10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission file number  1-11356
Radian Group Inc.
(Exact name of registrant as specified in its charter)
Delaware		23-2691170
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1601 Market Street, Philadelphia, PA		19103
(Address of principal executive offices)		(zip code)
(215) 564-6600
(Registrant’s telephone number, including area code)

          Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or if such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes   x No   o

          Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes   x No   o

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

          Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes   o No   o

APPLICABLE ONLY TO CORPORATE ISSUERS:

          Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 93,339,582 shares of Common Stock, $0.001 par value, outstanding on May 8, 2003.

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Radian Group Inc. and Subsidiaries

INDEX

			Page Number
PART I - FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Income	4
		Condensed Consolidated Statement of Changes in Common Stockholders’ Equity	5
		Condensed Consolidated Statements of Cash Flows	6
		Notes to Unaudited Condensed Consolidated Financial Statements	7 – 13
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14 – 26
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26
	Item 4.	Controls and Procedures	26
PART II - OTHER INFORMATION
	Item 1.	Legal Proceedings	27
	Item 6.	Exhibits and Reports on Form 8-K	27
SIGNATURES			28
CERTIFICATIONS			29 – 30
EXHIBIT INDEX			31

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PART I – FINANCIAL INFORMATION

ITEM 1.  Financial Statements

Radian Group Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share amounts)	March 31 2003			December 31 2002
Assets
Investments
Fixed maturities held to maturity – at amortized cost (fair value $354,752 and $379,643)	$	331,738		$	356,000
Fixed maturities available for sale – at fair value (amortized cost $3,569,202 and $3,332,102)		3,690,560			3,448,926
Trading securities – at fair value (cost $44,056 and $39,261)		37,602			37,619
Equity securities – at fair value (cost $204,423 and $196,766)		172,543			168,517
Short-term investments		299,308			180,919
Other invested assets		6,463			8,346
Total Investments		4,538,214			4,200,327
Cash		31,393			21,969
Investment in affiliates		253,027			259,120
Deferred policy acquisition costs		195,481			183,587
Prepaid federal income taxes		280,236			294,136
Provisional losses recoverable		45,548			48,561
Accrued investment income		48,937			47,762
Accounts and notes receivable		108,018			86,850
Property and equipment, at cost (less accumulated depreciation of $24,569 and $21,703)		59,059			55,580
Other assets		228,994			195,513
	$	5,788,907		$	5,393,405
Liabilities and Stockholders’ Equity
Unearned premiums	$	643,904		$	618,050
Reserve for losses		632,896			624,577
Short-term and long-term debt		717,237			544,145
Deferred federal income taxes		592,811			570,279
Accounts payable and accrued expenses		358,007			282,919
		2,944,855			2,639,970
Common stockholders’ equity
Common stock, par value $.001 per share; 200,000,000 shares authorized;
95,223,318 and 95,134,279 shares issued in 2003 and 2002, respectively		95			95
Treasury stock; 1,940,640 and 1,581,989 shares in 2003 and 2002, respectively		(63,758	)		(51,868	)
Additional paid-in capital		1,240,078			1,238,698
Retained earnings		1,611,036			1,508,138
Accumulated other comprehensive income		56,601			58,372
		2,844,052			2,753,435
	$	5,788,907		$	5,393,405

See notes to unaudited condensed consolidated financial statements

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Radian Group Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  (UNAUDITED)

	Quarter Ended March 31
(In thousands, except per-share amounts)	2003			2002
Revenues:
Premiums written:
Direct	$	211,677		$	202,864
Assumed		59,689			35,402
Ceded		(19,006	)		(13,628	)
Net premiums written		252,360			224,638
Increase in unearned premiums		(26,231	)		(15,449	)
Premiums earned		226,129			209,189
Net investment income		46,672			42,753
Equity in net income of affiliates		14,888			18,620
Other income		14,557			11,282
Total revenues		302,246			281,844
Expenses:
Provision for losses		67,758			57,427
Policy acquisition costs		31,017			23,447
Other operating expenses		44,441			44,745
Interest expense		8,584			7,154
Total expenses		151,800			132,773
Gains and losses:
Net gains on dispositions of investments		4,025			621
Change in fair value of derivative instruments		(7,898	)		(3,242	)
Net losses		(3,873	)		(2,621	)
Pretax income		146,573			146,450
Provision for income taxes		41,801			42,517
Net income		104,772			103,933
Dividends to preferred stockholder		—			825
Net income available to common stockholders	$	104,772		$	103,108
Basic net income per share	$	1.12		$	1.09
Diluted net income per share	$	1.11		$	1.08
Average number of common shares outstanding – basic		93,394			94,224
Average number of common and common equivalent shares outstanding - diluted		94,297			95,881

See notes to unaudited condensed consolidated financial statements.

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Radian Group Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN COMMON STOCKHOLDERS’ EQUITY
(UNAUDITED)

											Accumulated Other Comprehensive Income (Loss)
(In thousands)	Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings			Foreign Currency Translation Adjustment		Unrealized Holding Gains (Losses)			Total
Balance, January 1, 2003	$	95	$	(51,868	)	$	1,238,698	$	1,508,138		$	233	$	58,139		$	2,753,435
Comprehensive income:
Net income		—		—			—		104,772			—		—			104,772
Unrealized foreign currency translation adjustment, net of tax of  $119		—		—			—		—			222		—			222
Unrealized holding gains arising during period, net of tax of $336		—		—			—		—			—		623
Less: Reclassification adjustment for net gains included in net income, net of tax of $1,409		—		—			—		—			—		(2,616	)
Net unrealized loss on investments, net of tax benefit of  $1,073		—		—			—		—			—		(1,993	)		(1,993	)
Comprehensive income																	103,001
Issuance of common stock under incentive plans		—		—			1,380		—			—		—			1,380
Treasury stock purchased, net				(11,890	)												(11,890	)
Dividends		—		—			—		(1,874	)		—		—			(1,874	)
Balance, March 31, 2003	$	95	$	(63,758	)	$	1,240,078	$	1,611,036		$	455	$	56,146		$	2,844,052

See notes to unaudited condensed consolidated financial statements.

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Radian Group Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (UNAUDITED)

	Quarter Ended March 31
(in thousands)	2003			2002
Cash flows from operating activities	$	135,244		$	120,623
Cash flows from investing activities:
Proceeds from sales of fixed maturity investments available for sale		540,315			238,887
Proceeds from sales of equity securities available for sale		9,042			120,098
Proceeds from redemptions of fixed maturity investments available for sale		35,717			50,833
Proceeds from redemptions of fixed maturity investments held to maturity		24,565			14,854
Purchases of fixed maturity investments available for sale		(768,877	)		(667,094	)
Purchases of equity securities available for sale		(20,236	)		(159,174	)
(Purchases) sales of short-term investments, net		(118,390	)		84,853
Sales (purchases) of other invested assets		1,891			(1,836	)
Purchases of property and equipment		(6,305	)		(16,373	)
Investment in affiliates		—			(20,000	)
Proceeds from sales of investment in affiliates		3,395			—
Distributions from affiliates		12,450			12,595
Other		1,595			4,144
Net cash used in investing activities		(284,836	)		(338,213	)
Cash flows from financing activities:
Proceeds from issuance of common stock under incentive plans		1,380			13,316
Issuance of long-term debt		246,400			215,953
Repayment of short term debt		(75,000	)		—
Purchase of treasury stock, net		(11,890	)		—
Dividends paid		(1,874	)		(2,710	)
Net cash provided by financing activities		159,016			226,559
Increase in cash		9,424			8,969
Cash, beginning of period		21,969			60,159
Cash, end of period	$	31,393		$	69,128
Supplemental disclosures of cash flow information:
Income taxes paid	$	12,082		$	6,513
Interest paid	$	5,186		$	2,708

See notes to unaudited condensed consolidated financial statements.

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Radian Group Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements

1 – Consolidated Financial Statements – Basis of Presentation

          The consolidated financial statements included herein, include the accounts of Radian Group Inc. (the “Company” or “Radian”) and its subsidiaries, including its principal mortgage guaranty subsidiaries, Radian Guaranty Inc. (“Radian Guaranty”), Amerin Guaranty Corporation (“Amerin Guaranty”) and Radian Insurance Inc. (“Radian Insurance”) (together referred to as “Mortgage Insurance”) and its principal financial guaranty operating subsidiaries, Radian Reinsurance Inc. (“Radian Reinsurance”) and Radian Asset Assurance Inc. (“Radian Asset Assurance”).  The Company also has an equity interest in two active credit-based asset businesses, Credit-Based Asset Servicing and Securitization LLC (“C-BASS”) and Sherman Financial Group LLC (“Sherman”).  The Company has a 46.0% interest in C-BASS and a 41.5% interest in Sherman. In January 2003, Sherman’s management exercised its right to acquire additional ownership of Sherman reducing the Company’s ownership interest in Sherman from 45.5% to 41.5%.  The Company recorded a $1.3 million loss on the transaction. 

          The Consolidated Financial Statements are presented on the basis of accounting principles generally accepted in the United States of America (“GAAP”).  The Company has condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP pursuant to such rules and regulations.

          The financial information for the interim periods is unaudited; however, such information reflects all adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations, and cash flows for the interim periods.  These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.  The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or for any other period.

          The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from these estimates.

          Basic net income per share is based on the weighted average number of common shares outstanding, while diluted net income per share is based on the weighted average number of common shares outstanding and common share equivalents that would arise from the exercise of stock options. Preferred stock dividends are deducted from net income in the net income per share computation.  Diluted shares do not assume the conversion of the Company’s senior convertible debentures.  Under the terms of the debt agreement, the conditions for holders to be able to convert the debentures to common stock have not been met.

          Certain prior period balances have been reclassified to conform to the current period presentation.

2 – Derivative Instruments and Hedging Activities

          The Company accounts for derivatives under Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended.  Transactions that the Company has entered into that are accounted for under SFAS No. 133, as amended, include investments in convertible debt securities, and selling credit protection in the form of credit default swaps and certain financial guaranty contracts that are considered credit default swaps.  Credit default swaps and certain financial guaranty contracts that are accounted for under SFAS No. 133 are part of the Company’s overall business strategy of offering financial guaranty protection to its customers. Currently, none of the derivatives qualifies as a hedge under SFAS No. 133. Therefore, changes in fair value are included in the periods presented.

          At March 31, 2003, the fair value of the Company’s derivative instruments, classified as trading securities, was $37.6 million, as compared to an amortized value of $44.1 million, and the Company recognized $3.1 million, net of tax, of loss on changes in the fair value of derivative instruments in the consolidated statement of income for 2003.  The notional value of the Company’s credit default swaps and certain other financial guaranty contracts

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accounted for under SFAS No. 133 was $9.4 billion at March 31, 2003 and the Company recognized $2.0 million, net of tax, of loss on these instruments in the first quarter of 2003.  Net unrealized losses on credit default swaps and certain other financial guaranty contracts of $20.6 million at March 31, 2003 was comprised of gross unrealized gains of $66.2 million and gross unrealized losses of $86.8 million.  At March 31, 2002, the fair value of the Company’s derivative instruments, classified as trading securities, was $32.8 million, as compared to an amortized value of $37.0 million, and the Company recognized $2.1 million, net of tax, of loss on changes in the fair value of derivative instruments in the consolidated statement of income for the first quarter of 2002.  The notional value of the Company’s credit default swaps and certain other financial guaranty contracts accounted for under SFAS No. 133 was $3.5 billion at March 31, 2002 and the Company recognized no additional loss on these instruments.  Net unrealized losses on credit default swaps and certain other financial guaranty contracts of $5.7 million at March 31, 2002 was comprised of gross unrealized gains of $8.6 million and gross unrealized losses of $14.3 million. 

          The application of SFAS 133, as amended, could result in volatility from period to period in gains and losses as reported on the Company’s condensed consolidated statements of income.  The Company is unable to predict the effect this volatility may have on its financial position or results of operations.

3 – Accounting for Stock-Based Compensation

          The Company accounts for stock-based compensation in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation.” SFAS No. 123 requires expanded disclosures of stock-based compensation arrangements with employees and directors and encourages, but does not require, the recognition of compensation expense for the fair value of stock options and other equity instruments granted as compensation to employees and directors. The Company has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” (“APB 25”), and related interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company’s stock at the date of the grant over the amount an employee must pay to acquire the stock. To date, there have been no options issued at a price that was less than the market price at the date of issuance.

In December 2002, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment of FASB Statement No. 123.” SFAS No. 148 amends SFAS No. 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. This Statement is effective for financial statements for fiscal years ending after December 15, 2002.

          The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation.

	Quarter Ended March 31
	2003		2002
Net income, as reported	$	104,772	$	103,933
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax		1,652		1,854
Pro forma net income	$	103,120	$	102,079
Pro forma net income available to common stockholders	$	103,120	$	101,254
Earnings per share
Basic – as reported	$	1.12	$	1.09
Basic – pro forma	$	1.10	$	1.07
Diluted – as reported	$	1.11	$	1.08
Diluted – pro forma	$	1.09	$	1.06

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4 – Investments

          The Company is required to group assets in its investment portfolio into one of three categories: held to maturity, available for sale, and trading securities. Fixed maturity securities for which the Company has the positive intent and ability to hold to maturity are classified as held to maturity and reported at amortized cost. Fixed maturity and equity securities purchased and held principally for the purpose of selling them in the near term are classified as trading securities and are reported at fair value, with unrealized gains and losses included in earnings. All other investments are classified as available for sale and are reported at fair value, with unrealized gains and losses (net of tax) reported as a separate component of stockholders’ equity as accumulated other comprehensive income. Realized gains and losses are determined on a specific identification method and are included in income. Other invested assets consist of residential mortgage-backed securities and are carried at fair value.

          The Company periodically reviews its investment portfolio for declines in fair value below the amortized cost basis that are considered to be other-than-temporary and recognizes any such declines as a charge to earnings if the security has not been sold.  In the first quarter of 2003, the Company recorded approximately $4.3 million (pre-tax) of charges related to declines in fair value considered to be other–than-temporary.  Potential declines in fair value below the amortized cost basis considered other-than-temporary for individual securities held in the Company’s investment portfolio were not material for other periods presented in this report.

5 – Segment Reporting

          The Company has three reportable segments: mortgage insurance, financial guaranty and mortgage services.  The mortgage insurance segment provides private mortgage insurance and risk management services to mortgage lending institutions located throughout the United States.  Private mortgage insurance primarily protects lenders from default-related losses on residential first mortgage loans made to homebuyers who make downpayments of less than 20% of the purchase price and facilitates the sale of these mortgages in the secondary market. The financial guaranty segment provides credit-related insurance coverage, credit default swaps and certain other financial guaranty contracts to meet the needs of customers in a wide variety of domestic and international markets.  For the periods presented in this report, revenues attributable to foreign countries were not material.  The Company’s insurance businesses within the Financial Guaranty segment include the assumption of reinsurance from monoline financial guaranty insurers for both municipal bonds and structured finance obligations.  The Company also provides direct financial guaranty insurance for municipal bonds and structured transactions and trade credit reinsurance.  The mortgage services segment deals primarily with credit-based servicing and securitization of assets in underserved markets, in particular, the purchase and servicing of and securitization of special assets, including sub-performing/non-performing mortgages, seller financed residential mortgages and delinquent consumer assets.  In addition, mortgage services includes the results of RadianExpress.com (“RadianExpress”), an internet-based settlement company that provides real estate information products and services to the first and second lien mortgage industry.  The Company’s reportable segments are strategic business units, which are managed separately, as each business requires different marketing and sales expertise. Certain corporate income and expenses have been allocated to the segments. 

          In the mortgage insurance segment, the highest state concentration of risk in force is California at 16.3 %.  At March 31, 2003, California also accounted for 16.3% of Mortgage Insurance’s total direct primary insurance in force.  California accounted for 16.9% of Mortgage Insurance’s direct primary new insurance written in the first quarter 2003.  The largest single customer of Mortgage Insurance  (including branches and affiliates of such customer) measured by new insurance written, accounted for 30.5% of new insurance written during the first quarter of 2003 compared to 8.1% for full year 2002 and 12.6% for full year 2001.  The amount reported in 2003 represented a large structured transaction for one customer comprised of prime mortgage loans originated throughout the United States.

          In the financial guaranty segment, the Company derives a substantial portion of its premiums written from a small number of primary insurers.  In the first quarter of 2003, 27.5% of gross written premiums were derived from two primary insurers compared to 29.3% for the comparable period of 2002.  Four primary insurers were responsible for 37.7% of gross written premiums in 2003, compared to 36.9% in 2002.  This customer concentration results from a significant concentration of business with the small number of primary financial guaranty insurance companies.  Two trade credit insurers were responsible for 9.1% of premiums written in 2003.

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          The Company evaluates performance based on net income.  Summarized financial information concerning the Company’s operating segments as of and for the year-to-date periods indicated, is presented in the following tables:

	March 31, 2003
(in thousands)	Mortgage Insurance			Financial Guaranty			Mortgage Services		Consolidated
Net premiums written	$	164,772		$	87,588			—	$	252,360
Net premiums earned	$	168,032		$	58,097			—	$	226,129
Net investment income		27,829			18,809		$	34		46,672
Equity in net income of affiliates		—			(56	)		14,944		14,888
Other income		6,599			1,597			6,361		14,557
Total revenues		202,460			78,447			21,339		302,246
Provision for losses		54,167			13,591			—		67,758
Policy acquisition costs		17,479			13,538			—		31,017
Other operating expenses		29,408			7,872			7,161		44,441
Interest expense		5,100			2,872			612		8,584
Total expenses		106,154			37,873			7,773		151,800
Net (losses) gains		(3,194	)		(798	)		119		(3,873	)
Pretax income		93,112			39,776			13,685		146,573
Income tax provision		25,454			10,873			5,474		41,801
Net income	$	67,658		$	28,903		$	8,211	$	104,772
Total assets	$	3,590,043		$	1,945,273		$	253,591	$	5,788,907
Deferred policy acquisition costs		74,931			120,550			—		195,481
Reserve for losses		484,069			148,827			—		632,896
Unearned premiums		108,592			535,312			—		643,904
Equity		1,694,518			947,650			201,884		2,844,052

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	March 31, 2002
(in thousands)	Mortgage Insurance			Financial Guaranty			Mortgage Services			Consolidated
Net premiums written	$	162,062		$	62,576			—		$	224,638
Net premiums earned	$	169,039		$	40,150			—		$	209,189
Net investment income		25,851			16,859		$	43			42,753
Equity in net income of affiliates		—			116			18,504			18,620
Other income		4,017			569			6,696			11,282
Total revenues		198,907			57,694			25,243			281,844
Provision for losses		45,098			12,329			—			57,427
Policy acquisition costs		15,572			7,875			—			23,447
Other operating expenses		28,806			8,701			7,238			44,745
Interest expense		4,042			2,604			508			7,154
Total expenses		93,518			31,509			7,746			132,773
Net losses		(315	)		(2,238	)		(68	)		(2,621	)
Pretax income		105,074			23,947			17,429			146,450
Income tax provision		28,948			6,598			6,971			42,517
Net income	$	76,126		$	17,349		$	10,458		$	103,933
Total assets	$	2,990,738		$	1,642,136		$	199,882		$	4,832,756
Deferred policy acquisition costs		73,690			84,234			—			157,924
Reserve for losses		471,268			122,417			—			593,685
Unearned premiums		98,630			429,411			—			528,041
Equity		1,455,108			799,809			155,866			2,410,783

          The reconciliation of segment net income to consolidated net income is as follows:

	Quarter Ended March 31
Consolidated (in thousands)	2003		2002
Net income:
Mortgage Insurance	$	67,658	$	76,126
Financial Guaranty		28,903		17,349
Mortgage Services		8,211		10,458
Total	$	104,772	$	103,933

6 – Short-Term and Long-Term Debt

          In February 2003, the Company issued $250 million of unsecured Senior Notes.  These notes bear interest at the rate of 5.625% per annum, payable semi-annually on February 15 and August 15, beginning August 15, 2003.  These notes mature in February 2013.  The Company used a portion of the proceeds to repay the $75.0 million in principal outstanding of the 6.75% debentures due March 1, 2003 issued by Enhance Financial Services Group (“EFSG”).   The remainder will be used for general corporate purposes.

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The composition of short-term and long-term debt was as follows:

($ in thousands)	March 31 2003		December 31 2002
5.625% debentures due 2013	$	248,073	$	—
2.25% Senior Convertible Debentures due 2022		220,000		220,000
7.75% debentures due 2011		249,164		249,145
6.75% debentures due 2003		—		75,000
	$	717,237	$	544,145

7 – Redeemable Preferred Stock

          On August 15, 2002, the Company redeemed its $4.125 Preferred Stock, par value $.001 per share.  Pursuant to the Company’s sinking fund redemption obligation, 72,000 shares were redeemed at $50.00 per share, and the remaining 728,000 shares were redeemed at $54.125 per share.  Accrued and unpaid dividends on the shares to the date of redemption were also paid as part of the redemption price.  The excess of the amount paid over the carrying value of the preferred stock of $3.0 million, was accounted for as a charge to equity and resulted in an approximate $.03 reduction in earnings per share in the period when the redemption occurred.

8 – Recent Accounting Pronouncements

          In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” The provisions of this statement related to the rescission of SFAS No. 4 are effective for fiscal years beginning after May 15, 2002. Certain provisions of the statement relating to SFAS No. 13 are effective for transactions occurring after May 15, 2002. All other provisions of the statement are effective for financial statements issued on or after May 15, 2002. The provisions of this statement did not have a material impact on the Company’s financial statements.

          In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” The standard requires companies to recognize costs associated with exit or disposal of activities when they are incurred rather than at the date of either the commitment to exit or the disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with restructuring, discontinued operations, plant closing, or other exit or disposal activity. SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002.

          In October 2002, the FASB issued SFAS No. 147, “Acquisitions of Certain Financial Institutions, an amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9.” The Company is not within the definition of a financial institution as defined by SFAS No. 147. Therefore, this statement has no impact on the Company’s financial statements.

          In November 2002, the FASB issued FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others.” This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. This Interpretation also incorporates, without change, the guidance in FASB Interpretation No. 34, “Disclosure of Indirect Guarantees of Indebtedness of Others,” which is being superseded. The initial recognition and initial measurement of provisions of this Interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, irrespective of the guarantor’s fiscal year-end. The disclosure requirements in this Interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002. The Interpretation does not apply to the financial guaranty insurance policies issued by the Company. However, the Company has guaranteed the performance of an affiliate under a revolving credit facility.

          In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest

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Entities.” The Interpretation clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The Interpretation applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains interest after that date. The Interpretation applies in the interim period beginning after June 15, 2003 to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. Currently, the Company is not the primary beneficiary of a variable interest entity. However, the Company has been a transferor of financial assets considered to be a qualifying special purpose entity (“QSPE”) described in SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” These QSPEs are not within the scope of the Interpretation. In management’s opinion, this Interpretation will not have a material effect on the Company’s financial statements.

          In April 2003, the FASB issued SFAS No 149, “Amendment of FASB Statement No. 133 on Derivative Instruments and Hedging Activities.”  This Statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.”  This Statement improves financial reporting by requiring that contracts with comparable characteristics be accounted for similarly.  This Statement is effective for contracts entered into or modified after June 30, 2003, except for the provisions of this Statement that relate to SFAS 133 Implementation Issues that have been effective for fiscal quarters that began prior to June, 2003 and for hedging relationships designated after June 30, 2003.  All provisions are to be applied prospectively except for the provisions of this Statement that relate to SFAS 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003.  These provisions are to be applied in accordance with their respective effective dates.  The Company does not believe this Statement will have a material impact on its financial statements.

9 – Other Information

          On September 24, 2002, the Company announced that its Board of Directors had authorized the repurchase of up to 2.5 million shares of its common stock on the open market.  Shares will be purchased from time to time depending on the market conditions, share price, and other factors.  These purchases will be funded from available working capital.  At March 31, 2003 and December 31, 2002, 1.9 million shares and 1.4 million shares, respectively, had been purchased under this repurchase program at a total price of approximately $61.1 million and $45.1 million, respectively.

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ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:

          This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to analyses and other information that are based on the Company’s beliefs, assumptions, forecasts of future results, and current expectations, estimates and projections about the markets and economy in which the Company operates. Words such as “anticipate,” “intend,” “may,” “expect,” “believe,” “should,” “plan,” “will” and “estimate” help identify forward-looking statements. The following are some of the factors that could cause actual outcomes to differ materially from the matters expressed or implied in the Company’s forward-looking statements.  Readers are also directed to risks discussed in other documents filed by the Company with the Securities and Exchange Commission.  Readers are cautioned not to place undue reliance on the Company’s forward–looking statements, which speak only as of their respective dates.

