrower
          and ABI. 

          

     		(v)       
          The First Amendment to Third Amended and Restated Receivables Purchase and Sale
          Agreement duly executed and delivered by Borrower and NCM. 

          

     		(vi)      
          the amendment to the Financing Statements of the Borrower, as Debtor. 

          

     		(vii)     
          the First Amendment to Intercreditor Subordination Agreement, in the form of
          Exhibit X hereto, signed by all parties thereto. 

          

     		(viii)    
          a certificate of the Secretary or Assistant Secretary of ABI, dated the date of
          this Amendment, attesting on behalf of ABI to all corporate action taken by ABI,
          including resolutions of its Board of Directors authorizing the execution,
          delivery and performance of the ABI Guaranty and each other document to be
          delivered by ABI pursuant to the Credit Agreement, and attesting to the names
          and true signatures of the officers of ABI authorized to sign the ABI Guaranty
          and the other documents to be delivered by ABI pursuant to the Credit Agreement
          and to the completeness and correctness of the attached Articles of
          Incorporation and Bylaws of ABI. 

          

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

          

     		(x)       
          a favorable opinion of general counsel to ABI and each other Obligor dated the
          date of this Amendment, in substantially the form set forth in Exhibit Y
          hereto. 

          

     		(xi)      
          each Master General Agent Contract to which ABI is a party, attached to a
          certificate of a Senior Officer of ABI certifying that each such Master General
          Agent Contract is a true, correct and complete copy, including all amendments
          and supplements thereto, and is in full force and effect on the date of this
          Amendment. 

          

     		(xii)     
          the Receivables Purchase Agreement between ABI and the Borrower, attached to a
          certificate of a Senior Officer of ABI certifying that such Receivables Purchase
          Agreement is a true, correct and complete copy, including all amendments and
          supplements thereto, and is in full force and effect on the date of this
          Amendment. 

          

     		(xiii)    
          the Receivables Purchase Agreement between NCM and the Borrower, attached to a
          certificate of a Senior Officer of NCM certifying that such Receivables Purchase
          Agreement is a true, correct and complete copy, including all amendments and
          supplements thereto, and is in full force and effect on the date of this
          Amendment. 

          

     		(xiv)    
          the letter agreement among Borrower, AAI, NCM, ABI and Lender regarding notice
          under each Receivables Purchase Agreement, duly executed and delivered by each
          party thereto. 

          

     		(xv)     
          a copy of the form of Agency Contract of ABI, attached to a certificate of a
          Senior Officer of ABI certifying that such form is a true, correct and complete
          copy of the form of Agent Contract of ABI. 

          

     		(xvi)    
          all corporate and legal proceedings and all instruments and agreements in
          connection with the transactions contemplated by Amendment, the ABI Guaranty,
          the Receivables Purchase Agreement to which ABI is a party and the other Loan
          Documents shall be reasonably satisfactory in form and substance to the Lender
          and the Lender shall have received any and all other information and documents
          with respect to ABI and each other Obligor, which it may reasonably request. 

          

     		(xvii)   
          searches of the Uniform Commercial Code, tax lien, real property and other
          records with respect to any Obligor as the Lender may require. 

          

     		(xviii)  
          a Waiver of Jury Trial and Notice of Final Agreement executed by all parties
          thereto in the form of Exhibit Z hereto. 

          

     		(b)       
          No Default. No Default of Event of Default shall exist. 

          

     		(c)       
          Representations and Warranties. All of the representations and warranties
          contained in Article IV of the Credit Agreement, as amended hereby, and in the
          other Loan Documents shall be true and correct on and as of the date of this
          Amendment with the same force and effect as if such representations and
          warranties had been made on and as of such date, except to the extent such
          representations and warranties speak to a specific date. 

          

4.2 Expenses of Lender. As
provided in the Credit Agreement, Borrower shall pay on demand all reasonable costs and
expenses incurred by the Lender in connection with the preparation, negotiation, and
execution of this Amendment and the other Loan Documents executed pursuant hereto,
including without limitation the reasonable fees and expenses of the Lender’s legal
counsel. 

ARTICLE V 

Ratifications,
Representations and Warranties 

5.1 Ratifications. The terms
and provisions set forth in this Amendment shall modify and supersede all inconsistent
terms and provisions set forth in the Credit Agreement and except as expressly modified
and superseded by this Amendment, the terms and provisions of the Credit Agreement and the
other Loan Documents are ratified and confirmed and shall continue in full force and
effect. Each Obligor and the Lender agree that the Credit Agreement, as amended hereby,
and the other Loan Documents shall continue to be legal, valid, binding and enforceable in
accordance with their respective terms. Upon the effectiveness of this Amendment, ABI
shall be a party to the Credit Agreement and an Obligor. 

5.2 Representations and
Warranties. Each Obligor hereby represents and warrants to the Lender that (i) the
execution, delivery and performance of this Amendment and any and all other Loan Documents
executed and/or delivered in connection herewith have been authorized by all requisite
action on the part of such Obligor and will not violate any organizational document of
such Obligor, (ii) the representations and warranties contained in the Credit Agreement,
as amended hereby, and each other Loan Document are true and correct on and as of the date
hereof as though made on and as of the date hereof, except to the extent such
representations and warranties speak to a specific date, (iii) no Default or Event of
Default exists, (iv) the organizational and governance documents of such Obligor have not
been modified in any respect from the copies thereof previously provided to the Lender in
connection with the Credit Agreement, and (v) such Obligor is in full compliance with all
covenants and agreements contained in the Credit Agreement, as amended hereby, and the
other Loan Documents to which it is a party or it or its property is subject. AAI and ABI
represent and warrant that ABI is a wholly-owned Subsidiary of AAI. 

ARTICLE VI 

Miscellaneous 

6.1 Reference to Credit
Agreement. Each of the Loan Documents, including the Credit Agreement and any and all
other agreements, documents, or instruments now or hereafter executed and delivered
pursuant to the terms hereof or pursuant to the terms of the Credit Agreement as amended
hereby, are hereby amended so that any reference in such Loan Documents to the Credit
Agreement shall mean a reference to the Credit Agreement as amended hereby. 

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

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

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

6.5 GOVERNING LAW. THIS
AMENDMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF TEXAS AND FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 

6.6 Authorization of Third Parties
to Deliver Opinions, Etc. Each Obligor hereby authorizes and directs each Person whose
preparation or delivery to the Lender of any opinion, report or other information is a
condition or covenant under this Amendment to so prepare or deliver such opinion, report
or other information for the benefit of the Lender. 

6.7 Successors and Assigns.
This Amendment is binding upon and shall inure to the benefit of the Lender and each
Obligor and their respective successors and assigns, except no Obligor may assign or
transfer any of its rights or obligations hereunder without the prior written consent of
the Lender. Signatures hereto transmitted by facsimile shall be effective as originals. 

     

        THE
REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. 

     

        Executed
as of the date first written above. 

	BORROWER:   	ASCENT FUNDING, INC.
	 
	 	By:/s/ Cynthia B. Koenig 

                                                     Print Name: Cynthia B. Koenig

                                                     Print Title: Sr. Vice Presidnet, CFO and Treasurer

	OBLIGORS:   	ASCENT ASSURANCE, INC.
	 
	 	By:/s/ Cynthia B. Koenig 

                                                     Print Name: Cynthia B. Koenig

                                                     Print Title: Sr. Vice Presidnet, CFO and Treasurer
	 
		NATIONALCARE® MARKETING, INC.
	 
	 	By:/s/ Cynthia B. Koenig 

                                                     Print Name: Cynthia B. Koenig

                                                     Print Title: Sr. Vice Presidnet, CFO and Treasurer
	 
		AMERICARE BENEFITS, INC.
	 