• changes in the business practices of Fannie Mae and Freddie Mac, the largest purchasers of mortgage loans insured by the Company;

• general economic developments such as extended national or regional economic recessions (or expansions), business failures, material changes in housing values, changes in unemployment rates, interest rate changes or volatility, changes in investor perceptions of the strength of private mortgage insurers or financial guaranty providers, investor concern over the credit quality of municipalities and corporations, and specific risks faced by the particular businesses, municipalities or pools of assets covered by the Company’s insurance;

• the loss of significant customers with whom the Company has a concentration of its mortgage insurance and financial guaranty insurance in force or the addition of new customers;

• economic changes in regions where the Company’s mortgage insurance or financial guaranty risk is more concentrated;

• the potential for more severe losses or more frequent losses associated with certain of the Company’s products that are riskier than traditional mortgage insurance and financial guaranty insurance policies, such as insurance on high-LTV, adjustable-rate mortgage and non-prime mortgage loans, credit insurance on non-traditional mortgage related assets such as second mortgages and manufactured housing, credit enhancement of mortgage related capital market transactions, guaranties on certain asset-backed transactions and securitizations, guaranties on obligations under credit default swaps and trade credit reinsurance;

• the potential to be committed to insure a material number of mortgage loans with unacceptable risk profiles through the Company’s delegated underwriting program;

• material changes in persistency rates of the Company’s mortgage insurance policies caused by changes in refinancing activity, appreciating or depreciating home values and changes in the mortgage insurance cancellation requirements of mortgage lenders and investors;

• changes in the ability of the Company to recover amounts paid on defaulted mortgages by taking title to a mortgaged property, due to a failure of housing values to appreciate;

• downgrades of the insurance financial strength ratings assigned by the major rating agencies to any of the Company’s operating subsidiaries at any time, which has occurred in the past;

• changes to mortgage insurance revenues due to intense competition from others such as the Federal Housing Administration and Veterans Administration or other private mortgage insurers, and from alternative products such as “80-10-10 loan” structures used by mortgage lenders or other forms of credit enhancement used by investors;

• changes to financial guaranty revenues due to changes in competition from other financial guaranty

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	insurers, and from other forms of credit enhancement such as letters of credit, guaranties and credit default swaps provided by foreign and domestic banks and other financial institutions;
•	changes in the demand for private mortgage insurance caused by legislative and regulatory changes such as increases in the maximum loan amount that the Federal Housing Administration can insure;
•	changes in claims against mortgage insurance products as a result of aging of the Company’s mortgage insurance policies;
•	changes in the demand for financial guaranty insurance caused by changes in laws and regulations affecting the municipal, asset-backed debt markets and trade credit reinsurance; and
•	changes to the Company’s ability to maintain sufficient reinsurance capacity needed to comply with regulatory, rating agency and internal single-risk retention limits as the Company’s business grows, in a reinsurance market that has recently become more concentrated.

Results of Consolidated Operations

          Net income for the first quarter of 2003 was $104.8 million or $1.11 per share compared to $103.9 million or $1.08 per share for the first quarter of 2002.  The slight increase in net income was primarily a result of growth in the Company’s business volumes.  Insurance in force for Mortgage Insurance increased from $111.3 billion at March 31, 2002 to $119.0 billion at March 31, 2003.  Total net debt service outstanding on transactions insured by Financial Guaranty increased from $100.3 billion at March 31, 2002 to $109.0 billion at March 31, 2003.  These increases in business volumes produced increases in written and earned premiums, investment income and other income.  Partially offsetting these increases were increases in the provision for losses, policy acquisition costs and interest expense to support the business growth.  Equity in net income of affiliates was $14.9 million for the first quarter of 2003 compared to $18.6 million for the same period of 2002, primarily due to lower earnings from C-BASS. 

          Consolidated earned premiums for the first quarter of 2003 were $226.1 million, a $16.9 million or 8.1% increase from the first quarter of 2002.  Financial Guaranty accounted for all of this increase.  Net investment income increased to $46.7 million for the first quarter of 2003, up from $42.8 million in the first quarter of 2002, primarily due to growth in the investment portfolio as a result of continued positive operating cash flows and the proceeds from the issuance of $250 million of notes during the first quarter of 2003.  Other income increased to $14.6 million in the first quarter of 2003 from $11.3 million for the same period of 2002, primarily due to increases in income related to contract underwriting.

          The provision for losses was $67.8 million for the first quarter of 2003, an increase of $10.4 million or 18.1% from the $57.4 million reported for the first quarter of 2002.  Policy acquisition costs increased to $31.0 million in the first quarter of 2003, up from $23.4 million for the comparable period of 2002.  Other operating expenses were $44.4 million in the first quarter of 2003 compared to $44.7 million in the first quarter of 2002.  Interest expense of $8.6 million in the first quarter of 2003 increased $1.4 million or 19.4% from $7.2 million in 2002, primarily due to the issuance of $250 million of notes in February 2003.  The consolidated effective tax rate was 28.5% for 2003 compared to 29.0% in the first quarter of 2002.

          Mortgage Insurance – Results of Operations

          Net income for the first quarter of 2003 was $67.7 million compared to $76.1 million in the first quarter of 2002.  This decrease was due to an increase in the provision for losses as a result of increased claims, and increased policy acquisition costs.  Primary new insurance written during the first quarter of 2003 was $21.3 billion, a $7.4 billion or 53.2% increase from the $13.9 billion written in the first quarter of 2002.  This increase in primary new insurance written in Mortgage Insurance for the first quarter of 2003 was primarily due to an increase in insurance written through structured transactions.  The amount written in 2003 includes $10.7 billion written through structured transactions while the 2002 written amount includes $4.8 billion written through structured transactions.  Included in the $10.7 billion for 2003 was one large transaction composed primarily of prime, high credit quality loans at a relatively low premium.  The mortgage industry experienced a 26% increase in new insurance written for

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the first quarter of 2003 as compared to the comparable period of 2002.  The mortgage insurance industry did not benefit from all of this increase due to equity appreciation and an increase in alternative mortgage executions that excluded mortgage insurance.  The Company’s participation in the structured transactions market is likely to vary significantly from quarter to quarter as the Company competes with other mortgage insurers, as well as capital market executions, for these transactions.  The Company’s market share of the industry based on new insurance written was 21.9% for the first quarter of 2003 compared to 14.4% for the fourth quarter of 2002 and 17.9% for the first quarter of 2002.

          During the first quarter of 2003, the Company wrote $63.4 million of pool insurance risk as compared to $86.0 million in the same period of 2002.

          Mortgage Insurance’s volume in the first three months of 2003 was impacted by lower interest rates that affected the entire mortgage industry.  The continued low interest rate environment caused refinancing activity to continue to remain high and contributed to the increase in the industry new insurance volume for the first quarter of 2003. Mortgage Insurance’s refinancing activity as a percentage of primary new insurance written was 55.3% for the first quarter of 2003 as compared to 39.1% for the same period in 2002.  The persistency rate, which is defined as the percentage of insurance in force that remains in effect after a 12 month period, was 56.5% for the 12 months ended March 31, 2003 as compared to 59.5% for the 12 months ended March 31, 2002.  This decrease was consistent with the increasing level of refinancing activity, which caused the cancellation rate to increase.  The expectation towards the end of 2003 is lower industry volume of new insurance written and higher persistency rates, influenced by relatively stable interest rates.

          Net premiums earned in the first quarter of 2003 were $168.0 million compared to $169.0 million in the same period of 2002.  This slight decrease was due to low persistency levels, which offset the strong volumes, and to a higher level of ceded premiums to captive reinsurers (captive reinsurance arrangements are further discussed below).  During 2002 and continuing into 2003, the Company experienced a change in the mix of new insurance written.  The mix now includes a higher percentage of non-prime business, which has higher premium rates commensurate with the increased level of risk associated with this type of insurance.  Direct primary insurance in force grew to $119.0 billion at March 31, 2003, up from $110.3 billion at December 31, 2002 and $111.3 billion at March 31, 2002.  Total pool risk in force was $1.9 billion at March 31, 2003, compared to $1.7 billion at both December 31, 2002 and March 31, 2002

          The Company insures non-traditional loans, specifically Alternative A (“Alt A”) and A minus loans (collectively, referred to as “non-prime” business).  Alt A borrowers have a similar credit profile to the Company’s prime borrowers, but these loans are underwritten with reduced documentation and verification of information.  The Company typically charges a higher premium rate for this business due to the reduced documentation, but the Company does not consider this business to be significantly more risky than its prime business.  The A minus loan programs typically have non-traditional credit standards that are less stringent than standard credit guidelines.  To compensate for this additional risk, the Company receives a higher premium for insuring this product, which the Company believes is commensurate with the additional default risk.  During the first quarter of 2003, non-prime business accounted for $7.8 billion or 36.5% of Mortgage Insurance’s new primary insurance written as compared to $4.5 billion or 32.3% for the same period in 2002.  Approximately half of this business was written in the form of structured transactions.  At March 31, 2003, non-prime insurance in force was $32.2 billion or 27.1% of total primary insurance in force as compared to $21.3 billion or 19.1% at March 31, 2002.  Of the $7.8 billion of non-prime business written in the first quarter of 2003, $5.1 billion or 65.6% was Alt A.  Of the $32.2 billion of non-prime insurance in force at March 31, 2003, $18.9 million or 58.7% was Alt A.  The Company anticipates that the mix of non-prime insurance in force could gradually increase, but will stay below a targeted level of 30%.

          The Company insures mortgage-related assets in a Pennsylvania domiciled insurer, Radian Insurance.  Radian Insurance is rated “AA” by Standard & Poor’s Insurance Rating Service and Fitch Ratings and “Aa3” by Moody’s Investors Service and was formed to write credit insurance and financial guaranty insurance on mortgage-related assets that are not permitted to be insured by monoline mortgage guaranty insurers.  Such assets include second mortgages, manufactured housing loans, home equity loans and mortgages with loan-to-value ratios above 100%.  Radian Insurance also provides credit enhancement to mortgage related capital market transactions.  In October 2001, Radian Insurance entered into a reinsurance agreement with one of its affiliates, Radian Asset Assurance, for a substantial part of its business.  In 2002, most of the financial guaranty insurance business was written in Radian Asset Assurance.  During 2003, Radian Insurance began directly writing this business again.  Also during 2003, Radian Asset Assurance began ceding a part of its business to Radian Insurance.

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          Mortgage Insurance and other companies in the industry have entered into risk-sharing arrangements with various customers that are designed to allow the customer to participate in the risks and rewards of the mortgage insurance business.  One such product is captive reinsurance, in which a mortgage lender sets up a mortgage reinsurance company that assumes part of the risk associated with that lender’s insured book of business.  In most cases, the risk assumed by the reinsurance company is an excess layer of aggregate losses that would be penetrated only in a situation of adverse loss development.  For the first quarter of 2003, premiums ceded under captive reinsurance arrangements were $18.5 million, or 10.8% of total premiums earned during the period, as compared to $11.2 million, or 6.4% of total premiums earned for the same period of 2002. New primary insurance written under captive reinsurance arrangements was $5.3 billion, or 24.9% of total new primary insurance written for the first quarter of 2003 as compared to $3.8 billion, or 27.6% for the same period in 2002.

          Net investment income for the first quarter of 2003 was $27.8 million, a 7.6% increase compared to $25.9 million for the same period of 2002.  This increase was a result of continued growth in invested assets primarily due to positive operating cash flows during the first quarter of 2003 and the allocation of interest income from net financing activities.  This was partially offset by declining yields on the investment portfolio, which continued into 2003.  The Company has continued to invest some of its new operating cash flow in tax-advantaged securities, primarily municipal bonds, although the Company’s investment policy allows the purchase of various other asset classes, including common stock and convertible securities. The Company’s common equity exposure is targeted at a maximum of 5% of the investment portfolio’s market value, while the investment-grade convertible securities and investment-grade taxable bond exposures are each targeted not to exceed 10%.

          The provision for losses for the first quarter of 2003 was $54.2 million, an increase of $9.1 million or 20.1% from $45.1 million for the same period of 2002.  This resulted primarily from an increase in claims.  Claim activity is not spread evenly throughout the coverage period of a book of business.  Relatively few claims are received during the first two years following issuance of a policy.  Historically, claim activity has reached its highest level in the third through fifth years after the year of policy origination.  Approximately 67.6% of the primary risk in force and approximately 18.4% of the pool risk in force at March 31, 2003 had not yet reached its highest claim frequency years.  The combined default rate for both primary and pool insurance, excluding second lien insurance coverage, was 2.7% at March 31, 2003, compared to 2.8% at December 31, 2002 and 2.2% at March 31, 2002, while the default rate on the primary business was 3.8% at March 31, 2003 compared to 4.1% at December 31, 2002 and 3.4% at March 31, 2002.  The change in the default rate on the primary business from December 31, 2002 was caused principally by a 113 basis point decrease in the delinquency rate on the non-prime business as a result of the growth in that business, with the delinquency rate on the prime business down 11 basis points from year end as described in the following tables.  A strong economy generally results in better loss experience and a decrease in the overall level of losses.  A continued weakening of the economy could negatively impact the Company’s overall default rates, which would result in an increase in the provision for losses.

          The total number of defaults decreased from 43,773 at December 31, 2002 to 42,095 at March 31, 2003.  The Company believes this favorable decline in defaults may be a result of seasonality and is unable to predict the likelihood of the favorable trend continuing.  The average loss reserve per default increased from $11,073 at the end of 2002 to $11,499 at March 31, 2003.  The loss reserve as a percentage of risk in force was 1.7% at March 31, 2003 and at December 31, 2002.  The non-prime mortgage insurance business has experienced a consistent increase in the number of defaults.  Although the default rate on this business is higher than on the prime book of business, it is within the Company’s expected range for this type of business, and the higher premium rates charged are expected to compensate for the increased level of risk.  The number of non-prime loans in default at March 31, 2003 was 14,538, which represented 41.5% of the total primary loans in default, slightly higher than the 14,305 non-prime loans in default at December 31, 2002, which represented 40% of the total primary loans in default.  The default rate on the Alt A business was 4.4% at March 31, 2003 compared to 5.2% at December 31, 2002.  The default rate on the A minus and below loans was 9.0% at March 31, 2003, compared to 11.3% at December 31, 2002.  The default rates are within the Company’s expectations.  The default rate on the prime business was 3.0% and 3.1% at March 31, 2003 and December 31, 2002, respectively.

          Direct claims paid for the first quarter of 2003 were $53.3 million compared to $37.0 million for the comparable period of 2002.  The severity of loss payments has increased over the past few years due to deeper coverage amounts and larger loan balances.  In addition, claims paid in 2003 have been impacted by the rise in delinquencies in 2001 and 2002 that have proceeded to foreclosure.  The disproportionately higher incidence of claims in Georgia and Utah is directly related to questionable property value estimates in those states.  The

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Company’s risk management department identified these issues over a year ago and has put into place several property valuation checks and balances to mitigate the risk of these issues recurring.  Further, these same techniques are being applied to all mortgage insurance transactions.  The Company expects this higher incidence of claims in Georgia and Utah to continue until loans originated in Georgia and Utah prior to the implementation of these preventive measures become sufficiently seasoned.  The Company anticipates that claim payments will continue to increase throughout 2003.

          The following table provides selected information as of and for the periods indicated for the Mortgage Insurance segment:

	Three Months Ended
($ thousands, unless specified otherwise)	March 31 2003			December 31 2002			March 31 2002
Provision for losses	$	54,167		$	54,989		$	45,098
Reserve for losses	$	484,069		$	484,705		$	471,268
Primary Insurance
Prime:
Number of insured loans		690,647			698,910			763,990
Number of loans in default		20,452			21,483			20,244
Percentage of total loans in default		2.96	%		3.07	%		2.65	%
Alt A:
Number of insured loans		109,907			102,839			74,085
Number of loans in default		4,844			5,300			3,240
Percentage of total loans in default		4.41	%		5.15	%		4.37	%
A Minus and below:
Number of insured loans		107,181			79,871			70,532
Number of loans in default		9,694			9,005			7,353
Percentage of loans in default		9.04	%		11.27	%		10.43	%
Total:
Number of insured loans		907,735			881,620			908,607
Number of loans in default		34,990			35,788			30,837
Percentage of loans in default		3.85	%		4.06	%		3.39	%
Direct claims paid:
Prime	$	24,064		$	23,995		$	20,026
Non-prime
Alt A		8,608			8,547			4,639
A minus and below		13,935			11,283			6,339
Seconds		6,706			3,705			5,965
Total	$	53,313		$	47,530		$	36,969
Average claim paid	$	25.0		$	25.9		$	26.5
Claims Paid:
Georgia	$	4,921		$	3,220		$	3,686
Texas		2,898			3,262			1,611
Florida		2,695			2,686			1,674
Utah		2,374			2,753			2,505
Ohio		2,328			1,709			1,204

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	Three Months Ended
	March 31 2003			December 31 2002			March 31 2002
Percentage of total claims paid:
Georgia		9.2	%		6.8	%		10.0	%
Texas		5.4			6.9			4.4
Florida		5.1			5.7			4.5
Utah		4.5			5.8			6.8
Ohio		4.4			3.6			3.3
Risk in Force: ($ millions)
California	$	4,293		$	4,308		$	4,463
Florida		2,122			2,084			2,008
New York		1,651			1,647			1,643
Texas		1,404			1,379			1,401
Georgia		1,212			1,196			1,203
Total Risk in Force:	$	26,406		$	26,273		$	26,715
Percentage of total risk in force:
California		16.3	%		16.4	%		16.7	%
Florida		8.0			7.9			7.5
New York		6.3			6.3			6.2
Texas		5.3			5.2			5.2
Georgia		4.6			4.6			4.5
New insurance written:  ($ millions)
Prime	$	13,500		$	9,785		$	9,378
Alt A		5,104			3,803			3,510
A minus and below		2,672			1,681			975
Total	$	21,276		$	15,269		$	13,863
Primary risk written ($ millions)	$	5,384		$	3,728		$	3,591
Direct primary insurance in force	$	119,036		$	110,273		$	111,297
Pool Insurance:  ($ millions)
Pool risk written	$	63		$	25		$	86
GSE pool risk in force	$	1,215		$	1,218		$	1,224
Total pool risk in force	$	1,815		$	1,732		$	1,723

          Policy acquisition and other operating expenses were $46.9 million in the first quarter of 2003, an increase of $2.5 million or 5.6% compared to $44.4 million for the first quarter of 2002.  These expenses consisted of policy acquisition expenses, which relate directly to the acquisition of new business and other expenses, which primarily represent contract underwriting expenses, overhead, and administrative costs.  Policy acquisition costs were $17.5 million in the first quarter of 2003, an increase of 12.2% from $15.6 million in the first quarter of 2002.  The amortization of these expenses is related to the recognition of gross profits over the life of the policies.  Much of the amortization for the current year represents costs that were expended in 2002.  Other operating expenses were $29.4 million for the first quarter of 2003, an increase of 2.1% from $28.8 million for the first quarter of 2002.  This reflects an increase in expenses associated with the Company’s technological, administrative and support functions to support the business growth.  Contract underwriting expenses for the first quarter of 2003, included in other operating expenses, were $13.2 million as compared to $9.7 million in the first quarter of 2002, an increase of 36.1%.  Other income, which primarily includes income related to contract underwriting services, was $6.6 million for the first quarter of 2003, compared to $4.0 million for the first quarter of 2002.  During 2003, loans written via contract underwriting accounted for 25.0% of applications, 23.5% of commitments, and 18.7% of certificates issued by Mortgage Insurance as compared to 32.3%, 28.3% and 19.0%, respectively, in the same period of 2002.

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          Interest expense for the first quarter of 2003 was $5.1 million compared to $4.0 million for the first quarter of 2002.  This represented the allocation of interest on the long-term debt issued during 2001 and 2002 and the $250 million of notes issued in February 2003.  Net losses on dispositions of investments and changes in the fair value of derivative instruments of $3.2 million in the first quarter of 2003 increased from $.3 million in the comparable period of 2002.  This primarily related to the change in the fair value of derivative instruments, primarily embedded derivatives in convertible debt securities.

          The effective tax rate was 27.3% for the first quarter of 2003 compared to 27.6% for the first quarter of 2002.  The tax rate reflects the significant investment in tax-advantaged securities.

          The U.S. Department of Housing and Urban Development (“HUD”) has proposed a rule under the Real Estate Settlement Procedures Act (“RESPA”) to create an exemption from the provisions of RESPA that prohibit the giving of any fee, kickback or thing of value pursuant to any agreement or understanding that real estate settlement services will be referred.  The proposed rule would make the exemption available to lenders that, at the time a borrower submits a loan application, give the borrower a firm, guaranteed price for all settlement services associated with the loan.  Mortgage insurance is currently included in the proposed rule as one of these settlement services.  HUD is currently considering comments to the proposed rule, and is not expected to finalize the rule until the summer of 2003 at the earliest.  The rule would not be effective until a year after it is finalized.  If the rule is implemented, the premiums charged for the mortgage insurance could be affected.  As the final rule has not yet been issued, management is unable to determine what impact, if any, it will have on the Company.

          Financial Guaranty– Results of Operations

          The financial guaranty insurance segment operations are conducted through insurance subsidiaries of Enhance Financial Services Group Inc. (“EFSG”) and primarily involve the direct insurance and reinsurance of municipal bonds and asset-backed securities, and other structured financial obligations, including credit default swaps and certain other financial guaranty contracts.  Financial guaranty and trade credit reinsurance (which protects sellers of goods under certain circumstances against non-payment of the receivables they hold from the buyers of their goods) is assumed primarily from a limited number of direct insurers.  Radian Reinsurance currently derives substantially all of its reinsurance premium revenues from four primary insurers.  Approximately 46.8% of total gross written premiums for Financial Guaranty were derived from six insurers in the first quarter of 2003.  A substantial reduction in the amount of insurance ceded by one or more of these principal clients could have a material adverse affect on Financial Guaranty’s gross written premiums and, consequently, its results of operations.  The Company’s trade credit reinsurance may cover receivables as to which the buyer and seller are in the same country, as well as cross-border receivables.  In such cross-border transactions, the Company sometimes provides coverage that extends to certain political risks, such as foreign currency controls and expropriation, which could interfere with the payment by the buyer of the goods that are the subject of the transaction being reinsured by the Company.

          On October 4, 2002, Standard & Poor’s Rating Service, a division of McGraw-Hill Companies, Inc. (“S&P”) announced that it had downgraded the financial strength rating of Radian Reinsurance from “AAA” to “AA.”  On April 8, 2003, Fitch Rating Service (“Fitch”) downgraded the financial strength rating of Radian Reinsurance from “AAA” to “AA” and removed it from “negative watch.”  Radian Reinsurance and Radian Asset Assurance are parties to numerous reinsurance agreements with primary insurers which grant the primary insurers the right to recapture all of the business ceded to Radian Reinsurance or Radian Asset Assurance under these agreements if the financial strength rating of Radian Reinsurance or Radian Asset Assurance, as the case may be, is downgraded below the rating levels from specified rating agencies established in the agreements, and, in some cases, to increase the commissions in order to compensate the primary insurers for the decrease in credit the rating agencies give the primary insurers for the reinsurance provided by Financial Guaranty.

          As a result of the downgrade by S&P, the primary insurers have the right described above to recapture the financial guaranty reinsurance ceded to Radian Reinsurance, including substantially all of the unearned premium reserves of Radian Reinsurance.  The primary insurers do not have a similar right with respect to the downgrade by Fitch.  As described above, the primary insurers also have the right to increase commissions charged to Radian Reinsurance for cessions, including the right to a cash refund of a portion of the unearned premium reserves previously ceded to Radian Reinsurance reflecting the increased commissions.  In addition, the primary insurers may seek amendments to their agreements with Radian Reinsurance to revise commissions or premiums payable or to recapture only a portion of the business ceded to Radian Reinsurance in a given year.  Radian Reinsurance has

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reached agreement with two of the primary insurers whereby such primary insurers have agreed not to exercise their rights with respect to the downgrade of Radian Reinsurance by S&P and negotiations continue with respect to the other two primary insurers regarding the exercise of rights, which the Company expects will be concluded on or before June 30, 2003.  Although Radian Reinsurance may be able to offset some of the effects of increased commissions or reduced reinsurance premiums by posting collateral for the benefit of the reinsurers, the S&P downgrade, or the exercise by primary insurers of their rights triggered by the downgrade of Radian Reinsurance by S&P, could have a material adverse effect on Radian Reinsurance’s competitive position and/or its prospects for future reinsurance opportunities.  The Company does not believe that the downgrade of Radian Reinsurance by Fitch will have a material adverse effect on Radian Reinsurance or its competitive position and/or its prospects for future reinsurance opportunities.  The Company cannot be certain that the rating agencies will not make further revisions to Radian Reinsurance’s or Radian Asset Assurance’s financial strength ratings which would again trigger these rights of the primary insurers.

          Net income for the first quarter of 2003 was $28.9 million, an $11.6 million or 67.1% increase from $17.3 million for the same period of 2002.  This increase resulted from increases in earned premiums as a result of continued business growth, partially offset by an increase in policy acquisition costs.  Net premiums written and earned for the first quarter of 2003 were $87.6 million and $58.1 million, respectively, compared to $62.6 million and $40.2 million for the first quarter of 2002.  Included in net premiums written and earned for the first quarter of 2003 were $8.1 million and $8.5 million, respectively, of credit enhancement fees on derivative financial guaranty contracts, compared to $2.0 million and $1.9 million, respectively, for net premiums written and earned in the same period of 2002.  In 2003, Financial Guaranty originated $440 million of par in the municipal bond area, including $132 million in the healthcare sector and $76 million in the higher education sector.  In the global structured products area, Financial Guaranty originated $2.9 billion of par for the three months ended March 31, 2003, primarily in the form of guarantees on collateralized debt obligations and asset-backed securities.  The following table shows the breakdown of premiums written and earned for each period.  In the first quarter of 2002, Financial Guaranty originated $481 million in par in the municipal bond area, including $290 million in the healthcare sector.  Financial Guaranty also originated $1.7 billion of par in the global structured products area in the first quarter of 2002, primarily in the form of collateralized debt obligations.

	Quarter Ended March 31
	2003		2002
	(in thousands)
Net premiums written:
Public finance direct	$	10,268	$	14,584
Public finance reinsurance		23,531		15,982
Structured direct		17,810		8,015
Structured reinsurance		14,368		15,714
Trade credit		21,611		8,281
Total net premiums written	$	87,588	$	62,576
Net premiums earned:
Public finance direct	$	3,887	$	3,519
Public finance reinsurance		11,078		7,665
Structured direct		18,412		6,555
Structured reinsurance		12,283		15,040
Trade credit		12,437		7,371
Total net premiums earned	$	58,097	$	40,150

          Included in net premiums earned for the first quarter of 2003 were refundings of $1.6 million, while the first quarter of 2002 included refundings of $0.6 million.

          The following schedule depicts the expected amortization of the unearned premium for the existing financial guaranty portfolio, assuming no advance refundings, as of March 31, 2003.  Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay financial guaranty obligations.  Unearned premium amounts are net of prepaid reinsurance.

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($ millions)	Ending Net Unearned Premiums		Unearned Premium Amortization		Future Installments		Total Premium Earnings
2003	$	458.7	$	73.4	$	79.0	$	152.4
2004		407.8		50.9		86.8		137.7
2005		365.0		42.8		75.1		117.9
2006		325.4		39.6		67.1		106.7
2007		291.8		33.6		49.4		83.0
2003-2007		291.8		240.3		357.4		597.7
2008-2012		170.0		121.8		99.5		221.3
2013-2017		85.6		84.4		53.4		137.8
2018-2022		33.5		52.1		35.9		88.0
After 2022		—		33.5		38.9		72.4
Total			$	532.1	$	585.1	$	1,117.2

          Net investment income was $18.8 million for the first quarter of 2003 compared to $16.9 million for the same period of 2002.  The provision for losses was $13.6 million for 2003, compared to $12.3 million for the same period of 2002.  The provision for losses represented 23.4% of net premiums earned in the first quarter of 2003 compared to 30.7% in the same period of 2002.  Financial Guaranty paid one large claim totaling $9.0 million in the first quarter of 2002. The remaining claims paid of $4.6 million and $4.8 million for the first quarter of 2003 and 2002, respectively, relate primarily to trade credit reinsurance.  Policy acquisition and other operating expenses were $21.4 million for the first quarter of 2003 compared to $16.6 million for the first quarter of 2002.  This resulted from an increase in expenses to support the growth in business volumes.  The operating expense ratio of 36.9% for the first quarter of 2003 was down from 41.3% in the same period of 2002, due to higher business volumes and a higher mix of direct written business.  Included in policy acquisition and other operating expenses for the first quarter of 2003 were $1.3 million of origination costs related to derivative financial guaranty contracts.  Interest expense was $2.9 million for the first quarter of 2003 compared to $2.6 million for the first quarter of 2002.  This represented interest on the $75.0 million of EFSG’s long-term debt which matured during the first quarter of 2003, as well as interest allocated on the Company’s debt financing.  Net losses on dispositions of investments and changes in the fair value of derivative instruments of $0.8 million for the first quarter of 2003 decreased from $2.2 million for the same period of 2002.  This decrease related primarily to net gains on the disposition of investments.

          The effective tax rate was 27.3% for the first quarter of 2003, compared to 27.6% for the comparable period of 2002.  The tax rate reflects the significant investment in tax-advantaged securities.

          Mortgage Services – Results of Operations

          The mortgage services results include the operations of RadianExpress.com Inc. (“RadianExpress”) and the asset-based business conducted through EFSG’s minority owned subsidiaries, C-BASS and Sherman.  The Company owns a 46% interest in C-BASS and a 41.5% interest in Sherman.  Effective January 1, 2003, Sherman’s management exercised its right to acquire additional ownership of Sherman, reducing the Company’s ownership interest in Sherman from 45.5% to 41.5%.  The Company recorded a $1.3 million loss on this transaction.  C-BASS is engaged in purchasing, servicing, and/or securitizing of special assets, including sub-performing/non-performing and seller-financed residential mortgages, real estate and subordinated residential mortgage-based securities.  Sherman’s business focuses on purchasing and servicing delinquent, primarily unsecured consumer assets.

          Net income for the first quarter of 2003 was $8.2 million, down from $10.5 million for the first quarter of 2002.  Equity in net income of affiliates was $14.9 million (pre-tax) for the first quarter of 2003, down $3.6 million or 19.5% from $18.5 million (pre-tax) in the first quarter of 2002.  C-BASS accounted for $9.8 million of this total in the first quarter of 2003 compared to $16.1 million for the same period in 2002.  These results tend to vary significantly from period to period due to a portion of C-BASS’s income being generated from sales of mortgage-backed securities in the capital markets.  These markets can be volatile, subject to change in interest rates, the credit environment and liquidity.

          RadianExpress recorded $5.0 million of other income and $5.5 million of operating expenses for the first quarter of 2003 compared to $5.8 million and $6.4 million, respectively, for the same period in 2002.  RadianExpress processed approximately 74,000 applications during the first period of 2003 compared to 120,000 during the comparable period of 2002.  In June 2002, the Company received a cease and desist order from the State

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of California in connection with the offering of its Radian Lien Protection product, which it appealed.  On January 6, 2003, the Company received a decision from an administrative law judge in California sustaining the cease and desist order, which was subject to the approval of the California Commissioner of Insurance.  In April 2003, the California Commissioner of Insurance rejected the proposed opinion of the administrative law judge and reopened the matter, and commenced an investigation of the title insurance industry.  A decision by the California Commissioner of Insurance is expected within a few months.  In the meantime, the California legislature is considering a bill that would clarify that a mortgage insurer can offer a lien protection product of the type the Company seeks to offer.  The cease and desist order has not had a material impact on the Company’s overall operations, but it has significantly reduced the potential for increased revenues of RadianExpress, the Radian entity through which Radian Lien Protection sales would be processed.  The Company has reduced expenses in RadianExpress as a result of the effect on business caused by the cease and desist order and is pursuing alternative business propositions and strategies.

          Other

          A wholly-owned subsidiary of EFSG, Singer Asset Finance Company L.L.C. (“Singer”), which had been engaged in the purchase, servicing, and securitization of assets including state lottery awards and structured settlement payments, is currently operating on a run-off basis.  Its operations consist of servicing the prior originations of non-consolidated special purpose vehicles and the results of these subsidiaries are not material to the financial results of the Company.  At March 31, 2003, the Company has approximately $490.6 million and $463.7 million of non-consolidated assets and liabilities, respectively, associated with Singer special purpose vehicles.  The Company’s investment in these special purpose vehicles is $26.9 million at March 31, 2003.  In August 2002, the Company sold substantially all of the assets of a related subsidiary, Enhance Consumer Services LLC (“ECS”), which had been engaged in the purchase, servicing and securitization of viatical settlements, to an independent third party for an aggregate purchase price of $8.4 million, which approximated the carrying value.

          Another insurance subsidiary, Van-American Insurance Company, Inc., is operating, on a run-off basis, in reclamation bonds for the coal mining industry and surety bonds covering closure and post-closure obligations of landfill operations.  Such business is not material to the financial results of the Company.

          At March 31, 2003, the Company, through its ownership of EFSG, owned an indirect 36.5% equity interest in EIC Corporation Ltd.  (“Exporters”), an insurance holding company that, through its wholly-owned insurance subsidiary licensed in Bermuda, insures primarily foreign trade receivables for multinational companies.  Financial Guaranty provides significant reinsurance capacity to this joint venture on a quota-share, surplus share and excess-of-loss basis.  The Company’s exposure at March 31, 2003 was approximately $403 million or 0.4% of net debt service outstanding.

Liquidity and Capital Resources

          The Company’s sources of funds consist primarily of premiums and investment income.  Funds are applied primarily to the payment of the Company’s claims and operating expenses. 

          Cash flows from operating activities for the quarter ended March 31, 2003 were $135.2 million as compared to $120.6 million for the same period of 2002.  This increase resulted from an increase in net premiums written and investment income received partially offset by increases in claims paid and operating expenses.  Positive cash flows are invested pending future payments of claims and other expenses; excess cash flow needs, if any, are funded through sales of short-term investments and other investment portfolio securities.

          Stockholders’ equity was $2.8 billion at both March 31, 2003 and December 31, 2002.  The approximate $90 million increase in equity resulted from net income of $104.8 million and proceeds from the issuance of common stock of $1.4 million offset by a decrease in the market value of securities available for sale of $2.0 million, net of tax, dividends of $1.9 million and the purchase of approximately 0.5 million additional shares of the Company’s stock, net of treasury stock issuances, for approximately $12.0 million.

          On September 24, 2002, the Company announced that its board of directors had authorized the repurchase of up to 2.5 million shares of its common stock on the open market.  Shares will be purchased from time to time depending on the market conditions, share price, and other factors.  These purchases will be funded from available

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working capital.  At March 31, 2003, approximately 1.9 million shares had been repurchased under this program at a cost of approximately $61.1 million.

          On October 4, 2002, S&P lowered the financial strength rating of Radian Reinsurance to “AA” from “AAA,” and on April 8, 2003, Fitch lowered the financial strength rating of Radian Reinsurance to “AA”as further described above, under “Financial Guaranty – Results of Operations.” 

          At March 31, 2003, the Company and its subsidiaries had plans to continue investing in significant information technology and infrastructure upgrades over the next two years at an estimated total cost of $40 million to $50 million.  The Company plans to move the majority of its Data Center to Dayton, Ohio in the coming months and expects to be in full service by mid-2003.  Cash flows from operations are being used to fund these expenditures, which are intended to benefit all of the Company’s business segments.

          The Company owns a 46% interest in C-BASS.  The Company has not made any capital contributions to   C-BASS since the Company acquired its interest in C-BASS in connection with the acquisition of EFSG in February 2001.  C-BASS did not pay any dividends to the Company during the first quarter of 2003 and paid $20.1 million during all of 2002.

          The Company owns a 41.5% interest in Sherman.   The Company did not make any capital contributions to Sherman in 2003 or 2002.  In December 2002, the Company guaranteed payment of up to $25.0 million of a revolving credit facility issued to Sherman that expires in December 2003.  There was $1.0 million outstanding under this facility as of March 31, 2003.  Sherman paid $12.5 million of dividends to the Company during the first quarter of 2003.  Sherman did not pay any dividends during 2002.

          In January 2002, the Company issued $220 million of unsecured Senior Convertible Debentures.  Approximately $125 million of the proceeds from the offering were used to increase capital at Radian Asset Assurance.  Some of the remainder was used to redeem the Company’s preferred stock in August 2002, to buy back the Company’s common stock, as described above, and for other general corporate purposes.  The debentures bear interest at the rate of 2.25% per year, payable semi-annually on January 1 and July 1.  The Company will also pay contingent interest on specified semi-annual periods, if the sale price of its common stock for a specified period of time is less than 60% of the conversion price.  The debentures are convertible, at the purchaser’s option, into shares of common stock at prices and on dates specified in the offering memorandum.  At that time, the shares would become common shares for the purposes of calculating earnings per share.  The Company may redeem all or some of the debentures on or after January 1, 2005.

          In February 2002, the Company closed on a $50 million Senior Revolving Credit Facility to be used for working capital and general corporate purposes.  The facility is unsecured and expires May 30, 2003.  There have been no drawdowns on this facility.  The Company plans to replace this with a similar facility.   

          In March 2002, the Company made a $20 million investment in Primus Guaranty, Ltd., a Bermuda holding company and parent company to Primus Financial Products, LLC. (“Primus”), a Triple A rated company that provides credit risk protection to derivatives dealers and credit portfolio managers on individual investment-grade entities.  In connection with the capitalization and Triple A rating of Primus, Radian Reinsurance had provided Primus with an excess of loss insurance policy, which expired March 30, 2003.  The Company accounts for the Primus investment under the equity method of accounting.  The results of Primus for the first quarter of 2002 and 2003 were immaterial to the Company’s Condensed Consolidated Financial Statements.

          In February 2003, the Company issued $250 million of unsecured Senior Notes.  These notes bear interest at the rate of 5.625% per year, payable semi-annually on February 15 and August 15, beginning August 15, 2003.  These notes mature in February 2013.  The Company used a portion of the proceeds to repay the $75.0 million in principal on the 6.75% debentures due March 1, 2003 that EFSG had issued.  The remainder will be used for general corporate purposes.

          The Company believes that Radian Guaranty will have sufficient funds to satisfy its claims payments and operating expenses and to pay dividends to the Company for at least the next 12 months.  The Company also believes that it will be able to satisfy its long-term (more than 12 months) liquidity needs with the cash flow from Mortgage Insurance and Financial Guaranty.  As a holding company, the Company conducts its principal operations through Mortgage Insurance and EFSG.  In connection with obtaining approval from the New York insurance

24

department for the change of control of EFSG when the Company acquired EFSG, EFSG agreed not to declare or pay dividends for a period of two years following consummation of the acquisition.  The agreement for Radian Reinsurance and Radian Asset Assurance to refrain from paying dividends to the Company expired on February 28, 2003.  Based on the Company’s current intention to pay quarterly common stock dividends of approximately $0.02 per share, the Company will require approximately $5.6 million for the remainder of 2003 to pay the dividends on the outstanding shares of common stock.  The Company will also require approximately $38 million annually to pay the debt service on its long-term financing.  The Company believes that it has the resources to meet these cash requirements for the next 12 months.  There are regulatory and contractual limitations on the payment of dividends or other distributions from its insurance subsidiaries.  The Company does not believe that any of these restrictions will prevent the payment by its subsidiaries or the Company of these anticipated dividends or distributions in the foreseeable future.

          The Company’s insurance subsidiaries have the ability to allocate capital resources within certain guidelines by making direct investments.  In April 2003, Radian Guaranty invested $100 million in EFSG, for an approximate 11% ownership interest.  This amount was subsequently contributed by EFSG to Radian Asset Assurance to support growth in the direct financial guaranty business.

Critical Accounting Policies

          Critical accounting policies comprise those policies that require the Company’s most difficult, subjective, and complex judgments.  These policies require estimates of matters that are inherently uncertain.  The accounting policies that the Company believes meet the criteria of critical accounting policies are described below.

Reserve for Losses

          The Company establishes reserves to provide for the estimated costs of settling claims in both the mortgage insurance and financial guaranty businesses. 

          In the mortgage insurance business, the incurred loss process is initiated by a borrower’s missed payment.  The Company uses historical models based on a variety of loan characteristics, including the status of the loan as reported by the servicer of the loan, the economic conditions, and the estimated foreclosure period in the area where the default exists to help determine the appropriate loss reserve at any point in time.  As the delinquency proceeds toward foreclosure, there is more certainty around these estimates and adjustments are made to loss reserves to reflect this updated information.

          The process for establishing financial guaranty loss reserves is similar; however, the remote probability of losses and the dearth of historical losses in this business make it more difficult to estimate the appropriate loss reserve.  Policies are monitored by the Company or the primary insurers over the life of the policy.  When the policy’s performance deteriorates below underwriting expectations, or if the circumstances dictate, it is placed on a Watch List.  Once a transaction is placed on a Watch List, the transaction is actively monitored, which may include communication with the borrower, site inspection, or the engagement of a third party consultant.   If the transaction continues to deteriorate to a point where a default is probable and estimable, the Company will establish a loss reserve.  Financial Guaranty has a regular case reserve committee meeting where experts in the risk management and surveillance area provide input to the finance area before any case reserves are determined, and the surveillance team actively monitors any problem deals and notifies the committee if a change in the loss reserve is necessary.  Financial Guaranty establishes a reserve based on the estimated loss, including expenses associated with the settlement of the loss.

          Setting the loss reserves in both business segments involves significant reliance upon estimates with regard to the likelihood, magnitude and timing of a loss.  The models and estimates the Company uses to establish loss reserves may not prove to be accurate, especially during an extended economic downturn.  There can be no assurance that the Company has correctly estimated the necessary amount of reserves or that the reserves established will be adequate to cover ultimate losses on incurred defaults.

          If the Company’s estimates are inadequate, it may be forced by insurance and other regulators or rating agencies to increase its reserves.  Unanticipated increases to its reserves could lead to a reduction in the Company’s and its subsidiaries’ ratings.  Such a reduction in ratings could have a significant negative impact on the Company’s ability to attract and retain business.

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Derivative Instruments and Hedging Activity

          The Company accounts for derivatives under SFAS No. 133.  The two areas where gains and losses on derivative contracts are recognized are in the convertible debt securities contained in the Company’s investment portfolio and in certain financial guaranty contracts.  The value of the derivative position of convertible debt securities is calculated by the Company’s outside convertible debt portfolio manager by determining the value of the readily ascertainable comparable debt securities and assigning a value to the equity (derivative) portion by subtracting the value of the comparable debt security from the total value of the convertible instrument.  Changes in such values from period to period represent the gains and losses recorded.  The gains and losses on derivative financial guaranty contracts are derived from internally generated models.  The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies.  However, considerable judgment is necessarily required to interpret market data to develop the estimates of fair value.  Accordingly, the estimates are not necessarily indicative of amounts the Company could realize in a current market exchange.  The use of different market assumptions and/or estimation methodologies may have an effect on the estimated fair value amounts.

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

          During the first three months of 2003, the Company experienced a decrease in the fair market value of the available for sale portfolio, which resulted in a decrease in the net unrealized gain on the investment portfolio of  $2.0 million.  The accumulated net unrealized gain at March 31, 2003 was $56.1 million compared to $58.1 million at December 31, 2002.  This decrease in value was primarily a result of changes in market interest rates and not a result of changes in the composition of the Company’s investment portfolio.

          At March 31, 2003, the fair value of the Company’s derivative instruments, classified as trading securities, was $37.6 million, as compared to an amortized value of $44.1 million, and the Company recognized $3.1 million, net of tax, of loss on changes in the fair value of trading securities in the consolidated statement of income for the first quarter of 2003.  The notional value of the Company’s credit default swaps and certain other financial guaranty contracts accounted for under SFAS No. 133 was $9.4 billion at March 31, 2003 and the Company recognized $2.0 million, net of tax, of losses on these instruments.  Net unrealized losses on credit default swaps and certain other financial guaranty contracts of $20.6 million at March 31, 2003 were composed of gross unrealized gains of $66.2 million and gross unrealized losses of $86.8 million.

ITEM 4.  Controls and Procedures

          Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the  Company’s disclosure controls and procedures as of a date within 90 days of the filing of this report.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective in ensuring that the information required to be disclosed by the Company in its reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported on a timely basis.

          There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referred to above.

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PART II.   OTHER INFORMATION

ITEM 1.           Legal Proceedings

          There have been no material developments in legal proceedings involving the Company or its subsidiaries since those reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

          The Company is involved in certain litigation arising in the normal course of its business. The Company is contesting the allegations in each such pending action and believes, based on current knowledge and after consultation with counsel, that the outcome of such litigation will not have a material adverse effect on the Company’s consolidated financial position and results of operations.

ITEM 6.           Exhibits and Reports on Form 8-K

(a)	Exhibits
Exhibit No.		Exhibit Name
*4.1		Indenture dated as of February 14, 2003 between the Registrant and Wachovia Bank, National Association, as Trustee
*4.2		Form of 5.625% Senior Note Due 2013 (included within Exhibit 4.1)
*4.3		Registration Rights Agreement dated February 14, 2003 relating to the 5.625% Senior Notes Due 2013
10		Letter Amendment, dated February 5, 2003, to Credit Agreement dated as of February 8, 2002 between the Registrant and Wachovia Bank, National Association (formerly, First Union National Bank), as lender (1) (10.34)
*11		Statement re Computation of Per Share Earnings
*99		Certifications required under Section 906 of the Sarbanes-Oxley Act of 2002
*  Filed herewith
(1)	Incorporated by reference to the exhibit identified in parentheses, filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002.
(b)	Reports on Form 8-K
Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on February 12, 2003 reporting the Registrant’s announcement of the sale of its 5.625% senior unsecured notes.
Current Report on Form 8-K filed with the SEC on February 11, 2003 reporting (1) the Registrant’s announcement on January 22, 2003 of 2002 fourth quarter and full year results, (2) the Registrant’s announcement on February 11, 2003 of a proposed sale of senior unsecured notes and (3) certain information regarding possible acquisitions by the Registrant.

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SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	RADIAN GROUP INC.
Date:  May 14, 2003	/s/ C. ROBERT QUINT
	C. Robert Quint Executive Vice President and Chief Financial Officer
	/s/ JOHN J. CALAMARI
	John J. Calamari Senior Vice President and Corporate Controller

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CERTIFICATIONS

I, Frank P. Filipps, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Radian Group Inc.;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
	a)	Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
	c)	Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
	a)	All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6.	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:     May 14, 2003	/s/ FRANK P. FILIPPS
	Frank P. Filipps Chief Executive Officer

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I, C. Robert Quint, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Radian Group Inc.;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
	a)	Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
	d)	Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
	a)	All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6.	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:     May 14, 2003	/s/ C. ROBERT QUINT
	C. Robert Quint Chief Financial Officer

30

EXHIBIT INDEX

Exhibit No.		Exhibit Name
*4.1		Indenture dated as of February 14, 2003 between the Registrant and Wachovia Bank, National Association, as Trustee
*4.2		Form of 5.625% Senior Note Due 2013 (included within Exhibit 4.1)
*4.3		Registration Rights Agreement dated February 14, 2003 relating to the 5.625% Senior Notes Due 2013
11		Letter Amendment, dated February 5, 2003, to Credit Agreement dated as of February 8, 2002 between the Registrant and Wachovia Bank, National Association (formerly, First Union National Bank), as lender (1) (10.34)
*11		Statement re:  Computation of Per Share Earnings
*99		Certifications required under Section 906 of the Sarbanes-Oxley Act of 2002
	*  Filed herewith
	(1)		Incorporated by reference to the exhibit identified in parentheses, filed as an exhibit to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2002.

31

EX-4.1

                                                                     EXHIBIT 4.1

                                                                  EXECUTION COPY

                                RADIAN GROUP INC.

                       5.625% NOTES DUE FEBRUARY 15, 2013

                                    INDENTURE

                          Dated as of February 14, 2003

                       WACHOVIA BANK, NATIONAL ASSOCIATION

                                     Trustee



                             CROSS-REFERENCE TABLE*

Trust Indenture Act                                            Indenture Section
- -------------------                                            -----------------
310(a)(1)...................................................          7.10
   (a)(2)...................................................          7.10
   (a)(5)...................................................          7.10
   (b)......................................................          7.10
   (b)(1)...................................................          7.10
   (c)......................................................          N.A.
311(a)......................................................          7.11
   (b)......................................................          7.11
312(a)......................................................          2.05
   (b)......................................................         10.03
   (c)......................................................         10.03
313(a)......................................................          7.06
                                                                      7.07
   (b)(2)...................................................          7.06
   (c)......................................................          7.06
                                                                     10.02
   (d)......................................................          7.06
314(a)......................................................          4.03
                                                                     10.05
   (a)(4)...................................................         10.05
   (c)(1)...................................................         10.04
   (c)(2)...................................................         10.04
   (e)......................................................         10.05
316(a)(last sentence).......................................          2.09
   (a)(1)(A)................................................          6.05
   (a)(1)(B)................................................          6.04
317(a)(1)...................................................          6.08

* This Cross-Reference Table is not part of this Indenture.