	 	By:/s/ Cynthia B. Koenig 

                                                     Print Name: Cynthia B. Koenig

                                                     Print Title: Sr. Vice Presidnet, CFO and Treasurer
	 
	 
	LENDER:	THE FROST NATIONAL BANK
	 
	 	By:/s/ Adam Palmer 

                                                           Adam Palmer

                                                           Senior Vice President
	 

EXHIBIT B 

(ABI Agent Contract) 

EXHIBIT C 

        (Master
General Agent Contract with NFL and FLICA) 

EXHIBIT N 

(ABI Receivables
Purchase Agreement) 

EXHIBIT O 

(Compliance Certificate) 

EXHIBIT Q 

(ABI Guaranty) 

EXHIBIT W 

(First Restated
Guaranty — NCM) 

EXHIBIT X 

(First Amendment to
Intercreditor Subordination Agreement) 

EXHIBIT Y 

(Opinion of Obligor Counsel) 

EXHIBIT Z 

(Waiver of Jury Trial
and Notice of Final Agreement) 

GUARANTY AGREEMENT 

        THIS
GUARANTY AGREEMENT (“Guaranty”) is made as of July 6, 2004, by
Guarantor (as hereinafter defined) for the benefit of Lender (as hereinafter defined). 

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

          

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

          

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

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

          

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

          

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

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

          

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

          

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

          

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

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

          

     	3. 	
          Character of Obligations. 

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

     	6. 	
          Consent and Waiver. 

          

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

          

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

          

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

          

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

          

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

          

     	7. 	
          Obligations Not Impaired. 

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

     

REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK. 

     

        EXECUTED
as of the date first above written. 

	 	GUARANTOR:
	 
	 
	 	AMERICARE BENEFITS, INC.
	 
	 	By:/s/ Cynthia B. Koenig 

                                                     Print Name: Cynthia B. Koenig

                                                     Print Title: Sr. Vice President and Treasurer

FIRST RESTATED
GUARANTY AGREEMENT 

        THIS
FIRST RESTATED GUARANTY AGREEMENT (“Guaranty”) is made as of July 6,
2004, by Guarantor (as hereinafter defined) for the benefit of Lender (as hereinafter
defined). 

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

          

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

          

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

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

          

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

          

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

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

          

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

          

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

          

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

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

          

     	3. 	
          Character of Obligations. 

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

     	6. 	
          Consent and Waiver. 

          

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

          

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

          

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

          

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

          

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

          

     	7. 	
          Obligations Not Impaired. 

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

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

          

     	23. 	
          Restatement. This Guaranty is a restatement of, but not a
          release or novation of, the Guaranty Agreement dated December 31, 2003, made by
          Guarantor in favor of Lender. 

          

     

REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK. 

     

        EXECUTED
as of the date first above written. 

	 	GUARANTOR:
	 
	 
	 	NATIONALCARE®
MARKETING, INC.
	 
	 	By:/s/ Cynthia B. Koenig 

                                                     Print Name: Cynthia B. Koenig

                                                     Print Title: Sr. Vice President and Treasurer

FIRST AMENDMENT TO
INTERCREDITOR AND SUBORDINATION AGREEMENT 

        This
FIRST AMENDMENT TO INTERCREDITOR AND SUBORDINATION AGREEMENT (this
“Amendment”), dated as of July 6, 2004, is among THE FROST NATIONAL BANK
(the “Bank”), CREDIT SUISSE FIRST BOSTON MANAGEMENT LLC
(“CSFBM”), as Administrative Agent under the Ascent Holdings Credit
Agreement referred to below (the “Administrative Agent”), for itself as
such and as Agent for each of the Lenders party to that Agreement (each a
“Lender”), ASCENT ASSURANCE, INC., a Delaware corporation
(“Holdings”), the subsidiaries of Holdings a party hereto (each a
“Subsidiary”), and SPECIAL SITUATIONS HOLDINGS, INC. — WESTBRIDGE
(“Westbridge”). 