                                TABLE OF CONTENTS



                                                                                           Page
                                                                                           ----
                                                                                      
                                    ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.   Definitions..................................................................1
Section 1.02.   Other Definitions............................................................8
Section 1.03.   Incorporation by Reference of Trust Indenture Act............................9
Section 1.04.   Rules of Construction........................................................9

                                    ARTICLE 2
                                    THE NOTES

Section 2.01.   Form and Dating.............................................................10
Section 2.02.   Execution and Authentication................................................10
Section 2.03.   Registrar and Paying Agent..................................................11
Section 2.04.   Paying Agent to Hold Money in Trust.........................................11
Section 2.05.   Holder Lists................................................................12
Section 2.06.   Transfer and Exchange.......................................................12
Section 2.07.   Replacement Notes...........................................................25
Section 2.08.   Outstanding Notes...........................................................25
Section 2.09.   Treasury Notes..............................................................26
Section 2.10.   Temporary Notes.............................................................26
Section 2.11.   Cancellation................................................................26
Section 2.12.   Defaulted Interest..........................................................26
Section 2.13.   CUSIP Numbers...............................................................26

                                    ARTICLE 3
                                   REDEMPTION

Section 3.01.   Notices to Trustee..........................................................27
Section 3.02.   Selection of Notes to Be Redeemed...........................................27
Section 3.03.   Notice of Redemption........................................................27
Section 3.04.   Effect of Notice of Redemption..............................................28
Section 3.05.   Deposit of Redemption Price.................................................28
Section 3.06.   Notes Redeemed in Part......................................................28
Section 3.07.   Optional Redemption.........................................................29

                                    ARTICLE 4
                                    COVENANTS

Section 4.01.   Payment of Notes............................................................29
Section 4.02.   Maintenance of Office or Agency.............................................29
Section 4.03.   Compliance Certificate......................................................30
Section 4.04.   Limitation on Liens of Stock of Designated Subsidiaries.....................30
Section 4.05.   Limitation on Sales of Capital Stock of Designated Subsidiaries.............30
Section 4.06.   Existence...................................................................30


                                        i



                                                                                      
                                    ARTICLE 5
                                   SUCCESSORS

Section 5.01.   Merger, Consolidation, or Sale of Assets....................................31
Section 5.02.   Successor Corporation Substituted...........................................31

                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

Section 6.01.   Events of Default...........................................................32
Section 6.02.   Acceleration................................................................33
Section 6.03.   Other Remedies..............................................................33
Section 6.04.   Waiver of Past Defaults.....................................................34
Section 6.05.   Control by Majority.........................................................34
Section 6.06.   Limitation on Suits.........................................................34
Section 6.07.   Rights of Holders of Notes to Receive Payment...............................35
Section 6.08.   Collection Suit by Trustee..................................................35
Section 6.09.   Trustee May File Proofs of Claim............................................35
Section 6.10.   Priorities..................................................................36
Section 6.11.   Undertaking for Costs.......................................................36

                                    ARTICLE 7
                                     TRUSTEE

Section 7.01.   Duties of Trustee...........................................................36
Section 7.02.   Rights of Trustee...........................................................37
Section 7.03.   Individual Rights of Trustee................................................38
Section 7.04.   Trustee's Disclaimer........................................................38
Section 7.05.   Notice of Defaults..........................................................38
Section 7.06.   Reports by Trustee to the Holders of the Notes..............................39
Section 7.07.   Compensation and Indemnity..................................................39
Section 7.08.   Replacement of Trustee......................................................40
Section 7.09.   Successor Trustee by Merger, Etc............................................41
Section 7.10.   Eligibility; Disqualification...............................................41
Section 7.11.   Preferential Collection of Claims Against Company...........................41

                                    ARTICLE 8
                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01.   Option to Effect Legal Defeasance or Covenant Defeasance....................41
Section 8.02.   Legal Defeasance and Discharge..............................................41
Section 8.03.   Covenant Defeasance.........................................................42
Section 8.04.   Conditions to Legal Defeasance or Covenant Defeasance.......................42
Section 8.05.   Deposited Money and Government Securities to Be Held in Trust;
                   Other Miscellaneous Provisions...........................................43
Section 8.06.   Repayment to Company........................................................44
Section 8.07.   Reinstatement...............................................................44



                                       ii



                                                                                      
                                    ARTICLE 9
                        AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01.   Without Consent of Holders of Notes.........................................45
Section 9.02.   With Consent of Holders of Notes............................................45
Section 9.03.   Compliance with Trust Indenture Act.........................................47
Section 9.04.   Revocation and Effect of Consents...........................................47
Section 9.05.   Notation on or Exchange of Notes............................................47
Section 9.06.   Trustee to Sign Amendments, Etc.............................................47
Section 9.07.   Payments for Consent........................................................47

                                   ARTICLE 10
                                  MISCELLANEOUS

Section 10.01.  Trust Indenture Act Controls................................................48
Section 10.02.  Notices.....................................................................48
Section 10.03.  Communication by Holders of Notes with Other Holders of Notes...............49
Section 10.04.  Certificate and Opinion as to Conditions Precedent..........................49
Section 10.05.  Statements Required in Certificate or Opinion...............................50
Section 10.06.  Rules by Trustee and Agents.................................................50
Section 10.07.  No Personal Liability of Directors, Officers, Employees and Shareholders....50
Section 10.08.  Governing Law...............................................................50
Section 10.09.  No Adverse Interpretation of Other Agreements...............................50
Section 10.10.  Successors..................................................................51
Section 10.11.  Severability................................................................51
Section 10.12.  Counterpart Originals.......................................................51
Section 10.13.  Table of Contents, Headings, Etc............................................51



                                       iii



                                    EXHIBITS

Exhibit A-1  FORM OF RULE 144A NOTE
Exhibit A-2  FORM OF REGULATION S NOTE
Exhibit B    FORM OF CERTIFICATE OF TRANSFER
Exhibit C    FORM OF CERTIFICATE OF EXCHANGE

                                       iv



          INDENTURE dated as of February 14, 2003, between Radian Group Inc., a
Delaware corporation (the "Company"), and Wachovia Bank, National Association,
as trustee (the "Trustee").

          The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 5.625% Senior
Notes of the Company due February 15, 2013 (the "Notes"):

                                    ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

          Section 1.01. Definitions.

          "144A Global Note" means a global note in the form of Exhibit A hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of, and registered in the name of, the Depositary or its
nominee that will be issued in a denomination equal to the outstanding principal
amount of the Notes sold in reliance on Rule 144A.

          "Additional Interest" means the additional interest (if any) payable
by the Company in the event of a Registration Default under, and as defined in
Section 5 of, the Registration Rights Agreement.

          "Additional Notes" means an unlimited aggregate principal amount of
Notes (other than the Initial Notes) issued under this Indenture in accordance
with Section 2.02 hereof.

          "Adjusted Treasury Rate" means, with respect to any redemption date,
(a) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Remaining Life, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Adjusted Treasury Rate shall be interpolated or
extrapolated from such yields on a straight line basis, rounding to the nearest
month); or (b) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.

     The Adjusted Treasury Rate shall be calculated on the second Business Day
preceding the redemption date.

     "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any specified Person,



means the power to direct the management or policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, the terms "controlling," "controlled
by" and "under common control with" shall have correlative meanings.

          "Agent" means any Registrar, Paying Agent or co-registrar.

          "Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Clearstream that apply to such
transfer or exchange.

          "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.

          "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.

          "Board of Directors" means (i) with respect to a corporation, the
board of directors of the corporation; (ii) with respect to a partnership, the
Board of Directors of the general partner of the partnership; (iii) with respect
to any other Person, the board or committee of such Person serving a similar
function; and (iv) any duly authorized committee of the Board of Directors.

          "Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.

          "Business Day" means any day other than a Legal Holiday.

          "Capital Stock" of any Person means any and all shares, interests,
participations, rights to purchase warrants, options or other equivalents or
interests in (however designated) equity of such Person, including preferred
stock, but excluding any debt securities convertible into such equity.

          "Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case,
with institutional lenders having capital and surplus in excess of $500.0
million, a Thomson Bank Watch Rating of "B" or better and chartered or organized
in the United States, (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses (ii) and
(iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above,

                                        2



(v) commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Rating Services and in each case maturing
within six months after the date of acquisition, and (vi) money market funds at
least 95% of the assets of which constitute Cash Equivalents of the kinds
described in clauses (i) through (v) of this definition.

          "Clearstream" means Clearstream Banking, societe anonyme (or any
successor securities clearing agency).

          "Company" means the person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture and thereafter "Company"
shall mean such successor Person.

          "Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the securities to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes ("Remaining Life").

          "Comparable Treasury Price" means (i) the average of the Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (ii) if the Independent
Investment Banker obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such quotations.

          "Consolidated Stockholders' Equity", at any time, means the total
stockholders' equity of the Company and/or Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recently
completed fiscal quarter of the Company for which financial information is then
publicly available.

          "Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 10.02 hereof or such other address as to which the
Trustee may give notice to the Company.

          "Custodian" means the Trustee, as custodian with respect to the Global
Notes, or any successor entity thereto.

          "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.

          "Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A-1 hereto, except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.

          "Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.

                                        3



          "Designated Subsidiary" means any present or future consolidated
Subsidiary, the Consolidated Stockholders' Equity of which constitutes at least
15% of the Company's Consolidated Stockholders' Equity.

          "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system (or any successor securities
clearing agency).

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Exchange Notes" means the Notes issued in the Exchange Offer in
accordance with Section 2.06(f) hereof.

          "Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.

          "Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.

          "GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect as of the date hereof.

          "Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, issued in accordance
with certain sections of this Indenture.

          "Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.

          "Government Securities" means (a) any security which is (i) a direct
obligation of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (ii) an
obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof, and (b) any depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as
custodian with respect to any Government Securities which is specified in clause
(a) above and held by such bank for the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of or interest on
any Government Securities which is so specified and held, provided that (except
as required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the Government Securities or the
specific payment of principal or interest evidenced by such depositary receipt.

          "Holder" means a Person in whose name a Note is registered.

                                        4



          "Indebtedness" means, with respect to any Person: (i) the principal
of, and any premium and interest on, indebtedness of any such Person for money
borrowed and indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which that such Person is responsible or liable;
(ii) all capitalized lease obligations of such Person; (iii) all obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business and deferred purchase price due and payable within 90 days); (iv)
all obligations of such Person for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction, other than
obligations with respect to letters of credit securing obligations entered into
in the ordinary course of business; (v) all obligations of the type referred to
above of other Persons and all dividends of other Persons for which that person
is responsible or liable as obligor, guarantor or otherwise; (vi) all
obligations of the type referred to above of other Persons secured by any Lien
on any property or asset of that Person; and (vii) any amendments,
modifications, refundings, renewals or extensions of any indebtedness or
obligation described above.

          "Indenture" means this Indenture, as amended or supplemented from time
to time.

          "Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Company.

          "Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.

          "Initial Notes" means $250 million in aggregate principal amount of
Notes originally issued under this Indenture on the date hereof.

          "Issue Date" means the date on which the initial $250 million in
aggregate principal amount of the Notes were originally issued under this
Indenture.

          "Legal Holiday" means a Saturday, a Sunday or a day on which
commercial banks in The City of New York or at a place of payment are authorized
or required by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.

          "Letter of Transmittal" means the letter of transmittal to be prepared
by the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.

          "Lien" means, with respect to any asset, any lien, pledge or other
encumbrance.

          "Non-U.S. Person" means a Person who is not a U.S. Person.

          "Notes" has the meaning assigned to it in the preamble to this
Indenture. The Initial Notes and the Additional Notes, if any are issued, shall
be treated as a single class for all purposes under this Indenture.

                                        5



          "Offering" means the offering of the Notes by the Company.

          "Officer" means, with respect to any Person, the Chairman of the
Board, the Vice-Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant
Secretary or any Vice-President of such Person.

          "Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer, or the
principal accounting officer of the Company, that meets the requirements of
Section 10.05 hereof.

          "Opinion of Counsel" means an opinion from legal counsel that meets
the requirements of Section 10.05 hereof. The counsel may be an employee of or
counsel to the Company.

          "Participant" means a Person who has an account with the Depositary,
Euroclear or Clearstream.

          "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.

          "Primary Treasury Dealer" has the meaning set forth in the definition
of "Reference Treasury Dealer".

          "Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued hereunder except where otherwise
permitted by the provisions of this Indenture.

          "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

          "Reference Treasury Dealer" means each of Banc of America Securities
LLC, Lehman Brothers Inc. and such other nationally recognized investment
banking firms that are primary U.S. Government securities dealers specified from
time to time by the Company and its respective successors; provided that, if any
of the foregoing ceases to be a primary U.S. Government securities dealer in New
York City (a "Primary Treasury Dealer"), the Company will substitute another
Primary Treasury Dealer; and any other Primary Treasury Dealer selected by the
Company.

          "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 3:30
p.m., New York City time, on the third Business Day preceding such redemption
date.

                                        6



          "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of February 14, 2003, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time and, with respect to any Additional
Notes, one or more registration rights agreements between the Company and the
other parties thereto, as such agreement(s) may be amended, modified or
supplemented from time to time, relating to rights given by the Company to the
purchasers of Additional Notes to register such Additional Notes under the
Securities Act.

          "Regulation S" means Regulation S promulgated under the Securities
Act.

          "Regulation S Global Note" means a global Note bearing the Regulation
S Global Note Legend and the Private Placement Legend and deposited with or on
behalf of and registered in the name of the Depositary or its nominee, issued in
a denomination equal to the outstanding principal amount of the Notes resold in
reliance on Rule 904.

          "Remaining Life" has the meaning set forth in the definition of
"Comparable Treasury Issue".

          "Responsible Officer" when used with respect to the Trustee, means any
officer within the Corporate Trust Office of the Trustee (or any successor group
of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his or her knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture.

          "Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.

          "Restricted Global Note" means a Global Note bearing the Private
Placement Legend.

          "Rule 144" means Rule 144 promulgated under the Securities Act.

          "Rule 144A" means Rule 144A promulgated under the Securities Act.

          "Rule 903" means Rule 903 promulgated under the Securities Act.

          "Rule 904" means Rule 904 promulgated under the Securities Act.

          "SEC" means the Securities and Exchange Commission.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.

          "Subsidiary" means, with respect to any specified person:

                                        7



               (i) any corporation of which at least a majority of the
          outstanding stock having ordinary voting power (without regard to the
          occurrence of any contingency) to elect a majority of the directors of
          such corporation, is at the time, directly or indirectly, owned or
          controlled by the Company or by one or more of its Subsidiaries (or
          any combination thereof);

               (ii) any partnership (a) of which the Company or one of its
          Subsidiaries is the sole general partner or the managing general
          partner or (b) the only general partners of which are the Company or
          one or more of its Subsidiaries (or any combination thereof); or

               (iii) any other business entity of which more that 50% of the
          total voting power of equity interests entitled (without regard to the
          occurrence of any contingency) to vote in the election of directors,
          managers or trustees thereof is at the time owned or controlled,
          directly or indirectly, by the Company or one or more of its
          Subsidiaries (or any combination thereof).

          "TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
(S)(S) 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.

          "Trustee" means the party named as such in the preamble to this
Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.

          "Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.

          "Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A-1 attached hereto that bears the Global Note Legend and that has
the "Schedule of Exchanges of Interests in the Global Note" attached thereto,
and that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.

          "U.S. Person" means a U.S. person as defined in Rule 902(k) under the
Securities Act.

          "Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.

          Section 1.02. Other Definitions.

                                                                 Defined in
Term                                                              Section
- ----                                                             ----------
"Authentication Order"........................................      2.02
"Covenant Defeasance".........................................      8.03
"DTC".........................................................      2.03
"Event of Default"............................................      6.01
"Legal Defeasance"............................................      8.02

                                        8



                                                                 Defined in
Term                                                              Section
- ----                                                             ----------
"Paying Agent"................................................      2.03
"Registrar"...................................................      2.03
"successor Person.............................................      5.01

          Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.

          The following TIA terms used in this Indenture have the following
meanings:

          (i)  "indenture securities" means the Notes;

          (ii) "indenture security Holder" means a Holder of a Note;

          (iii) "indenture to be qualified" means this Indenture;

          (iv) "indenture trustee" or "institutional trustee" means the Trustee;
               and

          (v)  "obligor" on the Notes means the Company and any successor
               obligor upon the Notes.

          All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.

          Section 1.04. Rules of Construction. Unless the context otherwise
requires:

          (i)  a term has the meaning assigned to it;

          (ii) an accounting term not otherwise defined has the meaning assigned
               to it in accordance with GAAP;

          (iii) "or" is not exclusive;

          (iv) words in the singular include the plural, and in the plural
               include the singular;

          (v)  provisions apply to successive events and transactions; and

          (vi) references to sections of or rules under the Securities Act shall
               be deemed to include substitute, replacement of successor
               sections or rules adopted by the SEC from time to time.

                                        9



                                    ARTICLE 2

                                    THE NOTES

          Section 2.01. Form and Dating. (a) General. The Notes and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibits A-1 and A-2 hereto. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note shall be
dated the date of its authentication. The Notes shall be in denominations of
$1,000 and integral multiples thereof.

          The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.

          (b) Global Notes. 144A Global Notes issued in global form shall be
     substantially in the form of Exhibit A-1 attached hereto (including the
     Global Note Legend thereon and the "Schedule of Exchanges of Interests in
     the Global Note" attached thereto). Regulation S Global Notes issued in
     global form shall be substantially in the form of Exhibit A-2 attached
     hereto (including the Global Note Legend thereon and the "Schedule of
     Exchanges of Interests in the Global Note" attached thereto). Global Notes
     issued in definitive form shall be substantially in the form of Exhibit A-1
     attached hereto (but without the Global Note Legend thereon and without the
     "Schedule of Exchanges of Interests in the Global Note" attached thereto).
     Each Global Note shall represent such of the outstanding Notes as shall be
     specified therein and each shall provide that it shall represent the
     aggregate principal amount of outstanding Notes from time to time endorsed
     thereon and that the aggregate principal amount of outstanding Notes
     represented thereby may from time to time be reduced or increased, as
     appropriate, to reflect exchanges and redemptions. Any endorsement of a
     Global Note to reflect the amount of any increase or decrease in the
     aggregate principal amount of outstanding Notes represented thereby shall
     be made by the Trustee, in accordance with instructions given by the Holder
     thereof as required by Section 2.06 hereof.

          (c) Euroclear and Clearstream Procedures Applicable. The provisions of
     the "Operating Procedures of the Euroclear System" and "Terms and
     Conditions Governing Use of Euroclear" and the "General Terms and
     Conditions of Clearstream Banking" and "Customer Handbook" of Clearstream
     shall be applicable to transfers of beneficial interests in the Regulation
     S Global Notes that are held by Participants through Euroclear or
     Clearstream.

          Section 2.02. Execution and Authentication. One Officer shall sign the
Notes for the Company by manual or facsimile signature.

          If the Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.

                                       10



          A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.

          The Trustee shall, upon a written order of the Company signed by one
Officer (an "Authentication Order"), authenticate an unlimited aggregate
principal amount of Notes for original issue, of which $250 million will be
issued as Initial Notes on the date hereof. The aggregate principal amount of
Notes outstanding at any time may not exceed such amount except as provided in
Section 2.07 hereof.

          The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.

          Section 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency where Notes may be presented for registration of transfer or
for exchange ("Registrar") and an office or agency where Notes may be presented
for payment ("Paying Agent"). The Registrar shall keep a register of the Notes
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall promptly notify the Trustee in writing
of the name and address of any Agent not a party to this Indenture. If the
Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may
act as Paying Agent or Registrar.

          The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.

          The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.

          Section 2.04. Paying Agent to Hold Money in Trust. (a) The Company
shall require each Paying Agent other than the Trustee to agree in writing that
the Paying Agent shall hold in trust for the benefit of Holders or the Trustee
all money held by the Paying Agent for the payment of principal, premium or
Additional Interest, if any, or interest on the Notes, and shall notify the
Trustee of any Default by the Company in making any such payment. While any such
Default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.

                                       11



          (b) Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of or any premium
or interest on any Note and remaining unclaimed for two years after such
principal, premium or interest has become due and payable shall be paid to the
Company at its request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in New York, New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.

          Section 2.05. Holder Lists. (a) The Registrar shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of all Holders and shall otherwise comply with TIA
(S) 312(a). If the Trustee is not the Registrar, the Company shall furnish to
the Trustee at least seven Business Days before each interest payment date and
at such other times as the Trustee may request in writing, a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Notes and the Company shall otherwise comply with
TIA (S) 312(a).

          (b) Every Holder of Notes, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any Agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the TIA.

          Section 2.06. Transfer and Exchange. (a) Transfer and Exchange of
Global Notes. A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Notes shall be exchanged by the Company for Definitive
Notes if (i) the Company delivers to the Trustee notice from the Depositary that
it is unwilling or unable to continue to act as Depositary or that it is no
longer a clearing agency registered under the Exchange Act and, in either case,
a successor Depositary is not appointed by the Company within 120 days after the
date of such notice from the Depositary or (ii) the Company in its sole
discretion determines that the Global Notes (in whole but not in part) should be
exchanged for Definitive Notes and delivers a written notice to such effect to
the Trustee or (iii) there shall have occurred and be continuing a Default or
Event of Default with respect to the Notes. An interest in a Global Note may not
be exchanged for a Definitive Note except as provided in the preceding sentence.
Upon the occurrence of any of the preceding events in (i), (ii) or (iii) above,
Definitive Notes shall be issued in such names as the Depositary shall instruct
the Trustee. Global Notes also may be exchanged or replaced, in whole or in
part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not

                                       12



be exchanged for another Note other than as provided in this Section 2.06(a);
however, beneficial interests in a Global Note may be transferred and exchanged
as provided in Section 2.06(b), (c) or (f) hereof.

          (b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:

          (i) Transfer of Beneficial Interests in the Same Global Note.
     Beneficial interests in any Restricted Global Note may be transferred to
     Persons who take delivery thereof in the form of a beneficial interest in
     the same Restricted Global Note in accordance with the transfer
     restrictions set forth in the Private Placement Legend. Beneficial
     interests in any Unrestricted Global Note may be transferred to Persons who
     take delivery thereof in the form of a beneficial interest in an
     Unrestricted Global Note. No written orders or instructions shall be
     required to be delivered to the Registrar to effect the transfers described
     in this Section 2.06(b)(i).

          (ii) All Other Transfers and Exchanges of Beneficial Interests in
     Global Notes. In connection with all transfers and exchanges of beneficial
     interests that are not subject to Section 2.06(b)(i) above, the transferor
     of such beneficial interest must deliver to the Registrar either: (A)(1) a
     written order from a Participant or an Indirect Participant given to the
     Depositary in accordance with the Applicable Procedures directing the
     Depositary to credit or cause to be credited a beneficial interest in the
     Global Note in an amount equal to the beneficial interest to be transferred
     or exchanged and (2) instructions given in accordance with the Applicable
     Procedures containing information regarding the Participant account to be
     credited with such increase, or (B) subject to Section 2.06(a), (1) a
     written order from a Participant or an Indirect Participant given to the
     Depositary in accordance with the Applicable Procedures directing the
     Depositary to cause to be issued a Definitive Note in an amount equal to
     the beneficial interest to be transferred or exchanged and (2) instructions
     given by the Depositary to the Registrar containing information regarding
     the Person in whose name such Definitive Note shall be registered to effect
     the transfer or exchange referred to in (1) above. Upon consummation of an
     Exchange Offer by the Company in accordance with Section 2.06(f) hereof,
     the requirements of clause (A) of the first sentence of this Section
     2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the
     Registrar of the instructions contained in the Letter of Transmittal
     delivered by the Holder of such beneficial interests in the Restricted
     Global Notes. Upon satisfaction of all of the requirements for transfer or
     exchange of beneficial interests in Global Notes contained in this
     Indenture and the Notes or otherwise applicable under the Securities Act,
     the Trustee shall adjust the principal amount of the relevant Global
     Note(s) pursuant to Section 2.06(h) hereof.

                                       13



          (iii) Transfer of Beneficial Interests to Another Restricted Global
     Note. A beneficial interest in any Restricted Global Note may be
     transferred to a Person who takes delivery thereof in the form of a
     beneficial interest in another Restricted Global Note if the transfer
     complies with the requirements of Section 2.06(b)(ii) above and the
     Registrar receives the following:

               (A) if the transferee shall take delivery in the form of a
          beneficial interest in the 144A Global Note, then the transferor must
          deliver a certificate in the form of Exhibit B hereto, including the
          certifications in item (1) thereof; and

               (B) if the transferee shall take delivery in the form of a
          beneficial interest in the Regulation S Global Note, then the
          transferor must deliver a certificate in the form of Exhibit B hereto,
          including the certifications in item (2) thereof.