RECITALS: 

        Bank,
CSFBM, Administrative Agent, each Lender, Holdings, each Subsidiary and Westbridge have
previously entered into the Intercreditor and Subordination Agreement dated as of December
31, 2003 (such agreement, together with all amendments and restatements, the
“Intercreditor Subordination Agreement”). Bank and Funding are amending
the Receivables Financing Agreements to, among other things, reflect the creation of
AmeriCare Benefits, Inc., a Delaware corporation (“ABI”), as a new
Subsidiary and the execution by ABI of a guaranty in favor of Bank. 

        The
parties hereto desire to amend the Intercreditor Subordination Agreement to acknowledge
the guaranty of ABI in favor of Bank. 

AGREEMENT: 

        NOW,
THEREFORE, in consideration of the premises and mutual covenants herein contained, the
parties hereto agree as follows: 

ARTICLE I 

Definitions 

1.1      Definitions.  All  capitalized  terms  not  otherwise  defined  herein  have the same  meanings  as in the
Intercreditor Subordination Agreement.

ARTICLE II 

Amendment 

2.1      Amendment to Intercreditor Subordination Agreement.

	  	
Schedule
2 to the Intercreditor Subordination Agreement is deleted in its entirety and a new
Schedule 2, in the form of Schedule 2 attached hereto, is substituted in
lieu thereof. 

ARTICLE III 

Condition Precedent 

        This
Amendment shall be effective upon receipt by the Bank of a counterpart of this Amendment
executed by all parties hereto. 

ARTICLE IV 

Ratification 

        The
terms and provisions set forth in this Amendment shall modify and supersede all
inconsistent terms and provisions set forth in the Intercreditor Subordination Agreement
and except as expressly modified and superseded by this Amendment, the terms and
provisions of the Intercreditor Subordination Agreement are ratified and confirmed and
shall continue in full force and effect. Each party hereto agrees that the Intercreditor
Subordination Agreement, as amended hereby, shall continue to be legal, valid, binding and
enforceable in accordance with its terms. 

ARTICLE V 

Miscellaneous 

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

5.2 INTEGRATION.
THIS AMENDMENT, TOGETHER WITH THE INTERCREDITOR SUBORDINATION AGREEMENT, REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 

5.3 GOVERNING LAW. THIS
AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS AND FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 

     

THE REMAINDER OF THIS
PAGE IS INTENTIONALLY LEFT BLANK. 

     

        Executed
as of the date first written above. 

	  	THE FROST NATIONAL BANK
	 
	 	By:/s/ Adam Palmer 

                                                     Print Name: Adam Palmer

                                                     Print Title: Senior Vice President
	 
		CREDIT SUISSE FIRST BOSTON
MANAGEMENT LLC, as
Administrative Agent
	 
	 	By:/s/ Alan Freudenstein 

                                                     Print Name: Alan Freudenstein

                                                     Print Title: President        
	 
		CREDIT SUISSE FIRST BOSTON
MANAGEMENT LLC, as Lender
	 
	 	By:/s/ Alan Freudenstein 

                                                     Print Name: Alan Freudenstein

                                                     Print Title: President        
	 
		CREDIT SUISSE FIRST BOSTON
MANAGEMENT LLC
	 
	 	By:/s/ Alan Freudenstein 

                                                     Print Name: Alan Freudenstein

                                                     Print Title: President        
	 
	  	SPECIAL SITUATIONS HOLDINGS, INC. –
WESTBRIDGE
	 
	 	By:/s/ Alan Freudenstein 

                                                     Print Name: Alan Freudenstein

                                                     Print Title: President        
	 
		ASCENT ASSURANCE, INC.
	 
	 	By:/s/ Patrick J. Mitchell 

                                                     Print Name: Patrick J. Mitchell

                                                     Print Title: President        
	 
		FOUNDATION FINANCIAL SERVICES, INC.
	 
	 	By:/s/ Patrick J. Mitchell 

                                                     Print Name: Patrick J. Mitchell

                                                     Print Title: President        
	 
		NATIONALCARE® MARKETING, INC.
	 
	 	By:/s/ Patrick J. Mitchell 

                                                     Print Name: Patrick J. Mitchell

                                                     Print Title: President        
	 
	  	AMERICARE BENEFITS, INC.
	 