          (iv) Transfer and Exchange of Beneficial Interests in a Restricted
     Global Note for Beneficial Interests in the Unrestricted Global Note. A
     beneficial interest in any Restricted Global Note may be exchanged by any
     holder thereof for a beneficial interest in an Unrestricted Global Note or
     transferred to a Person who takes delivery thereof in the form of a
     beneficial interest in an Unrestricted Global Note if the exchange or
     transfer complies with the requirements of Section 2.06(b)(ii) above and:

               (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and the holder of the beneficial interest to be transferred, in the
          case of an exchange, or the transferee, in the case of a transfer,
          certifies in the applicable Letter of Transmittal that it is not (1) a
          Broker-Dealer, (2) a Person participating in the distribution of the
          Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
          144) of the Company;

               (B) such transfer is effected pursuant to the Shelf Registration
          Statement in accordance with the Registration Rights Agreement;

               (C) such transfer is effected by a Broker-Dealer pursuant to the
          Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

               (D) the Registrar receives the following:

                    (1) if the holder of such beneficial interest in a
               Restricted Global Note proposes to exchange such beneficial
               interest for a beneficial interest in an Unrestricted Global
               Note, a certificate from such holder in the form of Exhibit C
               hereto, including the certifications in item (1)(a) thereof; or

                    (2) if the holder of such beneficial interest in a
               Restricted Global Note proposes to transfer such beneficial
               interest to a Person who shall take delivery thereof in the form
               of a beneficial interest in an

                                       14



               Unrestricted Global Note, a certificate from such holder in the
               form of Exhibit B hereto, including the certifications in item
               (3) thereof;

          and, in each such case set forth in this subparagraph (D), if the
          Registrar so requests or if the Applicable Procedures so require, an
          Opinion of Counsel in form reasonably acceptable to the Registrar to
          the effect that such exchange or transfer is in compliance with the
          Securities Act and that the restrictions on transfer contained herein
          and in the Private Placement Legend are no longer required in order to
          maintain compliance with the Securities Act.

          If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.

          Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.

          (c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

          (i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. As provided in Section 2.06(a), interests in Global Notes may
be exchanged for, or transferred in the form of, Definitive Notes only in
limited circumstances. If, in such limited circumstances, any holder of a
beneficial interest in a Restricted Global Note proposes to exchange such
beneficial interest for a Restricted Definitive Note or to transfer such
beneficial interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Note, then, upon receipt by the Registrar of the following
documentation:

               (A) if the holder of such beneficial interest in a Restricted
          Global Note proposes to exchange such beneficial interest for a
          Restricted Definitive Note, a certificate from such holder in the form
          of Exhibit C hereto, including the certifications in item (2)(a)
          thereof;

               (B) if such beneficial interest is being transferred to a QIB in
          accordance with Rule 144A, a certificate to the effect set forth in
          Exhibit B hereto, including the certifications in item (1) thereof;

               (C) if such beneficial interest is being transferred to a
          Non-U.S. Person in an offshore transaction in accordance with Rule 903
          or Rule 904, a certificate to the effect set forth in Exhibit B
          hereto, including the certifications in item (2) thereof;

               (D) if such beneficial interest is being transferred pursuant to
          an exemption from the registration requirements of the Securities Act
          in accordance

                                       15



          with Rule 144, a certificate to the effect set forth in Exhibit B
          hereto, including the certifications in item (3)(a) thereof;

               (E) if such beneficial interest is being transferred to the
          Company or any of its Subsidiaries, a certificate to the effect set
          forth in Exhibit B hereto, including the certifications in item (3)(b)
          thereof; or

               (F) if such beneficial interest is being transferred pursuant to
          an effective registration statement under the Securities Act, a
          certificate to the effect set forth in Exhibit B hereto, including the
          certifications in item (3)(c) thereof,

     the Trustee shall cause the aggregate principal amount of the applicable
     Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
     and the Company shall execute and the Trustee shall authenticate and
     deliver to the Person designated in the instructions a Definitive Note in
     the appropriate principal amount. Any Definitive Note issued in exchange
     for a beneficial interest in a Restricted Global Note pursuant to this
     Section 2.06(c) shall be registered in such name or names and in such
     authorized denomination or denominations as the holder of such beneficial
     interest shall instruct the Registrar through instructions from the
     Depositary and the Participant or Indirect Participant. The Trustee shall
     deliver such Definitive Notes to the Persons in whose names such Notes are
     so registered. Any Definitive Note issued in exchange for a beneficial
     interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
     shall bear the Private Placement Legend and shall be subject to all
     restrictions on transfer contained therein.

          (ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. As provided in Section 2.06(a), interests in Global Notes may
be exchanged for, or transferred in the form of, Definitive Notes only in
limited circumstances. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive Note
or may transfer such beneficial interest to a Person who takes delivery thereof
in the form of an Unrestricted Definitive Note only if:

               (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and the holder of such beneficial interest, in the case of an
          exchange, or the transferee, in the case of a transfer, certifies in
          the applicable Letter of Transmittal that it is not (1) a
          Broker-Dealer, (2) a Person participating in the distribution of the
          Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
          144) of the Company;

               (B) such transfer is effected pursuant to the Shelf Registration
          Statement in accordance with the Registration Rights Agreement;

               (C) such transfer is effected by a Broker-Dealer pursuant to the
          Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

               (D) the Registrar receives the following:

                                       16



                    (1) if the holder of such beneficial interest in a
               Restricted Global Note proposes to exchange such beneficial
               interest for a Definitive Note that does not bear the Private
               Placement Legend, a certificate from such holder in the form of
               Exhibit C hereto, including the certifications in item (1)(b)
               thereof; or

                    (2) if the holder of such beneficial interest in a
               Restricted Global Note proposes to transfer such beneficial
               interest to a Person who shall take delivery thereof in the form
               of a Definitive Note that does not bear the Private Placement
               Legend, a certificate from such holder in the form of Exhibit B
               hereto, including the certifications in item (4) thereof;

          and, in each such case set forth in this subparagraph (D), if the
          Registrar so requests or if the Applicable Procedures so require, an
          Opinion of Counsel in form reasonably acceptable to the Registrar to
          the effect that such exchange or transfer is in compliance with the
          Securities Act and that the restrictions on transfer contained herein
          and in the Private Placement Legend are no longer required in order to
          maintain compliance with the Securities Act.

          (iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. As provided in Section 2.06(a), interests in
Global Notes may be exchanged for, or transferred in the form of, Definitive
Notes only in limited circumstances. If, in such limited circumstances, any
holder of a beneficial interest in an Unrestricted Global Note proposes to
exchange such beneficial interest for a Definitive Note or to transfer such
beneficial interest to a Person who takes delivery thereof in the form of a
Definitive Note, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of
the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in
such name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect Participant.
The Trustee shall deliver such Definitive Notes to the Persons in whose names
such Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the
Private Placement Legend.

                                       17



          (d) Transfer and Exchange of Definitive Notes for Beneficial
     Interests.

          (i) Restricted Definitive Notes to Beneficial Interests in Restricted
     Global Notes. If any Holder of a Restricted Definitive Note proposes to
     exchange such Note for a beneficial interest in a Restricted Global Note or
     to transfer such Restricted Definitive Note to a Person who takes delivery
     thereof in the form of a beneficial interest in a Restricted Global Note,
     then, upon receipt by the Registrar of the following documentation:

               (A) if the Holder of such Restricted Definitive Note proposes to
          exchange such Note for a beneficial interest in a Restricted Global
          Note, a certificate from such Holder in the form of Exhibit C hereto,
          including the certifications in item (2)(b) thereof;

               (B) if such Restricted Definitive Note is being transferred to a
          QIB in accordance with Rule 144A, a certificate to the effect set
          forth in Exhibit B hereto, including the certifications in item (1)
          thereof;

               (C) if such Restricted Definitive Note is being transferred to a
          Non-U.S. Person in an offshore transaction in accordance with Rule 903
          or Rule 904, a certificate to the effect set forth in Exhibit B
          hereto, including the certifications in item (2) thereof;

               (D) if such Restricted Definitive Note is being transferred
          pursuant to an exemption from the registration requirements of the
          Securities Act in accordance with Rule 144, a certificate to the
          effect set forth in Exhibit B hereto, including the certifications in
          item (3)(a) thereof; or

               (E) if such Restricted Definitive Note is being transferred to
          the Company or any of its Subsidiaries, a certificate to the effect
          set forth in Exhibit B hereto, including the certifications in item
          (3)(b) thereof.

     the Trustee shall cancel the Restricted Definitive Note, increase or cause
     to be increased the aggregate principal amount of, in the case of clause
     (A) above, the appropriate Restricted Global Note, in the case of clause
     (B) above, the 144A Global Note, and in the case of clause (C) above, the
     Regulation S Global Note.

          (ii) Restricted Definitive Notes to Beneficial Interests in
     Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
     exchange such Note for a beneficial interest in an Unrestricted Global Note
     or transfer such Restricted Definitive Note to a Person who takes delivery
     thereof in the form of a beneficial interest in an Unrestricted Global Note
     only if:

               (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and the Holder, in the case of an exchange, or the transferee, in the
          case of a transfer, certifies in the applicable Letter of Transmittal
          that it is not (1) a Broker-Dealer, (2) a Person

                                       18



          participating in the distribution of the Exchange Notes or (3) a
          Person who is an affiliate (as defined in Rule 144) of the Company;

               (B) such transfer is effected pursuant to the Shelf Registration
          Statement in accordance with the Registration Rights Agreement;

               (C) such transfer is effected by a Broker-Dealer pursuant to the
          Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

               (D) the Registrar receives the following:

                    (1) if the Holder of such Definitive Notes proposes to
               exchange such Notes for a beneficial interest in the Unrestricted
               Global Note, a certificate from such Holder in the form of
               Exhibit C hereto, including the certifications in item (1)(c)
               thereof; or

                    (2) if the Holder of such Definitive Notes proposes to
               transfer such Notes to a Person who shall take delivery thereof
               in the form of a beneficial interest in the Unrestricted Global
               Note, a certificate from such Holder in the form of Exhibit B
               hereto, including the certifications in item (4) thereof;

          and, in each such case set forth in this subparagraph (D), if the
          Registrar so requests or if the Applicable Procedures so require, an
          Opinion of Counsel in form reasonably acceptable to the Registrar to
          the effect that such exchange or transfer is in compliance with the
          Securities Act and that the restrictions on transfer contained herein
          and in the Private Placement Legend are no longer required in order to
          maintain compliance with the Securities Act.

     Upon satisfaction of the conditions of any of the subparagraphs in this
     Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
     increase or cause to be increased the aggregate principal amount of the
     Unrestricted Global Note.

          (iii) Unrestricted Definitive Notes to Beneficial Interests in
     Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
     exchange such Note for a beneficial interest in an Unrestricted Global Note
     or transfer such Definitive Notes to a Person who takes delivery thereof in
     the form of a beneficial interest in an Unrestricted Global Note at any
     time. Upon receipt of a request for such an exchange or transfer, the
     Trustee shall cancel the applicable Unrestricted Definitive Note and
     increase or cause to be increased the aggregate principal amount of one of
     the Unrestricted Global Notes.

          If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.

                                       19



          (e) Transfer and Exchange of Definitive Notes for Definitive Notes.
     Upon request by a Holder of Definitive Notes and such Holder's compliance
     with the provisions of this Section 2.06(e), the Registrar shall register
     the transfer or exchange of Definitive Notes. Prior to such registration of
     transfer or exchange, the requesting Holder shall present or surrender to
     the Registrar the Definitive Notes duly endorsed or accompanied by a
     written instruction of transfer in form satisfactory to the Registrar duly
     executed by such Holder or by his or her attorney, duly authorized in
     writing. In addition, the requesting Holder shall provide any additional
     certifications, documents and information, as applicable, required pursuant
     to the following provisions of this Section 2.06(e).

          (i) Restricted Definitive Notes to Restricted Definitive Notes. Any
     Restricted Definitive Note may be transferred to and registered in the name
     of Persons who take delivery thereof in the form of a Restricted Definitive
     Note if the Registrar receives the following:

               (A) if the transfer shall be made pursuant to Rule 144A, then the
          transferor must deliver a certificate in the form of Exhibit B hereto,
          including the certifications in item (1) thereof;

               (B) if the transfer shall be made pursuant to Rule 903 or Rule
          904, then the transferor must deliver a certificate in the form of
          Exhibit B hereto, including the certifications in item (2) thereof;
          and

               (C) if the transfer shall be made pursuant to any other exemption
          from the registration requirements of the Securities Act, then the
          transferor must deliver a certificate in the form of Exhibit B hereto,
          including the certifications, certificates and Opinion of Counsel
          required by item (3) thereof, if applicable.

          (ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
     Restricted Definitive Note may be exchanged by the Holder thereof for an
     Unrestricted Definitive Note or transferred to a Person or Persons who take
     delivery thereof in the form of an Unrestricted Definitive Note if:

               (A) such exchange or transfer is effected pursuant to the
          Exchange Offer in accordance with the Registration Rights Agreement
          and the Holder, in the case of an exchange, or the transferee, in the
          case of a transfer, certifies in the applicable Letter of Transmittal
          that it is not (1) a Broker-Dealer, (2) a Person participating in the
          distribution of the Exchange Notes or (3) a Person who is an affiliate
          (as defined in Rule 144) of the Company;

               (B) any such transfer is effected pursuant to the Shelf
          Registration Statement in accordance with the Registration Rights
          Agreement;

               (C) any such transfer is effected by a Broker-Dealer pursuant to
          the Exchange Offer Registration Statement in accordance with the
          Registration Rights Agreement; or

                                       20



               (D) the Registrar receives the following:

                    (1) if the Holder of such Restricted Definitive Notes
          proposes to exchange such Notes for an Unrestricted Definitive Note, a
          certificate from such Holder in the form of Exhibit C hereto,
          including the certifications in item (1)(d) thereof; or

                    (2) if the Holder of such Restricted Definitive Notes
          proposes to transfer such Notes to a Person who shall take delivery
          thereof in the form of an Unrestricted Definitive Note, a certificate
          from such Holder in the form of Exhibit B hereto, including the
          certifications in item (4) thereof;

     and, in each such case set forth in this subparagraph (D), if the Registrar
     so requests, an Opinion of Counsel in form reasonably acceptable to the
     Company to the effect that such exchange or transfer is in compliance with
     the Securities Act and that the restrictions on transfer contained herein
     and in the Private Placement Legend are no longer required in order to
     maintain compliance with the Securities Act.

          (iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes.
     A Holder of Unrestricted Definitive Notes may transfer such Notes to a
     Person who takes delivery thereof in the form of an Unrestricted Definitive
     Note. Upon receipt of a request to register such a transfer, the Registrar
     shall register the Unrestricted Definitive Notes pursuant to the
     instructions from the Holder thereof.

          (f) Exchange Offer. Upon the occurrence of the Exchange Offer in
     accordance with the Registration Rights Agreement, the Company shall issue
     and, upon receipt of an Authentication Order in accordance with Section
     2.02, the Trustee shall authenticate (i) one or more Unrestricted Global
     Notes in an aggregate principal amount equal to the principal amount of the
     beneficial interests in the Restricted Global Notes tendered for acceptance
     by Persons that certify in the applicable Letters of Transmittal that (x)
     they are not Broker-Dealers, (y) they are not participating in a
     distribution of the Exchange Notes and (z) they are not affiliates (as
     defined in Rule 144) of the Company, and accepted for exchange in the
     Exchange Offer and (ii) Definitive Notes in an aggregate principal amount
     equal to the principal amount of the Restricted Definitive Notes accepted
     for exchange in the Exchange Offer. Concurrently with the issuance of such
     Notes, the Trustee shall cause the aggregate principal amount of the
     applicable Restricted Global Notes to be reduced accordingly, and the
     Company shall execute and the Trustee shall authenticate and deliver to the
     Persons designated by the Holders of Definitive Notes so accepted
     Definitive Notes in the appropriate principal amount.

          (g) Legends. The following legends shall appear on the face of all
     Global Notes and Definitive Notes issued under this Indenture unless
     specifically stated otherwise in the applicable provisions of this
     Indenture.

               (i) Private Placement Legend.

                                       21



               (A) Except as permitted by subparagraph (B) below, each Global
          Note and each Definitive Note (and all Notes issued in exchange
          therefor or substitution thereof) shall bear the legend in
          substantially the following form:

          "THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
          ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
          THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND
          THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
          TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
          EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY
          IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
          FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
          RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
          AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH SECURITY MAY BE RESOLD,
          PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) TO A PERSON WHOM THE SELLER
          REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
          RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
          REQUIREMENTS OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
          ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING
          THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, OUTSIDE THE
          UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
          REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES
          ACT, PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
          ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE) OR IN ACCORDANCE
          WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
          SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO
          REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN EFFECTIVE
          REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
          APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
          OTHER APPLICABLE JURISDICTION AND THE HOLDER WILL, AND EACH SUBSEQUENT
          HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED
          HEREBY OF THE RESALE RESTRICTIONS SET FORTH ABOVE. NO REPRESENTATION
          CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE
          144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY."

               (B) Notwithstanding the foregoing, any Global Note or Definitive
          Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii),
          (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and
          all Notes issued in exchange therefor or substitution thereof) shall
          not bear the Private Placement Legend.

                                       22



          (ii) Global Note Legend. Each Global Note shall bear a legend in
     substantially the following form:

                    "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN
          THE INDENTURE GOVERNING THE NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
          BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
          ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
          MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06
          OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
          NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
          GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
          TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
          TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
          OF THE COMPANY."

          (iii) Regulation S Global Note Legend. The Regulation S Global Note
     shall bear a legend in substantially the following form:

          "PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS
          DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933 (THE
          "SECURITIES ACT")) ("REGULATION S"), THIS SECURITY MAY NOT BE OFFERED,
          SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS
          DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A
          U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO A PERSON
          REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS
          DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A
          TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE
          REFERRED TO HEREIN.

          THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE
          BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING
          TO ALL THE SECURITIES."

          (h) Cancellation and/or Adjustment of Global Notes. At such time as
     all beneficial interests in a particular Global Note have been exchanged
     for Definitive Notes or a particular Global Note has been redeemed,
     repurchased or canceled in whole and not in part, each such Global Note
     shall be returned to or retained and canceled by the Trustee in accordance
     with Section 2.11 hereof. At any time prior to such cancellation, if any
     beneficial interest in a Global Note is exchanged for or transferred to a
     Person who shall take delivery thereof in the form of a beneficial interest
     in another Global Note or for Definitive Notes, the principal amount of
     Notes represented by such Global Note shall be reduced accordingly and an
     endorsement shall be made on such Global Note by the Trustee or by the
     Depositary at the direction of the Trustee to reflect such reduction; and
     if the beneficial interest is being exchanged for or transferred to a
     Person who shall take

                                       23



     delivery thereof in the form of a beneficial interest in another Global
     Note, such other Global Note shall be increased accordingly and an
     endorsement shall be made on such Global Note by the Trustee or by the
     Depositary at the direction of the Trustee to reflect such increase.

          (i) General Provisions Relating to Transfers and Exchanges.

               (i) To permit registrations of transfers and exchanges, the
          Company shall execute and the Trustee shall authenticate Global Notes
          and Definitive Notes upon the Company's order or at the Registrar's
          request.

               (ii) No service charge shall be made to a holder of a beneficial
          interest in a Global Note or to a Holder of a Definitive Note for any
          registration of transfer or exchange, but the Company may require
          payment of a sum sufficient to cover any transfer tax or similar
          governmental charge payable in connection therewith (other than any
          such transfer taxes or similar governmental charge payable upon
          exchange or transfer pursuant to Sections 2.10, 3.06, and 9.05
          hereof).

               (iii) The Registrar shall not be required to register the
          transfer of or exchange any Note selected for redemption in whole or
          in part, except the unredeemed portion of any Note being redeemed in
          part.

               (iv) All Global Notes and Definitive Notes issued upon any
          registration of transfer or exchange of Global Notes or Definitive
          Notes shall be the valid and legally binding obligations of the
          Company, evidencing the same debt, and entitled to the same benefits
          under this Indenture, as the Global Notes or Definitive Notes
          surrendered upon such registration of transfer or exchange.

               (v) The Company shall not be required (A) to issue, to register
          the transfer of or to exchange any Notes during a period beginning at
          the opening of business 15 days before the day of any selection of
          Notes for redemption under Section 3.02 hereof and ending at the close
          of business on the day of selection, (B) to register the transfer of
          or to exchange any Note so selected for redemption in whole or in
          part, except the unredeemed portion of any Note being redeemed in part
          or (C) to register the transfer of or to exchange a Note between a
          record date and the next succeeding Interest Payment Date.

               (vi) Prior to due presentment for the registration of a transfer
          of any Note, the Trustee, any Agent and the Company may deem and treat
          the Person in whose name any Note is registered as the absolute owner
          of such Note for the purpose of receiving payment of principal of and
          interest on such Notes and for all other purposes, and none of the
          Trustee, any Agent or the Company shall be affected by notice to the
          contrary.

               (vii) The Trustee shall authenticate Global Notes and Definitive
          Notes in accordance with the provisions of Section 2.02 hereof.

                                       24



               (viii) All certifications, certificates and Opinions of Counsel
          required to be submitted to the Registrar pursuant to this Section
          2.06 to effect a registration of transfer or exchange may be submitted
          by facsimile with the original to follow by first class mail.

          Section 2.07. Replacement Notes. If any mutilated Note is surrendered
to the Trustee or the Company and the Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Note, the Company shall
issue and the Trustee, upon receipt of an Authentication Order, shall
authenticate a replacement Note if the Trustee's requirements are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss that any of them may suffer if a Note is replaced. The Company may
charge for its expenses in replacing a Note.

          Every replacement Note issued pursuant to this Section 2.07 is an
additional obligation of the Company and shall be entitled to all of the
benefits of this Indenture equally and proportionately with all other Notes duly
issued hereunder.

          Section 2.08. Outstanding Notes. The Notes outstanding at any time are
all the Notes authenticated by the Trustee except for those canceled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof,
and those other Notes described in this Section as not outstanding. Except as
set forth in Section 2.09 hereof, a Note does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Note; however,
Notes held by the Company or a Subsidiary of the Company shall not be deemed to
be outstanding for purposes of Section 3.07 hereof.

          In addition to the Notes referred to in the preceding paragraph, the
following Notes shall not be deemed "outstanding": (a) Notes for whose payment
or redemption money in the necessary amount has been theretofore deposited with
the Trustee or any Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes; provided that, if such Notes are to
be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made; (b)
Notes as to which defeasance has been effected pursuant to Section 8.02 hereof;
and (c) Notes which have been paid in full in accordance with their terms.

          If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.

          If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

          If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on

                                       25



that date, then on and after that date such Notes shall be deemed to be no
longer outstanding and shall cease to accrue interest.

          Section 2.09. Treasury Notes. In determining whether the Holders of
the required principal amount of Notes have concurred in any direction, waiver
or consent, Notes owned by the Company, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes that a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded.

          Section 2.10. Temporary Notes. Until certificates representing Notes
are ready for delivery, the Company may prepare and the Trustee, upon receipt of
an Authentication Order, shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of certificated Notes but may have variations
that the Company considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate Definitive Notes in exchange
for temporary Notes.

          Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.

          Section 2.11. Cancellation. The Company at any time may deliver Notes
to the Trustee for cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Notes surrendered to them for registration of transfer, exchange
or payment. The Trustee and no one else shall cancel all Notes surrendered for
registration of transfer, exchange, payment, replacement or cancellation and
shall dispose of such canceled Notes in its customary manner. Subject to Section
2.07, the Company may not issue new Notes to replace Notes that it has paid or
that have been delivered to the Trustee for cancellation.

          Section 2.12. Defaulted Interest. If the Company defaults in a payment
of interest on the Notes, it shall pay the defaulted interest in any lawful
manner to the Persons who are Holders on a subsequent special record date, in
each case at the rate provided in the Notes and in Section 4.01 hereof. The
Company shall notify the Trustee in writing of the amount of defaulted interest
proposed to be paid on each Note and the date of the proposed payment. The
Company shall fix or cause to be fixed each such special record date and payment
date, provided that no such special record date shall be less than 10 days prior
to the related payment date for such defaulted interest. At least 15 days before
the special record date, the Company (or, upon the written request of the
Company, the Trustee in the name and at the expense of the Company) shall mail
or cause to be mailed to Holders a notice that states the special record date,
the related payment date and the amount of such interest to be paid.

          Section 2.13. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Notes or as contained in
any notice of redemption and that reliance may be placed only on the

                                       26



other identification numbers printed on the Notes, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company shall
promptly notify the Trustee of any change in the "CUSIP" numbers.

                                    ARTICLE 3

                                   REDEMPTION

          Section 3.01. Notices to Trustee. If the Company elects to redeem
Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it
shall furnish to the Trustee, at least 30 days but not more than 60 days before
a redemption date (unless a shorter notice period shall be satisfactory to the
Trustee in its reasonable discretion), an Officers' Certificate setting forth
(i) the clause of this Indenture pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the principal amount of Notes to be redeemed and
(iv) the redemption price.

          Section 3.02. Selection of Notes to Be Redeemed. If less than all of
the Notes are to be redeemed at any time, selection of Notes for redemption
shall be made by the Trustee in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed,
or, if the Notes are not so listed or there are not any such requirements, by
lot. In the event of partial redemption by lot, the particular Notes to be
redeemed shall be selected, unless otherwise provided herein, not less than 30
nor more than 60 days prior to the redemption date by the Trustee (unless a
shorter time period shall be satisfactory to the Trustee) from the outstanding
Notes not previously called for redemption.

          The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.

          Section 3.03. Notice of Redemption. At least 30 days but not more than
60 days before a redemption date, the Company shall mail or cause to be mailed,
by first class mail, a notice of redemption to each Holder whose Notes are to be
redeemed at its registered address.

          The notice shall identify the Notes to be redeemed and shall state:

          (a)  the redemption date;

          (b)  the redemption price;

          (c) if any Note is being redeemed in part, the portion of the
     principal amount of such Note to be redeemed and that, after the redemption
     date upon surrender of such Note, a new Note or Notes in principal amount
     equal to the unredeemed portion shall be issued upon cancellation of the
     original Note;

                                       27



          (d) the name and address of the Paying Agent;

          (e) that Notes called for redemption must be surrendered to the Paying
     Agent to collect the redemption price and become due on the date fixed for
     redemption;

          (f) that, unless the Company defaults in making such redemption
     payment, interest on Notes called for redemption ceases to accrue on and
     after the redemption date;

          (g) the paragraph of the Notes and/or Section of this Indenture
     pursuant to which the Notes called for redemption are being redeemed; and

          (h) that no representation is made as to the correctness or accuracy
     of the CUSIP number, if any, listed in such notice or printed on the Notes.

          At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense. The notice, if mailed in
the manner provided herein shall be presumed to have been given, whether or not
the Holder receives such notice.

          Section 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed in accordance with Section 3.04 hereof, Notes called for
redemption become irrevocably due and payable on the redemption date at the
redemption price. A notice of redemption may not be conditional.

          Section 3.05. Deposit of Redemption Price. One Business Day prior to
the redemption date, the Company shall deposit with the Trustee or with the
Paying Agent (or, if Company is acting as its own Paying Agent, segregate and
hold in trust for the benefit of the applicable Holders) money sufficient to pay
the redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.

          If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid at the rate provided in the Notes and in
Section 4.01 hereof.

          Section 3.06. Notes Redeemed in Part. Upon surrender of a Note that is
redeemed in part, the Company shall issue and, upon the Company's written
request, the Trustee shall authenticate for the Holder at the expense of the
Company a new Note equal in principal amount to the unredeemed portion of the
Note surrendered.

                                       28



          Section 3.07. Optional Redemption. (a) Subject to clause (b), the
Company may redeem all or a part of the Notes from time to time, upon not less
than 30 nor more than 60 days' notice, at a redemption price equal to the
greater of (1) 100% of the aggregate principal amount of the Notes being
redeemed or (2) the sum of the present values of the remaining scheduled
payments of principal of and interest on the Notes to be redeemed (not including
any portion of such payments of interest accrued to the redemption date)
discounted to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate plus 30 basis
points, as calculated by an Independent Investment Banker, plus, in each case,
accrued and unpaid interest on the Notes to be redeemed to the redemption date.

          (b) Any redemption pursuant to this Section 3.07 shall be made
     pursuant to the provisions of Section 3.01 through 3.06 hereof.

          (c) The Notes do not have the benefit of any sinking fund obligation.

                                    ARTICLE 4

                                    COVENANTS

          Section 4.01. Payment of Notes. The Company shall pay or cause to be
paid the principal of, premium, if any, and interest on the Notes on the dates
and in the manner provided in the Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent, if a
Person other than the Company or a Subsidiary thereof, holds as of 12:00 p.m.
(noon) Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due, and if the Company is the
Paying Agent, it will on or before each due date of principal, premium, if any,
or interest, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal, premium, if any, or interest so
becoming due until such sums shall be paid to such Persons. The Company shall
pay Additional Interest, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.

          Section 4.02. Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, the City of New York, or in Philadelphia,
Pennsylvania, or in Charlotte, North Carolina, an office or agency (which may be
an office of the Trustee or an Affiliate of the Trustee, Registrar or
co-registrar) where Notes may be surrendered for payment or for registration of
transfer or for exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.

          The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or

                                       29



rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, the City of New York, or in
Philadelphia, Pennsylvania, or in Charlotte, North Carolina for such purposes.
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.

          The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.

          Section 4.03. Compliance Certificate. (a) The Company shall deliver to
the Trustee, within 120 days after the end of each fiscal year, an Officers'
Certificate and stating whether or not to the best knowledge of the signors
thereof, the Company is in default in the performance and observance of any of
the terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and, if the Company
shall be in default, specifying all such defaults and the nature and status
thereof of which they may have knowledge.

          (b) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, as soon as practicable, upon any Officer becoming aware
of any Default or Event of Default or any event which after notice or lapse of
time would become a Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default.

          Section 4.04. Limitation on Liens of Stock of Designated Subsidiaries.
The Company will not, and will not permit any Designated Subsidiary to, create,
assume, incur or permit to exist any Indebtedness secured by any Lien on the
present or future Capital Stock of any Designated Subsidiary unless the Notes,
and at the election of the Company, any other Indebtedness of the Company that
is not subordinate to the Notes and with respect to which the governing
instruments require, or pursuant to which the Company or Designated Subsidiary
is otherwise obligated, to provide such security, are secured equally and
ratably with such Indebtedness for at least the time period such Indebtedness is
so secured.

          Section 4.05. Limitation on Sales of Capital Stock of Designated
Subsidiaries. The Company will not, and will not permit any Designated
Subsidiary to, sell, transfer or dispose of Capital Stock of a Designated
Subsidiary, except to the Company or a Subsidiary that agrees to hold the
transferred Capital Stock subject to the terms of this Section 4.05, unless (a)
the Company and/or applicable Subsidiary sells, transfers or disposes of the
entire Capital Stock of the Designated Subsidiary at the same time for cash or
property for at least fair market value of such Capital Stock (as determined by
the Board of Directors of the Company) or (b) the Company or a Subsidiary sells,
transfers or dispose of any Capital Stock of a Designated Subsidiary for at
least fair market value (as determined by the Board of Directors of the Company)
and, after giving effect thereto, the Company and/or its Subsidiaries would own
more than 80% of the issued and outstanding Voting Stock of such Designated
Subsidiary.

          Section 4.06. Existence. Subject to Article 5 hereof, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its existence, rights (charter and statutory) and
franchises; provided, however, that the Company shall not be required to
preserve any such right or franchise, if the Board of Directors shall

                                       30



determine, that the preservation thereof is no longer desirable in the conduct
of the business of the Company, taken as a whole, and that the loss thereof is
not disadvantageous in any material respect to the Holders of the Notes.

                                    ARTICLE 5

                                   SUCCESSORS

          Section 5.01. Merger, Consolidation, or Sale of Assets. The Company
shall not consolidate with or merge into any other Person or sell, convey,
transfer or otherwise dispose of its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any other Person to
consolidate with or merge into the Company, unless:

          (a) the Company is the surviving Person, or the Person formed by such
     consolidation or into which the Company is merged or the Person which
     acquires by sale, conveyance or transfer, or which leases, the properties
     and assets of the Company substantially as an entirety (the "successor
     Person") shall be a corporation, partnership, trust or limited liability
     company, organized and existing under the laws of the United States of
     America, any State thereof or the District of Columbia and shall expressly
     assume, by an indenture supplemental hereto, executed and delivered to the
     Trustee, in form satisfactory to the Trustee, the due and punctual payment
     of the principal of (and premium, if any) and interest (including
     Additional Interest) on all the Notes and the performance or observance of
     every covenant of this Indenture to be performed or observed by the
     Company;

          (b) immediately after giving effect to such transaction, no Event of
     Default, and no event which, after notice or lapse of time, or both, would
     become an Event of Default, shall have happened and be continuing;

          (c) if, as a result of any such consolidation or merger or such sale,
     conveyance, transfer or lease, properties or assets of the Company would
     become subject to any Lien which would not otherwise be permitted by this
     Indenture without making effective provision whereby the Notes and any
     other Indebtedness of the Company then entitled thereto shall be equally
     and ratably secured with any and all Indebtedness and obligations secured
     thereby, the Company or such successor Person, as the case may be, shall
     take such steps as shall be necessary effectively to secure all Notes
     equally and ratably with (or prior to) all Indebtedness secured by such
     Lien; and

          (d) the Company has delivered to the Trustee an Officers' Certificate
     and an Opinion of Counsel each stating that such consolidation, merger,
     sale, conveyance, transfer or lease and, if a supplemental indenture is
     required in connection with such transaction, such supplemental indenture
     comply with this Article and that all conditions precedent herein provided
     for relating to such transaction have been complied with.

          Section 5.02. Successor Corporation Substituted. Upon any
consolidation of the Company with or merger of the Company into any other
Person, or any conveyance, transfer or other disposition of the properties and
assets of the Company substantially as an entirety in

                                       31



accordance with Section 5.01, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer or
other disposition is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture, the Notes,
and the Registration Rights Agreement with the same effect as if such successor
Person had been named as the Company herein, and thereafter the predecessor
Person shall be relieved of all obligations and covenants under this Indenture,
the Notes and the Registration Rights Agreement.

                                    ARTICLE 6

                              DEFAULTS AND REMEDIES

          Section 6.01. Events of Default. Each of the following is an "Event of
Default":

          (a) default in the payment of any interest, or any Additional
     Interest, upon the Notes when the same become due and payable, and
     continuance of such default for a period of 30 days; or

          (b) default in the payment of the principal of (and premium, if any,
     on) the Notes when the same becomes due and payable; or

          (c) default by the Company or any Subsidiary in the performance, or
     breach, of any covenant or warranty of the Company in this Indenture (other
     than a covenant or warranty a default in whose performance or whose breach
     is elsewhere in this Section specifically dealt with), and continuance of
     such default or breach for a period of 60 days after there has been given,
     by registered or certified mail, to the Company by the Trustee or to the
     Company and the Trustee by the Holders of at least 25% in principal amount
     of the outstanding Notes, a written notice specifying such default or
     breach and requiring it to be remedied and stating that such notice is a
     "Notice of Default" hereunder; or

          (d) default (i) in any scheduled payment of principal of any
     Indebtedness of the Company or any Designated Subsidiary (other than the
     Notes and other than non-recourse Indebtedness), aggregating more than $20
     million in principal amount, when due and payable after giving effect to
     any applicable grace period or (ii) in the performance of any other term or
     provision of any Indebtedness of the Company or any Designated Subsidiary
     of the Company (other than the Notes and other than non-recourse
     Indebtedness) in excess of $20 million principal amount that results in
     such Indebtedness becoming or being declared due and payable prior to the
     date on which it would otherwise become due and payable, and such
     acceleration shall not have been rescinded or annulled, or such
     Indebtedness shall not have been discharged, within a period of 15 days
     after there has been given, by registered or certified mail, to the Company
     by the Trustee or to the Company and the Trustee by the Holders of at least
     25% in principal amount of the outstanding Notes, a written notice
     specifying such default or defaults and stating that such notice is a
     "Notice of Default" hereunder; or

          (e) any case or proceeding shall be commenced against the Company
     seeking to have an order for relief entered against it or to adjudicate it
     as bankrupt or insolvent or

                                       32



     seeking reorganization, liquidation, dissolution, winding-up, arrangement,
     composition of its debts or other relief under any applicable bankruptcy,
     insolvency, reorganization or other similar law of any jurisdiction,
     domestic or foreign, now or hereafter existing, or a receiver, custodian,
     liquidator, assignee, trustee, sequestrator or other similar official of
     the Company or of any substantial part of its property shall be appointed;
     and such case or proceeding (A) results in the entry of an order for relief
     or similar order against the Company or (B) shall continue undismissed or
     unstayed and in effect for a period of 60 consecutive days; or

          (f) the commencement by the Company of a voluntary case or proceeding
     under any applicable bankruptcy, insolvency, reorganization or other
     similar law of any jurisdiction, domestic or foreign, now or hereafter
     existing, or the consent by the Company to, or the application by the
     Company for, the entry of an order for relief in respect of the Company in
     an involuntary case or proceeding under any such law or the appointment of
     a receiver, liquidator, assignee, custodian, trustee, sequestrator or other
     similar official of the Company or of any substantial part of its property,
     or the making by it of an assignment for the benefit of its creditors, or
     the admission by it in writing of its inability to pay its debts generally
     as they become due, or the taking of corporate action by the Company in
     furtherance of any such action.

          In the event of a declaration of acceleration of the Notes because an
Event of Default has occurred and is continuing as a result of the acceleration
of any Indebtedness described in clause (d) of the preceding paragraph, the
declaration of acceleration of the Notes shall be automatically annulled if the
holders of any Indebtedness described in clause (d) of the preceding paragraph
have rescinded the declaration of acceleration in respect of such Indebtedness
within 30 days of the date of such declaration and if (i) the annulment of the
acceleration of Notes would not conflict with any judgment or decree of an court
of competent jurisdiction and (ii) all existing Events of Default, except
nonpayment of principal or interest on the Notes that became due solely because
of the acceleration of the Notes have been cured or waived.

          Section 6.02. Acceleration. In the case of an Event of Default arising
from clause (e) or (f) of Section 6.01, with respect to the Company or a
Subsidiary, all outstanding Notes will become due and payable immediately
without further action or notice. If any other Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the principal, premium, if any,
accrued interest and Additional Interest, if any, of the Notes to be due and
payable by notice in writing to the Company and (if from the Holders) the
Trustee specifying the respective Event of Default and it is a "notice of
acceleration," and upon receipt of such notice the same shall become due and
payable, unless all Events of Default specified in the notice of acceleration
shall have been cured within five Business Days after such notice of
acceleration.

          Section 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal, premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.

                                       33



          The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

          Section 6.04. Waiver of Past Defaults. Holders of not less than a
majority in aggregate principal amount of the then outstanding Notes by notice
to the Trustee may on behalf of the Holders of all of the Notes waive an
existing Default or Event of Default and its consequences hereunder, except a
continuing Default or Event of Default in the payment of the principal of,
premium and Additional Interest, if any, or interest on, the Notes (including in
connection with a redemption) (provided, however, that the Holders of a majority
in aggregate principal amount of the then outstanding Notes may rescind an
acceleration and its consequences, including any related payment default that
resulted from such acceleration). The Company shall deliver to the Trustee an
Officers' Certificate stating that the requisite percentage of Holders has
consented to such waiver and attaching copies of such consents. In case of any
such waiver, the Company, the Trustee and the Holders shall be restored to their
former positions and rights hereunder and under the Notes, respectively. This
Section 6.04 shall be in lieu of (S) 316(a)(1)(B) of the TIA and such (S)
316(a)(1)(B) of the TIA is hereby expressly excluded from this Indenture and the
Notes, as permitted by the TIA. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.

          Section 6.05. Control by Majority. Subject to Section 2.09, holders of
a majority in principal amount of the then outstanding Notes may direct in
writing the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture that the Trustee determines may be unduly prejudicial
to the rights of Holders of Notes not taking part in such direction, and the
Trustee shall have the right to decline to follow any such direction, if the
Trustee, being advised by counsel, determines that such action so directed may
not be lawfully taken or if the Trustee, in good faith shall by a Responsible
Officer, determine that the proceedings so directed may involve the Trustee in
personal liability; provided that the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction. In the
event the Trustee takes any action or follows any direction pursuant to this
Indenture, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion against any loss or expense caused by taking such action
or following such direction. This Section 6.05 shall be in lieu of (S)
316(a)(1)(A) of the TIA, and such (S) 316(a)(1)(A) of the TIA is hereby
expressly excluded from this Indenture and the Notes, as permitted by the TIA.

          Section 6.06. Limitation on Suits. A Holder of a Note may pursue a
remedy with respect to this Indenture or the Notes only if:

          (a) the Holder of a Note gives to the Trustee written notice of a
     continuing Event of Default;

                                       34



          (b) the Holders of at least 25% in principal amount of the then
     outstanding Notes make a written request to the Trustee to pursue the
     remedy;

          (c) such Holder of a Note or Holders of Notes offer and, if requested,
     provide to the Trustee indemnity satisfactory to the Trustee against any
     loss, liability or expense;

          (d) the Trustee does not comply with the request within 60 days after
     receipt of the request and the offer and, if requested, the provision of
     indemnity; and

          (e) during such 60-day period the Holders of a majority in principal
     amount of the then outstanding Notes do not give the Trustee a direction
     inconsistent with the request.

          A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.

          Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
of a Note to receive payment of principal, premium and Additional Interest, if
any, and interest on the Note, on or after the respective due dates expressed in
the Note (including in connection with an offer to purchase), or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.

          Section 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is
authorized to recover judgment in its own name and as trustee of an express
trust against the Company for the whole amount of principal of, premium, if any,
interest and Additional Interest remaining unpaid on the Notes and interest on
overdue principal and, to the extent lawful, interest and such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.

          Section 6.09. Trustee May File Proofs of Claim. The Trustee is
authorized to file such proofs of claim and other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Company (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other securities or property
payable or deliverable on any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

                                       35



          Section 6.10. Priorities. If the Trustee collects any money pursuant
to this Article, it shall pay out the money in the following order:

          First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;

          Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Additional Interest, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Additional Interest, if any, and
interest, respectively; and

          Third: to the Company or to such party as a court of competent
jurisdiction shall direct.

          The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.

          Section 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as a Trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to
pay the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.

                                    ARTICLE 7

                                     TRUSTEE

          Section 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in its exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.

          (b)  Except during the continuance of an Event of Default:

          (i)  the duties of the Trustee shall be determined solely by the
               express provisions of this Indenture and the Trustee need perform
               only those duties that are specifically set forth in this
               Indenture and no others, and no implied covenants or obligations
               shall be read into this Indenture against the Trustee; and

          (ii) in the absence of bad faith on its part, the Trustee may
               conclusively rely, as to the truth of the statements and the
               correctness of the opinions expressed therein, upon certificates
               or opinions furnished to the Trustee

                                       36



               and conforming to the requirements of this Indenture. However, in
               the case of certificates or opinions specifically required by any
               provision hereof to be furnished to it, the Trustee shall examine
               the certificates and opinions to determine whether or not they
               conform to the requirements of this Indenture (but need not
               confirm or investigate the accuracy of mathematical calculations
               or other facts purported to be stated therein).

          (c) The Trustee may not be relieved from liabilities for its own
     negligent action, its own negligent failure to act, or its own willful
     misconduct, except that:

          (i)  this paragraph does not limit the effect of paragraph (b) of this
               Section;

          (ii) the Trustee shall not be liable for any error of judgment made in
               good faith by a Responsible Officer, unless it is proved that the
               Trustee was negligent in ascertaining the pertinent facts; and

          (iii) the Trustee shall not be liable with respect to any action it
               takes or omits to take in good faith in accordance with a
               direction received by it pursuant to Section 6.05 hereof.

          (d) Whether or not therein expressly so provided, every provision of
     this Indenture that in any way relates to the Trustee is subject to
     paragraphs (a), (b), and (c) of this Section.

          (e) No provision of this Indenture shall require the Trustee to expend
     or risk its own funds or incur any liability. The Trustee shall be under no
     obligation to exercise any of its rights and powers under this Indenture at
     the request of any Holders, unless such Holder shall have offered to the
     Trustee security and indemnity satisfactory to it against any loss,
     liability or expense.

          (f) The Trustee shall not be liable for interest on any money received
     by it except as the Trustee may agree in writing with the Company. Money or
     assets held in trust by the Trustee need not be segregated from other funds
     or assets except to the extent required by law.

          Section 7.02. Rights of Trustee. (a) The Trustee may conclusively rely
upon any document (whether in its original or facsimile form) believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.

          (b) Before the Trustee acts or refrains from acting, it may consult
     with counsel and may require (other than in connection with the Exchange
     Offer contemplated by Section 2.06(f) unless required by the TIA) an
     Officers' Certificate or an Opinion of Counsel or both. The Trustee shall
     not be liable for any action it takes or omits to take in good faith in
     reliance on such Officers' Certificate or Opinion of Counsel. The Trustee
     may consult with counsel and the advice of such counsel or any Opinion of
     Counsel shall be full and complete authorization and protection from
     liability in respect of any action taken, suffered or omitted by it
     hereunder in good faith and in reliance thereon.

                                       37



          (c) The Trustee may act through its attorneys and agents and shall not
     be responsible for the misconduct or negligence of any agent or attorney
     appointed with due care.

          (d) Subject to Section 7.01(c) above, the Trustee shall not be liable
     for any action it takes or omits to take in good faith that it believes to
     be authorized or within the rights or powers conferred upon it by this
     Indenture.

          (e) Unless otherwise specifically provided in this Indenture, any
     demand, request, direction or notice from the Company shall be sufficient
     if signed by an Officer of the Company.

          (f) The Trustee shall be under no obligation to exercise any of the
     rights or powers vested in it by this Indenture at the request or direction
     of any of the Holders unless such Holders shall have offered to the Trustee
     reasonable security or indemnity satisfactory to it against the costs,
     expenses and liabilities that might be incurred by it in compliance with
     such request or direction.

          (g) The Trustee shall not be deemed to have knowledge of any Default
     or Event of Default except (i) any Event of Default occurring pursuant to
     Section 6.01(a) or 6.01(b) (so long as the Trustee is also the Paying
     Agent) or (ii) any Event of Default of which the Trustee shall have
     received written notification or otherwise obtained actual knowledge.

          (h) The rights, privileges, protections, immunities, and benefits
     given to the Trustee, including, without limitation, its right to be
     indemnified, are extended to, and shall be enforceable by, the Trustee in
     each of its capacities hereunder, and each agent, custodian and other
     person employed to act hereunder.

          Section 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Company or any Affiliate of the Company with the
same rights it would have if it were not Trustee. However, in the event that the
Trustee acquires any conflicting interest it must eliminate such conflict within
90 days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties.

          Section 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Company's use
of the proceeds from the Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying Agent
other than the Trustee, and it shall not be responsible for any statement or
recital herein or any statement in the Notes or any other document in connection
with the sale of the Notes or pursuant to this Indenture other than its
certificate of authentication.

          Section 7.05. Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to the Holders of the Notes a notice of the Default or Event of Default
within 90 days after it occurs, provided that in the case

                                       38



of any default of the character specified in Section 6.01(c) hereof, no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, or interest on any Note, the Trustee may withhold
the notice if and so long as the Trustee in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.

          Section 7.06. Reports by Trustee to the Holders of the Notes. Within
60 days after each August 15 beginning with the August 15 following the date of
this Indenture, and for so long as Notes remain outstanding, the Trustee shall
mail to the Holders of the Notes a brief report dated as of such reporting date
that complies with TIA (S) 313(a) (but if no event described in TIA (S) 313(a)
has occurred within the twelve months preceding the reporting date, no report
need be transmitted). The Trustee also shall comply with TIA (S) 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA (S) 313(c).

          A copy of each report at the time of its mailing to the Holders of the
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any
securities exchange or of any delisting thereof.

          Section 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services except any such disbursement, advance or expense
as may be attributable to its negligence, bad faith or willful misconduct. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel and any taxes or other expenses incurred by
a trust created pursuant to Section 8.04 hereof.

          The Company shall indemnify the Trustee and its agents against any and
all losses, liabilities, claims, damages or expenses (including compensation,
fees, disbursements and expenses of Trustee's agents and counsel) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against the Company (including this Section 7.07) and defending itself
against any claim (whether asserted by the Company or any Holder or any other
person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability or
expense is caused by its own negligence, bad faith or willful misconduct. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel,
subject to the limitations set forth above. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.

                                       39



          The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture and resignation or removal of
the Trustee.

          When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(e) or (f) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.

          The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.

          Section 7.08. Replacement of Trustee. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section
7.08.

          The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of a majority
in principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:

          (a) the Trustee fails to comply with Section 7.10 hereof;

          (b) the Trustee is adjudged a bankrupt or an insolvent or an order for
     relief is entered with respect to the Trustee under any Bankruptcy Law;

          (c) a Custodian or public officer takes charge of the Trustee or its
     property;

          (d) the Trustee becomes incapable of acting; or

          (e) the Trustee fails to comply with Section 7.03 at the written
     request therefor from the Company.