	 	By:/s/ Cynthia B. Koenig 

                                                     Print Name: Cynthia B. Koenig

                                                     Print Title: Vice President
	 
		PRECISION DIALING SERVICES, INC.
	 
	 	By:/s/ Patrick J. Mitchell 

                                                     Print Name: Patrick J. Mitchell

                                                     Print Title: President        
	 
		 SENIOR BENEFITS, L.L.C.
	 
	 	By:/s/ Patrick J. Mitchell 

                                                     Print Name: Patrick J. Mitchell

                                                     Print Title: President        
	 
		WESTBRIDGE PRINTING SERVICES, INC.
	 
	 	By:/s/ Cynthia B. Koenig 

                                                     Print Name: Cynthia B. Koenig

                                                     Print Title: Chief Financial Officer
	 
	  	ASCENT FUNDING, INC.
	 
	 	By:/s/ Patrick J. Mitchell 

                                                     Print Name: Patrick J. Mitchell

                                                     Print Title: President        

SCHEDULE 2 

RECEIVABLES FINANCING
AGREEMENTS 

     1.    
          Credit Agreement among Ascent Funding, Inc., Ascent Assurance, Inc. and
          NationalCare® Marketing, Inc. and The Frost National Bank dated as of
          December 31, 2003, as amended by First Amendment to Credit Agreement and
          Security Agreement dated July 6, 2004. 

     2.    
          Security Agreement by Ascent Funding, Inc. for the benefit of The Frost National
          Bank dated as of December 31, 2003, as amended by First Amendment to Credit
          Agreement and Security Agreement dated July 6, 2004. 

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

     4.    
          Guaranty Agreement by Ascent Assurance, Inc. in favor of The Frost National Bank
          dated as of December 31, 2003. 

     5.    
          Pledge and Security Agreement between NationalCare® Marketing, Inc. and The
          Frost National Bank dated as of December 31, 2003. 

     6.    
          First Restated Guaranty Agreement by NationalCare® Marketing, Inc. in favor
          of The Frost National Bank dated as of July 6, 2004. 

     7.    
          Guaranty Agreement by AmeriCare Benefits, Inc. in favor of The Frost National
          Bank dated as of July 6, 2004. 

WAIVER OF JURY TRIAL
AND NOTICE OF FINAL AGREEMENT 

	To: 	 ASCENT FUNDING, INC.
(collectively,
whether one or more, “Borrower”)

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

FACSIMILE DOCUMENTS
AND SIGNATURES  

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

WAIVER OF RIGHT TO
TRIAL BY JURY 

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

NOTICE OF FINAL
AGREEMENT 

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

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

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

THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES. 

     

THE REMAINDER OF THIS
PAGE IS INTENTIONALLY LEFT BLANK. 

     

Executed effective as of
July 6, 2004. 

	  	
THE
FROST NATIONAL BANK, 
a national banking association 
	 
	 	By:/s/ Adam Palmer 

                                                     Print Name: Adam Palmer

                                                     Print Title: Senior Vice President

ACKNOWLEDGED AND AGREED: 

BORROWER: 

ASCENT FUNDING, INC. 

By:/s/ Patrick J. Mitchell 

                                                     Print Name: Patrick J. Mitchell

                                                     Print Title: Chairman of the Board, President, and Dir.

OTHER OBLIGORS: 

ASCENT ASSURANCE, INC. 

By:/s/ Patrick J. Mitchell 

                                                     Print Name: Patrick J. Mitchell

                                                     Print Title: CEO, President

NATIONALCARE®
MARKETING, INC. 

By:/s/ Patrick J. Mitchell 

                                                     Print Name: Patrick J. Mitchell

                                                     Print Title: Chairman of the Board, President,CEO and Dir.

AMERICARE BENEFITS, INC. 

By:/s/ Patrick J. Mitchell 

                                                     Print Name:  Patrick J. Mitchell

                                                     Print Title: Chariman of the BoardExhibit 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

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