          If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.

          If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition at the expense of the Company any court of competent
jurisdiction for the appointment of a successor Trustee.

          A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held

                                       40



by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.

          Section 7.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.

          Section 7.10. Eligibility; Disqualification. There shall at all times
be a Trustee hereunder that is a corporation organized and doing business under
the laws of the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $50 million as set forth in its most
recent published annual report of condition.

          This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S)(S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b); provided, however, that there shall be excluded from the operation
of TIA (S) 310(b)(1) any indenture or indentures under which other securities,
or certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.

          Section 7.11. Preferential Collection of Claims Against Company. The
Trustee is subject to TIA (S) 311(a), excluding any creditor relationship listed
in TIA (S) 311(b). A Trustee who has resigned or been removed shall be subject
to TIA (S) 311(a) to the extent indicated therein.

                                    ARTICLE 8

                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE

          Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance. The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or Section 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.

          Section 8.02. Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.02 hereof of the option applicable to this Section
8.02, the Company shall, subject to the satisfaction of the conditions set forth
in Section 8.04 hereof, be deemed to have been discharged from its obligations
with respect to all outstanding Notes (hereinafter, "Legal Defeasance"). For
this purpose, Legal Defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding
Notes, and to have satisfied all its obligations under such Notes and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following provisions which shall survive until otherwise terminated or

                                       41



discharged hereunder: (a) the rights of Holders of such Notes to receive solely
from the trust fund described in Section 8.04 hereof, and as more fully set
forth in such Section, payments in respect of the principal of, premium, if any,
interest and Additional Interest, if any, on such Notes when such payments are
due, (b) the Company's obligations with respect to such Notes under Article 2
(excluding Section 2.12) and Section 4.02 hereof, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03
hereof.

          Section 8.03. Covenant Defeasance. Upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03, the Company
shall, subject to the satisfaction of the conditions set forth in Section 8.04
hereof, be released from its obligations under the covenants set forth in
Sections 4.04, 4.05, 4.06 and 5.01 hereof with respect to the outstanding Notes
on and after the date the conditions set forth in Section 8.04 are satisfied
(hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed
not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.03, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, Sections 6.01(c) and 6.01(d) hereof
shall not constitute Events of Default.

          Section 8.04. Conditions to Legal Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of either Section 8.02
or 8.03 hereof to the outstanding Notes:

          In order to exercise either Legal Defeasance or Covenant Defeasance:

          (a) the Company must irrevocably deposit with the Trustee, in trust,
     for the benefit of the Holders of the Notes, cash in U.S. dollars,
     Government Securities, or a combination thereof, in such amounts as shall
     be sufficient, in the opinion of a nationally recognized firm of
     independent public accountants, to pay the principal of, premium and
     Additional Interest, if any, and interest on the outstanding Notes on the
     stated maturity or on the applicable redemption date, as the case may be,
     and the Company must specify whether the Notes are being defeased to
     maturity or to a particular redemption date;

          (b) in the case of an election under Section 8.02 hereof, the Company
     shall have delivered to the Trustee an Opinion of Counsel reasonably
     acceptable to the Trustee

                                       42



     confirming that (A) the Company has received from, or there has been
     published by, the Internal Revenue Service a ruling or (B) since the date
     of this Indenture, there has been a change in the applicable federal income
     tax law, in either case to the effect that, and based thereon such Opinion
     of Counsel shall confirm that, the Holders of the outstanding Notes shall
     not recognize income, gain or loss for federal income tax purposes as a
     result of such Legal Defeasance and shall be subject to federal income tax
     on the same amounts, in the same manner and at the same times as would have
     been the case if such Legal Defeasance had not occurred;

          (c) in the case of an election under Section 8.03 hereof, the Company
     shall have delivered to the Trustee an Opinion of Counsel reasonably
     acceptable to the Trustee confirming that the Holders of the outstanding
     Notes shall not recognize income, gain or loss for federal income tax
     purposes as a result of such Covenant Defeasance and shall be subject to
     federal income tax on the same amounts, in the same manner and at the same
     times as would have been the case if such Covenant Defeasance had not
     occurred;

          (d) no Default or Event of Default shall have occurred and be
     continuing either (i) on the date of such deposit or (ii) insofar as an
     Event of Default set forth in Section 6.01(e) or Section 6.01(f) shall have
     occurred and be continuing, at any time in the period ending on the 91st
     day after the date of deposit (other than a Default or Event of Default
     resulting from the borrowing of funds to be applied to such deposit);

          (e) such Legal Defeasance or Covenant Defeasance shall not result in a
     breach or violation of, or constitute a default under any material
     agreement or instrument (other than this Indenture) to which the Company or
     any of its Subsidiaries is a party or by which the Company or any of its
     Subsidiaries is bound;

          (f) the Company shall have delivered to the Trustee an Officers'
     Certificate stating that the deposit was not made by the Company with the
     intent of preferring the Holders of Notes over any other creditors of the
     Company with the intent of defeating, hindering, delaying or defrauding any
     other creditors of the Company or others; and

          (g) the Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that all conditions
     precedent, including the conditions set forth in this Section 8.04,
     provided for or relating to the Legal Defeasance or the Covenant Defeasance
     have been complied with.

          Section 8.05. Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions. Subject to Section 8.06 hereof, all cash
and Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.

                                       43



          The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or Government Securities
deposited pursuant to Section 8.04(a) hereof or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the outstanding Notes.

          Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any cash or Government Securities held by it as provided in
Section 8.05 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification or
attestation thereof delivered to the Trustee (which may be the opinion delivered
under Section 8.05(a) hereof), are in excess of the amount thereof that would
then be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.

          Section 8.06. Repayment to Company. Any money deposited with the
Trustee or any Paying Agent, or then held by the Company, in trust for the
payment of the principal of, premium, if any, interest, or Additional Interest,
if any, on any Note and remaining unclaimed for two years after such principal,
and premium, if any, interest, or Additional Interest, if any, has become due
and payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a secured creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
shall be repaid to the Company.

          Section 8.07. Reinstatement. If the Trustee or Paying Agent is unable
to apply any United States dollars or Government Securities in accordance with
Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.05 hereof; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.

                                       44



                                    ARTICLE 9

                        AMENDMENT, SUPPLEMENT AND WAIVER

          Section 9.01. Without Consent of Holders of Notes. Notwithstanding
Section 9.02 of this Indenture, without the consent of any Holder of Notes, the
Company and the Trustee may amend or supplement this Indenture or the Notes:

          (a) to cure any ambiguity, defect, error or inconsistency;

          (b) to provide for uncertificated Notes in addition to or in place of
     Definitive Notes;

          (c) to provide for the assumption of the Company's obligations to
     Holders of Notes in the case of a merger or consolidation or sale of all or
     substantially all of the assets of the Company;

          (d) to make any change that would provide any additional rights or
     benefits to the Holders or that does not adversely affect the legal rights
     under this Indenture of any such Holder;

          (e) to comply with requirements of the SEC in order to effect or
     maintain the qualification of this Indenture under the TIA;

          (f) to provide for the issuance of Additional Notes in accordance with
     the limitations set forth in this Indenture as of the date hereof; or

          (g) to allow any Subsidiary to guarantee the Notes.

          Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and, if and to the extent requested by the Trustee, upon receipt by
the Trustee of the documents described in Section 7.02(b) hereof stating that
such amended or supplemental Indenture complies with this Section 9.01, the
Trustee shall join with the Company in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.

          Section 9.02. With Consent of Holders of Notes. Except as provided
below in this Section 9.02 and as provided in Section 9.01 above, the Company
and the Trustee may amend or supplement this Indenture and the Notes with the
consent of the Holders of at least a majority in principal amount of the Notes
(including Additional Notes, if any) then outstanding voting as a single class
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, the Notes), and, subject to Sections
6.04 and 6.07 hereof, any existing Default or Event of Default or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
(including Additional Notes, if any) voting as a single

                                       45



class (including, without limitation, consents obtained in connection with a
tender offer or exchange offer for the Notes). Section 2.08 hereof shall
determine which Notes are considered to be "outstanding" for purposes of this
Section 9.02.

          Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and, if and to the
extent requested by the Trustee, upon receipt by the Trustee of the documents
described in Section 7.02(b) hereof stating that any such amended or
supplemental Indenture complies with this Section 9.02, the Trustee shall join
with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.

          It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.

          After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver.

          Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in
aggregate principal amount of the Notes (including Additional Notes, if any)
then outstanding voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):

          (a) reduce the principal amount of Notes whose Holders must consent to
     an amendment, supplement or waiver (including a waiver of any past
     Default);

          (b) reduce the principal of or change the fixed maturity of any Note
     or reduce the redemption price of any Note;

          (c) reduce the rate of or change the time for payment of interest,
     including Additional Interest, on any Note;

          (d) waive a Default or Event of Default in the payment of principal of
     or premium, if any, or interest or Additional Interest, if any, on the
     Notes (except a rescission of acceleration of the Notes (including
     Additional Notes, if any) by the Holders of at least a majority in
     aggregate principal amount of the Notes and a waiver of the payment default
     that resulted from such acceleration);

          (e) make any Note payable in money other than U.S. dollars;

                                       46



          (f) change the place of payment where payments of principal, interest
     (including Additional Interest) or premium, if any, on or the redemption
     price for any Notes are payable, or impair the right of any Holder to
     institute suit for the enforcement of any such payment; or

          (g) make any change in the foregoing amendment and waiver provisions.

          Section 9.03. Compliance with Trust Indenture Act. Every amendment or
supplement to this Indenture or the Notes shall be set forth in an amended or
supplemental Indenture that complies with the TIA as then in effect.

          Section 9.04. Revocation and Effect of Consents. Until an amendment,
supplement or waiver becomes effective, a consent to it by a Holder of a Note is
a continuing consent by such Holder of a Note and every subsequent Holder of a
Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. However,
any such Holder of a Note or subsequent Holder of a Note may revoke the consent
as to its Note if the Trustee receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.

          Section 9.05. Notation on or Exchange of Notes. The Trustee may place
an appropriate notation about an amendment, supplement or waiver on any Note
thereafter authenticated. The Company in exchange for all Notes may issue and
the Trustee shall, upon receipt of an Authentication Order, authenticate new
Notes that reflect the amendment, supplement or waiver.

          Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.

          Section 9.06. Trustee to Sign Amendments, Etc. The Trustee shall sign
any amended or supplemental Indenture authorized pursuant to this Article 9 if
the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. The Company may not sign an amendment
or supplemental Indenture until the Board of Directors approves it. In executing
any amended or supplemental indenture, the Trustee shall be provided with and
(subject to Section 7.01 hereof) shall be fully protected in relying upon an
Officers' Certificate and, if and to the extent the same is requested by the
Trustee, an Opinion of Counsel stating that the execution of such amended or
supplemental indenture is authorized or permitted by this Indenture. The Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's rights, duties or immunities under this
Indenture or otherwise. In signing any amendment, supplement or waiver, the
Trustee shall be entitled to receive an indemnity reasonably satisfactory to it.

          Section 9.07. Payments for Consent. The Company will not, and will not
permit any of its Subsidiaries to, directly or indirectly, pay or cause to be
paid any consideration to or for the benefit of any Holder of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
and is paid to all Holders of the Notes that consent, waive or

                                       47



agree to amend in the time frame set forth in the solicitation documents
relating to such consent, waiver or agreement.

                                   ARTICLE 10

                                  MISCELLANEOUS

          Section 10.01. Trust Indenture Act Controls. This Indenture is subject
to the provisions of the TIA that are required to be a part of this Indenture,
and shall, to the extent applicable, be governed by such provisions. If any
provision of this Indenture modifies any TIA provision that may be so modified,
such TIA provision shall be deemed to apply to this Indenture as so modified. If
any provision of this Indenture excludes any TIA provision that may be so
excluded, such TIA provision shall be excluded from this Indenture.

          The provisions of TIA (S)(S) 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included unless expressly
excluded by this Indenture) are a part of and govern this Indenture, whether or
not physically contained herein.

          Section 10.02. Notices. Any notice or communication required or
permitted hereunder to be given by the Company or the Trustee to the other is
duly given if in writing and delivered in person or mailed by first class mail
(registered or certified, return receipt requested), telex, telecopier or
overnight air courier guaranteeing next day delivery, addressed as follows:

          If to the Company:

          Radian Group Inc.
          1601 Market Street
          Philadelphia, PA 19103
          Facsimile: (215) 963-9658
          Attention: Terry L. Latimer

          With a copy to:

          Drinker Biddle & Reath LLP
          1 Logan Square, 18th & Cherry Streets
          Philadelphia, PA 19103
          Facsimile: (215) 988-2548
          Attention: F. Douglas Raymond, III

          If to the Trustee:

          Wachovia Bank, National Association
          123 South Broad Street
          Mail Code PA1249
          Philadelphia, PA 19109
          Facsimile: (215) 670-6340
          Attn: Corporate Trust Administration

                                       48



          The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.

          All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.

          Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice so given shall be deemed to have been given, in the
case of notice by mail, when deposited in the mail, postage prepaid, in the
manner specified in the preceding sentence and, in the case of overnight air
courier, the Business Day following timely delivery to the courier. Any notice
or communication shall also be so mailed to any Person described in TIA (S)
313(c), to the extent required by the TIA. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.

          If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.

          If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

          Section 10.03. Communication by Holders of Notes with Other Holders of
Notes. Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).

          Section 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action
under this Indenture (other than in connection with the Exchange Offer
contemplated by Section 2.06(e) or under Section 2.02 hereof unless required by
the TIA), the Company shall, if requested by the Trustee or required by the TIA,
furnish to the Trustee:

          (a) an Officers' Certificate in form and substance reasonably
     satisfactory to the Trustee (which shall include the statements set forth
     in Section 10.05 hereof) stating that, in the opinion of the signers, all
     conditions precedent and covenants, if any, provided for in this Indenture
     relating to the proposed action have been satisfied;

          (b) an Opinion of Counsel in form and substance reasonably
     satisfactory to the Trustee (which shall include the statements set forth
     in Section 10.05 hereof) stating that, in the opinion of such counsel, all
     such conditions precedent and covenants have been satisfied; and

                                       49



          (c) where applicable, a certificate or opinion by an independent
     certified public accountant satisfactory to the Trustee that complies with
     TIA (S) 314(c).

          Section 10.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S) 314(e) and shall
include:

          (a) a statement that the Person making such certificate or opinion has
     read such covenant or condition;

          (b) a brief statement as to the nature and scope of the examination or
     investigation upon which the statements or opinions contained in such
     certificate or opinion are based;

          (c) a statement that, in the opinion of such Person, he or she has
     made such examination or investigation as is necessary to enable him or her
     to express an informed opinion as to whether or not such covenant or
     condition has been complied with; and

          (d) a statement as to whether or not, in the opinion of such Person,
     such condition or covenant has been complied with.

          Section 10.06. Rules by Trustee and Agents. The Trustee may make
reasonable rules for action by or at a meeting of Holders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions.

          Section 10.07. No Personal Liability of Directors, Officers, Employees
and Shareholders. No director, officer, employee, incorporator or shareholder of
the Company shall have any liability for any obligations of the Company under
the Notes, the Exchange Notes, this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.

          Section 10.08. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

          Section 10.09. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Company or its Subsidiaries or of any other Person. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.

                                       50



          Section 10.10. Successors. All agreements of the Company in this
Indenture and the Notes shall bind its successors. All agreements of the Trustee
in this Indenture shall bind its successors.

          Section 10.11. Severability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

          Section 10.12. Counterpart Originals. The parties may sign any number
of copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.

          Section 10.13. Table of Contents, Headings, Etc. The Table of
Contents, Cross-Reference Table and Headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the terms or provisions hereof.

                         [Signatures on following page]

                                       51



                                   SIGNATURES

Dated as of February 14, 2003

                                         Very truly yours,

                                         RADIAN GROUP INC.


                                         By:  /s/ C. Robert Quint
                                             -----------------------------------
                                               Name:  C. Robert Quint
                                               Title: CFO


                                         WACHOVIA BANK, NATIONAL ASSOCIATION
                                            as Trustee


                                         By:  /s/ Alan Finn
                                             -----------------------------------
                                               Name:  Alan Finn
                                               Title: Vice President

                                       52



                                                                     EXHIBIT A-1

                                 (Face of Note)

                                                               CUSIP [_________]

No. A-1                                                            **$[______]**

                                RADIAN GROUP INC.

                    5.625% Senior Notes Due February 15, 2013

Issue Date: February 14, 2003

     Radian Group Inc., a Delaware corporation, promises to pay to CEDE & Co.,
or registered assigns, the principal sum of [__________________] ($[_______]) on
February 15, 2013.

Interest Payment Dates: August 15 and February 15

Record Dates: August 1 and February 1

                                      A-1-1



     IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal.

Dated: February 14, 2003

                                         RADIAN GROUP INC.


                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                      A-1-2



                     TRUSTEE'S CERTIFICATE OF AUTHORIZATION

This is one of the Global Notes referred to in the within-mentioned Indenture.

Date: February 14, 2003

                                         WACHOVIA BANK, NATIONAL ASSOCIATION

                                            as Trustee


                                         By:
                                             -----------------------------------
                                             (Authorized Signatory)

                                      A-1-3



                                 (Back Of Note)

                    5.625% Senior Notes Due February 15, 2013

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THE NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUER THAT SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF APPLICABLE) OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY

                                      A-1-4



ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET
FORTH ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE
EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE SECURITY EVIDENCED HEREBY.

          Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

          1. Interest. Radian Group Inc., a Delaware corporation (the
"Company"), promises to pay interest on the outstanding principal amount of this
Note at 5.625% per annum from the date hereof until maturity and shall pay the
Additional Interest, if any, payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Company shall pay interest and
Additional Interest, if any, semi-annually on August 15 and February 15 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each an "Interest Payment Date"). Interest on the Notes shall accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that the first Interest Payment Date
shall be August 15, 2003. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months.

          2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) and Additional Interest, if any, to the Persons who
are registered Holders of Notes at the close of business on the August 1 or
February 1 immediately preceding the Interest Payment Date, even if such Notes
are canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium and Additional
Interest, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, City of
Philadelphia, Commonwealth of Pennsylvania and City of Charlotte, State of North
Carolina, or, at the option of the Company, payment of interest and Additional
Interest may be made by check mailed to the Holders at their addresses set forth
in the register of Holders, and provided that payment by wire transfer of
immediately available funds shall be required with respect to principal of and
interest, premium and Additional Interest, if any, on, all Global Notes and all
other Notes the Holders of which shall have provided wire transfer instructions
to the Company or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.

          3. Paying Agent and Registrar. Initially, Wachovia Bank, National
Association, the Trustee under the Indenture, shall act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.

          4. Indenture. The Company issued the Notes under an Indenture dated as
of February 14, 2003 (the "Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of

                                      A-1-5



the Indenture, the provisions of the Indenture shall govern and be controlling.
This Note is an obligation of the Company limited to $250 million in aggregate
principal amount. The Indenture pursuant to which this Note is issued provides
that an unlimited amount of Additional Notes may be issued thereunder.

          5. Optional Redemption. The Company may redeem all or a part of the
Notes from time to time, upon not less than 30 nor more than 60 days' notice, at
a redemption price equal to the greater of (a) 100% of the aggregate principal
amount of the Notes being redeemed or (b) the sum of the present values of the
remaining scheduled payments of principal of and interest on the Notes to be
redeemed (not including any portion of such payments of interest accrued to the
redemption date) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate plus 30.0 basis points, as calculated by an Independent Investment
Banker, plus, in each case, accrued and unpaid interest on the Notes to be
redeemed to the redemption date.

          6. No Sinking Fund. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.

          7. Notice of Redemption. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.

          8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.

          9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.

          10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes and Additional Notes, if any, voting as a single class, and any existing
default or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes and Additional Notes, if any, voting as a single class.
Without the consent of any Holder of a Note, the Indenture or the Notes may be
amended or

                                      A-1-6



supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's obligations to Holders of the Notes
in case of a merger or consolidation or sale of all or substantially all of the
assets of the Company, to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act or to allow any Subsidiary to guarantee
the Notes, to provide for the issuance of Additional Notes in accordance with
the limitations set forth in the Indenture, or to allow any Subsidiary to
guarantee the Notes.

          11. Defaults and Remedies. Events of Default include: (a) default in
the payment of any interest, or any Additional Interest, if any, upon the Notes
when the same become due and payable, and continuance of such default for a
period of 30 days; (b) default in the payment of the principal of (and premium,
if any, on) the Notes when due and payable; (c) default in the performance, or
breach, of any covenant or warranty of the Company in the Indenture (other than
a covenant or warranty a default in whose performance or whose breach is
elsewhere in the Indenture specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and Trustee by the Holders of at least 25% in principal amount of the
outstanding Notes, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; (d) default (i) in the scheduled payment of any principal of
any Indebtedness of the Company or any Designated Subsidiary of the Company
(other than the Notes and other than non-recourse Indebtedness), aggregating
more than $20 million in principal amount, when due and payable after giving
effect to any applicable grace period or (ii) in the performance of any other
term or provision of any Indebtedness of the Company or any Designated
Subsidiary of the Company (other than the Notes other than the Notes and other
than non-recourse Indebtedness) in excess of $20 million principal amount that
results in such Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, and such
acceleration shall not have been rescinded or annulled, or such Indebtedness
shall not have been discharged, within a period of 15 days after there has been
given, by registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal amount of
the outstanding Notes, a written notice specifying such default or defaults and
stating that such notice is a "Notice of Default" hereunder; and (e) certain
events of bankruptcy and insolvency with respect to the Company. In the event of
a declaration of acceleration of the Notes because an Event of Default has
occurred and is continuing as a result of the acceleration of any Indebtedness
described in clause (d) of this paragraph, the declaration of acceleration of
the Notes shall be automatically annulled if the holders of any Indebtedness
described in clause (d) of this paragraph have rescinded the declaration of
acceleration in respect of such Indebtedness within 30 days of the date of such
declaration and if (i) the annulment of the acceleration of Notes would not
conflict with any judgment or decree of a court of competent jurisdiction and
(ii) all existing Events of Default, except nonpayment of principal or interest
on the Notes that became due solely because of the acceleration of the Notes
have been cured or waived. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the principal, premium, if any, accrued
interest and Additional Interest, if any, of the Notes to be due and payable by

                                      A-1-7



Notice in writing to the Company and (if from the Holders) the Trustee
specifying the respective Event of Default and that it is a "notice of
acceleration," and upon receipt of such notice the same shall become due and
payable, unless all Events of Default specified in the notice of acceleration
shall have been cured within the five Business Day period. Holders of the Notes
may rescind an acceleration in the manner set forth in the Indenture. In the
case of an Event of Default arising from certain events of bankruptcy or
insolvency as described in clause (e) above, all outstanding Notes will become
due and payable immediately without further action or notice. Holders of the
Notes may not enforce the Indenture or the Notes except as provided in the
Indenture. Except as otherwise provided in the Indenture, Holders of not less
than a majority in aggregate principal amount of the then outstanding Notes by
notice to the Trustee may on behalf of the Holders of all of the Notes waive an
existing Default or Event of Default and its consequences hereunder, except a
continuing Default or Event of Default in the payment of the principal of,
premium and Additional Interest, if any, or interest on, the Notes. The Company
is required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.

          12. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

          13. No Recourse Against Others. No director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes.

          14. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

          15. Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

          16. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement, dated as of February 14, 2003, between the Company and each of the
parties named on the signature pages thereof or, in the case of Additional
Notes, Holders of Restricted Global Notes and Restricted Definitive Notes shall
have the rights set forth in one or more registration rights agreements, if any,
between the Company and the other parties thereto, relating to rights given by
the Company to the purchasers of Additional Notes (collectively, the
"Registration Rights Agreement").

                                      A-1-8



          17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

          The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

               Radian Group Inc.
               1601 Market Street
               Philadelphia, PA 19103

               Facsimile: (215) 963-9658
               Attention: Chief Financial Officer

                                      A-1-9



                                 ASSIGNMENT FORM

To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                  (Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
              (Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
and irrevocably appoint
                       ---------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------

Date:
      ------------


                                         Your Signature:
                                                        ----------------------
                                         (Sign exactly as your name appears on
                                         the face of this Note)


Signature Guarantee*:
                      ---------------------

*    Participant is a recognized Signature Guarantee Medallion Program (or other
     signature guarantor acceptable to the Trustee).

                                     A-1-10



                                                                     EXHIBIT A-2

                                 (Face of Note)

                                                               CUSIP [_________]
                                                               ISIN [__________]

No. B-1                                                            **$[______]**

                                RADIAN GROUP INC.

                    5.625% Senior Notes Due February 15, 2013

Issue Date: February 14, 2003

     Radian Group Inc., a Delaware corporation, promises to pay to CEDE & Co.,
or registered assigns, the principal sum of [__________________] ($[_______]) on
February 15, 2013.

Interest Payment Dates: August 15 and February 15

Record Dates: August 1 and February 1

                                      A-2-1



     IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
under its corporate seal.

Dated: February 14, 2003

                                         RADIAN GROUP INC.


                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                      A-2-2



                     TRUSTEE'S CERTIFICATE OF AUTHORIZATION

This is one of the Global Notes referred to in the within-mentioned Indenture.

Date: February 14, 2003

                                         WACHOVIA BANK, NATIONAL ASSOCIATION

                                            as Trustee


                                         By:
                                             -----------------------------------
                                             (Authorized Signatory)

                                      A-2-3



                                 (Back Of Note)

                    5.625% Senior Notes Due February 15, 2013

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THE NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO
A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUER THAT SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, OUTSIDE THE
UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF APPLICABLE) OR IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH ABOVE. NO REPRESENTATION CAN BE MADE AS TO

                                      A-2-4



THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THE
SECURITY EVIDENCED HEREBY.

PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"))
("REGULATION S"), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO
A PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A AND THE INDENTURE REFERRED TO HEREIN.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO BE BOUND BY THE
PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT RELATING TO ALL THE SECURITIES.

          Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

          1. Interest. Radian Group Inc., a Delaware corporation (the
"Company"), promises to pay interest on the outstanding principal amount of this
Note at 5.625% per annum from the date hereof until maturity and shall pay the
Additional Interest, if any, payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Company shall pay interest and
Additional Interest, if any, semi-annually on August 15 and February 15 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each an "Interest Payment Date"). Interest on the Notes shall accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that if there is no existing Default
in the payment of interest, and if this Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date;
provided further that the first Interest Payment Date shall be August 15, 2003.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months.

          2. Method of Payment. The Company shall pay interest on the Notes
(except defaulted interest) and Additional Interest, if any, to the Persons who
are registered Holders of Notes at the close of business on the August 1 or
February 1 immediately preceding the Interest Payment Date, even if such Notes
are canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes shall be payable as to principal, premium and Additional
Interest, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, City of
Philadelphia, Commonwealth of Pennsylvania and City of Charlotte, State of North
Carolina, or, at the option of the Company, payment of interest and Additional
Interest, if any, may be made by check mailed to the Holders at their addresses
set forth in the register of Holders, and provided that payment by wire transfer
of immediately available funds shall be required with respect to principal of
and interest, premium and Additional Interest, if any, on, all Global Notes and
all other Notes the Holders of which

                                      A-2-5



shall have provided wire transfer instructions to the Company or the Paying
Agent. Such payment shall be in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts.

          3. Paying Agent and Registrar. Initially, Wachovia Bank, National
Association, the Trustee under the Indenture, shall act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.

          4. Indenture. The Company issued the Notes under an Indenture dated as
of February 14, 2003 (the "Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. This Note is an obligation of the Company limited to $250 million
in aggregate principal amount. The Indenture pursuant to which this Note is
issued provides that an unlimited amount of Additional Notes may be issued
thereunder.

          5. Optional Redemption. The Company may redeem all or a part of the
Notes from time to time, upon not less than 30 nor more than 60 days' notice, at
a redemption price equal to the greater of (a) 100% of the aggregate principal
amount of the Notes being redeemed or (b) the sum of the present values of the
remaining scheduled payments of principal of and interest on the Notes to be
redeemed (not including any portion of such payments of interest accrued to the
redemption date) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate plus 30.0 basis points, as calculated by an Independent Investment
Banker, plus, in each case, accrued and unpaid interest on the Notes to be
redeemed to the redemption date.

          6. No Sinking Fund. The Company shall not be required to make
mandatory redemption or sinking fund payments with respect to the Notes.

          7. Notice of Redemption. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.

          8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the

                                      A-2-6



unredeemed portion of any Note being redeemed in part. Also, the Company need
not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.

          9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.

          10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes and Additional Notes, if any, voting as a single class, and any existing
default or compliance with any provision of the Indenture or the Notes may be
waived with the consent of the Holders of a majority in principal amount of the
then outstanding Notes and Additional Notes, if any, voting as a single class.
Without the consent of any Holder of a Note, the Indenture or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
the Notes in case of a merger or consolidation or sale of all or substantially
all of the assets of the Company, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to allow any
Subsidiary to guarantee the Notes, to provide for the issuance of Additional
Notes in accordance with the limitations set forth in the Indenture, or to allow
any Subsidiary to guarantee the Notes.

          11. Defaults and Remedies. Events of Default include: (a) default in
the payment of any interest, or any Additional Interest, if any, upon the Notes
when the same become due and payable, and continuance of such default for a
period of 30 days; (b) default in the payment of the principal of (and premium,
if any, on) the Notes when due and payable; (c) default in the performance, or
breach, of any covenant or warranty of the Company in the Indenture (other than
a covenant or warranty a default in whose performance or whose breach is
elsewhere in the Indenture specifically dealt with), and continuance of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and Trustee by the Holders of at least 25% in principal amount of the
outstanding Notes, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; (d) default (i) in the scheduled payment of any principal of
any Indebtedness of the Company or any Designated Subsidiary of the Company
(other than the Notes and other than non-recourse Indebtedness), aggregating
more than $20 million in principal amount, when due and payable after giving
effect to any applicable grace period or (ii) in the performance of any other
term or provision of any Indebtedness of the Company or any Designated
Subsidiary of the Company (other than the Notes other than the Notes and other
than non-recourse Indebtedness) in excess of $20 million principal amount that
results in such Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, and such
acceleration shall not have been rescinded or annulled, or such Indebtedness
shall not have been discharged, within a period of 15 days after there has been
given, by registered or certified mail, to the

                                      A-2-7



Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in principal amount of the outstanding Notes, a written notice
specifying such default or defaults and stating that such notice is a "Notice of
Default" hereunder; and (e) events of bankruptcy and insolvency with respect to
the Company. In the event of a declaration of acceleration of the Notes because
an Event of Default has occurred and is continuing as a result of the
acceleration of any Indebtedness described in clause (d) of this paragraph, the
declaration of acceleration of the Notes shall be automatically annulled if the
holders of any Indebtedness described in clause (d) of this paragraph have
rescinded the declaration of acceleration in respect of such Indebtedness within
30 days of the date of such declaration and if (i) the annulment of the
acceleration of Notes would not conflict with any judgment or decree of a court
of competent jurisdiction and (ii) all existing Events of Default, except
nonpayment of principal or interest on the Notes that became due solely because
of the acceleration of the Notes have been cured or waived. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the principal,
premium, if any, accrued interest and Additional Interest, if any, of the Notes
to be due and payable by Notice in writing to the Company and (if from the
Holders) the Trustee specifying the respective Event of Default and that it is a
"notice of acceleration," and upon receipt of such notice the same shall become
due and payable, unless all Events of Default specified in the notice of
acceleration shall have been cured within the five Business Day period. Holders
of the Notes may rescind an acceleration in the manner set forth in the
Indenture. In the case of an Event of Default arising from certain events of
bankruptcy or insolvency as described in clause (e) above, all outstanding Notes
will become due and payable immediately without further action or notice.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Except as otherwise provided in the Indenture,
Holders of not less than a majority in aggregate principal amount of the then
outstanding Notes by notice to the Trustee may on behalf of the Holders of all
of the Notes waive an existing Default or Event of Default and its consequences
hereunder, except a continuing Default or Event of Default in the payment of the
principal of, premium and Additional Interest, if any, or interest on, the
Notes. The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.

          12. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

          13. No Recourse Against Others. No director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Notes or the Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the SEC that such a waiver is
against public policy.

          14. Authentication. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.

                                      A-2-8



          15. Abbreviations. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

          16. Additional Rights of Holders of Restricted Global Notes and
Restricted Definitive Notes. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement, dated as of February 14, 2003, between the Company and each of the
parties named on the signature pages thereof or, in the case of Additional
Notes, Holders of Restricted Global Notes and Restricted Definitive Notes shall
have the rights set forth in one or more registration rights agreements, if any,
between the Company and the other parties thereto, relating to rights given by
the Company to the purchasers of Additional Notes (collectively, the
"Registration Rights Agreement").

          17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

          The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:

               Radian Group Inc.
               1601 Market Street
               Philadelphia, PA 19103

               Facsimile: (215) 963-9658
               Attention: Chief Financial Officer

                                      A-2-9



                                 ASSIGNMENT FORM

To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                  (Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
              (Print or type assignee's name, address and zip code)
- --------------------------------------------------------------------------------
and irrevocably appoint
                       ---------------------------------------------------------
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------

Date:
      -------------


                                         Your Signature:
                                                        ----------------------
                                         (Sign exactly as your name appears on
                                         the face of this Note)


Signature Guarantee*:
                      ---------------------

*    Participant is a recognized Signature Guarantee Medallion Program (or other
     signature guarantor acceptable to the Trustee).

                                     A-2-10



                                                                       EXHIBIT B

                        FORM OF CERTIFICATE OF TRANSFER

Radian Group Inc.
1601 Market Street
Philadelphia, PA 19103
Facsimile: (215) 963-9658

Attention: Robert Quint, Executive Vice President and Chief Financial Officer

Wachovia Bank, National Association
123 South Broad Street
Mail Code PA1249
Philadelphia, PA 19109
Facsimile: (215) 670-6337

Attn: Corporate Trust Administration

                 Re: 5.625% Senior Notes Due February 15, 2013

          Reference is hereby made to the Indenture, dated as of February 14,
2003 (the "Indenture"), between Radian Group Inc., as issuer (the "Company"),
and Wachovia Bank, National Association, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.

                        , (the "Transferor") owns and proposes to transfer the
          --------------
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $            in such Note[s] or interests (the "Transfer"),
                     -----------
to            (the "Transferee"), as further specified in Annex A hereto. In
   ----------
connection with the Transfer, the Transferor hereby certifies that:

                             [CHECK ALL THAT APPLY]

1.        [ ] Check if Transferee will take delivery of a beneficial interest in
          the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The
          Transfer is being effected pursuant to and in accordance with Rule
          144A under the United States Securities Act of 1933, as amended (the
          "Securities Act"), and, accordingly, the Transferor hereby further
          certifies that the beneficial interest or Definitive Note is being
          transferred to a Person that the Transferor reasonably believed and
          believes is purchasing the beneficial interest or Definitive Note for
          its own account, or for one or more accounts with respect to which
          such Person exercises sole investment discretion, and such Person and
          each such account is a "qualified institutional buyer" within the
          meaning of Rule 144A in a transaction meeting the requirements of Rule
          144A and such Transfer is in compliance with

                                       B-1



          any applicable blue sky securities laws of any state of the United
          States. Upon consummation of the proposed Transfer in accordance with
          the terms of the Indenture, the transferred beneficial interest or
          Definitive Note will be subject to the restrictions on transfer
          enumerated in the Private Placement Legend printed on the 144A Global
          Note and/or the Definitive Note and in the Indenture and the
          Securities Act.

2.        [ ] Check if Transferee will take delivery of a beneficial interest in
          the Regulation S Global Note or a Definitive Note pursuant to
          Regulation S. The Transfer is being effected pursuant to and in
          accordance with Rule 903 or Rule 904 under the Securities Act and,
          accordingly, the Transferor hereby further certifies that (i) the
          Transfer is not being made to a person in the United States and (x) at
          the time the buy order was originated, the Transferee was outside the
          United States or such Transferor and any Person acting on its behalf
          reasonably believed and believes that the Transferee was outside the
          United States or (y) the transaction was executed in, on or through
          the facilities of a designated offshore securities market and neither
          such Transferor nor any Person acting on its behalf knows that the
          transaction was prearranged with a buyer in the United States, (ii) no
          directed selling efforts have been made in contravention of the
          requirements of Rule 903(b) or Rule 904(b) of Regulation S under the
          Securities Act, (iii) the transaction is not part of a plan or scheme
          to evade the registration requirements of the Securities Act and (iv)
          if the proposed transfer is being made prior to the expiration of the
          Restricted Period, the transfer is not being made to a U.S. Person or
          for the account or benefit of a U.S. Person (other than an Initial
          Purchaser). Upon consummation of the proposed transfer in accordance
          with the terms of the Indenture, the transferred beneficial interest
          or Definitive Note will be subject to the restrictions on Transfer
          enumerated in the Private Placement Legend printed on the Regulation S
          Global Note and/or the Definitive Note and in the Indenture and the
          Securities Act.

3.        [ ] Check and complete if Transferee will take delivery of a
          beneficial interest in a Definitive Note pursuant to any provision of
          the Securities Act other than Rule 144A or Regulation S. The Transfer
          is being effected in compliance with the transfer restrictions
          applicable to beneficial interests in Restricted Global Notes and
          Restricted Definitive Notes and pursuant to and in accordance with the
          Securities Act and any applicable blue sky securities laws of any
          state of the United States, and, accordingly, the Transferor hereby
          further certifies that (check one):

          [ ] (a) such Transfer is being effected pursuant to and in accordance
     with Rule 144 under the Securities Act;

                                       or

          [ ] (b) such Transfer is being effected to the Company or a subsidiary
     thereof;

                                       or

                                       B-2



          [ ] (c) such Transfer is being effected pursuant to an effective
     registration statement under the Securities Act and in compliance with the
     prospectus delivery requirements of the Securities Act.

4.        [ ] Check and complete if Transferee will take delivery of a
          beneficial interest in an Unrestricted Global Note or of an
          Unrestricted Definitive Note.

          (a) [ ] Check if Transfer is pursuant to Rule 144. (i) The Transfer is
     being effected pursuant to and in accordance with Rule 144 under the
     Securities Act and in compliance with the transfer restrictions contained
     in the Indenture and any applicable blue sky securities laws of any state
     of the United States and (ii) the restrictions on transfer contained in the
     Indenture and the Private Placement Legend are not required in order to
     maintain compliance with the Securities Act. Upon consummation of the
     proposed Transfer in accordance with the terms of the Indenture, the
     transferred beneficial interest or Definitive Note will no longer be
     subject to the restrictions on transfer enumerated in the Private Placement
     Legend printed on the Restricted Global Notes, on Restricted Definitive
     Notes and in the Indenture.

          (b) [ ] Check if Transfer is pursuant to Regulation S. (i) The
     Transfer is being effected pursuant to and in accordance with Rule 903 or
     Rule 904 under the Securities Act and in compliance with the transfer
     restrictions contained in the Indenture and any applicable blue sky
     securities laws of any state of the United States and (ii) he restrictions
     on transfer contained in the Indenture and the Private Placement Legend are
     not required in order to maintain compliance with the Securities Act. Upon
     consummation of the proposed Transfer in accordance with the terms of the
     Indenture, the transferred beneficial interest or Definitive Note will no
     longer be subject to the restrictions on transfer enumerated in the Private
     Placement Legend printed on the Restricted Global Notes, on Restricted
     Definitive Notes and in the Indenture.

          (c) [ ] Check if Transfer is pursuant to Other Exemption. (i) The
     Transfer is being effected pursuant to and in compliance with an exemption
     from the registration requirements of the Securities Act other than Rule
     144, Rule 903 or Rule 904 and in compliance with the transfer restrictions
     contained in the Indenture and any applicable blue sky securities laws of
     any state of the United States and (ii) the restrictions on transfer
     contained in the Indenture and the Private Placement Legend are not
     required in order to maintain compliance with the Securities Act. Upon
     consummation of the proposed Transfer in accordance with the terms of the
     Indenture, the transferred beneficial interest or Definitive Note will not
     be subject to the restrictions on transfer enumerated in the Private
     Placement Legend printed on the Restricted Global Notes or Restricted
     Definitive Notes and in the Indenture.

          This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                         [Insert Name of Transferor]

                                       B-3




                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:
Dated:             ,
      ------------- ----

                                       B-4



                       ANNEX A TO CERTIFICATE OF TRANSFER

          1.   The Transferor owns and proposes to transfer the following:

                           [CHECK ONE OF (a) OR (b)]

          (a)  a beneficial interest in the:

                    (i)  [ ] 144A Global Note (CUSIP       ), or
                                                    -------

                    (ii) [ ] Regulation S Global Note (CUSIP       ); or
                                                            -------

          (b)  [ ] a Restricted Definitive Note.

          2.   After the Transfer the Transferee will hold:

                                  [CHECK ONE]

          (c)  a beneficial interest in the:

                    (i)  [ ] 144A Global Note (CUSIP      ), or
                                                    ------

                    (ii) [ ] Regulation S Global Note (CUSIP      ), or
                                                            ------

                    (iii) [ ] Unrestricted Global Note (CUSIP       ); or
                                                             -------

                    (iv) [ ] a Restricted Definitive Note; or

                    (v)  [ ] an Unrestricted Definitive Note,

          in accordance with the terms of the Indenture.

                                       B-5



                                                                       EXHIBIT C

                        FORM OF CERTIFICATE OF EXCHANGE

Radian Group Inc.
1601 Market Street
Philadelphia, PA 19103
Facsimile: (215) 963-9658

Attention: Robert Quint, Executive Vice President and Chief Financial Officer

Wachovia Bank, National Association
123 South Broad Street
Mail Code PA1249
Philadelphia, PA  19109
Facsimile: (215) 670-6337

Attn: Corporate Trust Administration

                 Re: 5.625% Senior Notes Due February 15, 2013

                              (CUSIP              )
                                    --------------

          Reference is hereby made to the Indenture, dated as of February 14,
2003 (the "Indenture"), between Radian Group Inc., as issuer (the "Company"),
and Wachovia Bank, National Association, as trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.

                      , (the "Owner") owns and proposes to exchange the Note[s]
          ------------
or interest in such Note[s] specified herein, in the principal amount of
$             in such Note[s] or interests (the "Exchange"). In connection with
 ------------
the Exchange, the Owner hereby certifies that:

1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
in an Unrestricted Global Note

          (a) [ ] Check if Exchange is from Beneficial Interest in a Restricted
     Global Note to Beneficial Interest in an Unrestricted Global Note. In
     connection with the Exchange of the Owner's beneficial interest in a
     Restricted Global Note for a beneficial interest in an Unrestricted Global
     Note in an equal principal amount, the Owner hereby certifies (i) the
     beneficial interest is being acquired for the Owner's own account without
     transfer, (ii) such Exchange has been effected in compliance with the
     transfer restrictions applicable to the Global Notes and pursuant to and in
     accordance with the United States Securities Act of 1933, as amended (the
     "Securities Act"), (iii) the

                                       C-1



     restrictions on transfer contained in the Indenture and the Private
     Placement Legend are not required in order to maintain compliance with the
     Securities Act and (iv) the beneficial interest in an Unrestricted Global
     Note is being acquired in compliance with any applicable blue sky
     securities laws of any state of the United States.

          (b) [ ] Check if Exchange is from Beneficial Interest in a Restricted
     Global Note to Unrestricted Definitive Note. In connection with the
     Exchange of the Owner's beneficial interest in a Restricted Global Note for
     an Unrestricted Definitive Note, the Owner hereby certifies (i) the
     Definitive Note is being acquired for the Owner's own account without
     transfer, (ii) such Exchange has been effected in compliance with the
     transfer restrictions applicable to the Restricted Global Notes and
     pursuant to and in accordance with the Securities Act, (iii) the
     restrictions on transfer contained in the Indenture and the Private
     Placement Legend are not required in order to maintain compliance with the
     Securities Act and (iv) the Definitive Note is being acquired in compliance
     with any applicable blue sky securities laws of any state of the United
     States.

          (c) [ ] Check if Exchange is from Restricted Definitive Note to
     Beneficial Interest in an Unrestricted Global Note. In connection with the
     Owner's Exchange of a Restricted Definitive Note for a beneficial interest
     in an Unrestricted Global Note, the Owner hereby certifies (i) the
     beneficial interest is being acquired for the Owner's own account without
     transfer, (ii) such Exchange has been effected in compliance with the
     transfer restrictions applicable to Restricted Definitive Notes and
     pursuant to and in accordance with the Securities Act, (iii) the
     restrictions on transfer contained in the Indenture and the Private
     Placement Legend are not required in order to maintain compliance with the
     Securities Act and (iv) the beneficial interest is being acquired in
     compliance with any applicable blue sky securities laws of any state of the
     United States.

          (d) [ ] Check if Exchange is from Restricted Definitive Note to
     Unrestricted Definitive Note. In connection with the Owner's Exchange of a
     Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
     hereby certifies (i) the Unrestricted Definitive Note is being acquired for
     the Owner's own account without transfer, (ii) such Exchange has been
     effected in compliance with the transfer restrictions applicable to
     Restricted Definitive Notes and pursuant to and in accordance with the
     Securities Act, (iii) the restrictions on transfer contained in the
     Indenture and the Private Placement Legend are not required in order to
     maintain compliance with the Securities Act and (iv) the Unrestricted
     Definitive Note is being acquired in compliance with any applicable blue
     sky securities laws of any state of the United States.

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted
Global Notes for Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes

          (a) [ ] Check if Exchange is from beneficial interest in a Restricted
     Global Note to Restricted Definitive Note. In connection with the Exchange
     of the Owner's beneficial interest in a Restricted Global Note for a
     Restricted Definitive Note with an equal principal amount, the Owner hereby
     certifies that the Restricted Definitive Note is being acquired for the
     Owner's own account without transfer. Upon consummation of the proposed
     Exchange in accordance with the terms of the Indenture, the Restricted

                                       C-2



     Definitive Note issued will continue to be subject to the restrictions on
     transfer enumerated in the Private Placement Legend printed on the
     Restricted Definitive Note and in the Indenture and the Securities Act.

          (b) [ ] Check if Exchange is from Restricted Definitive Note to
     Beneficial Interest in a Restricted Global Note. In connection with the
     Exchange of the Owner's Restricted Definitive Note for a beneficial
     interest in the 144A Global Note with an equal principal amount, the Owner
     hereby certifies (i) the beneficial interest is being acquired for the
     Owner's own account without transfer and (ii) such Exchange has been
     effected in compliance with the transfer restrictions applicable to the
     Restricted Global Notes and pursuant to and in accordance with the
     Securities Act and in compliance with any applicable blue sky securities
     laws of any state of the United States. Upon consummation of the proposed
     Exchange in accordance with the terms of the Indenture, the beneficial
     interest issued will be subject to the restrictions on transfer enumerated
     in the Private Placement Legend printed on the relevant Restricted Global
     Note and in the Indenture and the Securities Act.

          This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.

                                         [Insert Name of Owner]


                                         By:
                                            ------------------------------------
                                            Name:
                                            Title:

Dated:              ,
       -------------  ----

                                      C-3

EX-4.3

                                                                     EXHIBIT 4.3

                                                                  EXECUTION COPY

                          REGISTRATION RIGHTS AGREEMENT

                                  by and among

                               RADIAN GROUP INC.,

                                   as Issuer,

                                       and

                         BANC OF AMERICA SECURITIES LLC
                              LEHMAN BROTHERS INC.
                            WACHOVIA SECURITIES, INC.
                            BEAR, STEARNS & CO. INC.
                          DEUTSCHE BANK SECURITIES INC.

                              as Initial Purchasers

                          Dated as of February 14, 2003



                         Registration Rights Agreement

          This Registration Rights Agreement (this "Agreement") is made and
entered into as of February 14, 2003, by and among Radian Group Inc., a Delaware
corporation (the "Company"), Banc of America Securities Llc, Lehman Brothers
Inc., Wachovia Securities, Inc., Bear, Stearns & Co. Inc., And Deutsche Bank
Securities Inc. (each an "Initial Purchaser" and, collectively, the "Initial
Purchasers"), each of whom has agreed to purchase the Company's 5.625% Senior
Notes due 2013 (the "Initial Notes") pursuant to the Purchase Agreement (as
defined below).

          This Agreement is made pursuant to the Purchase Agreement, dated as of
February 11, 2003 (the "Purchase Agreement"), by and among the Company and the
Initial Purchasers (i) for the benefit of the Initial Purchasers and (ii) for
the benefit of the Holders from time to time of the Notes (including the Initial
Purchasers). In order to induce the Initial Purchasers to purchase the Initial
Notes, the Company has agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchasers set forth in Section 5(h) of the
Purchase Agreement.

          The parties hereby agree as follows:

Section 1. Definitions

          As used in this Agreement, the following capitalized terms shall have
the following meanings:

          Broker-Dealer: Any broker or dealer registered under the Exchange Act.

          Closing Date: The date of this Agreement.

          Commission: The Securities and Exchange Commission.

          Consummate: A registered Exchange Offer shall be deemed "Consummated"
     for purposes of this Agreement upon the occurrence of (i) the filing and
     effectiveness under the Securities Act of the Exchange Offer Registration
     Statement relating to the Exchange Notes to be issued in the Exchange
     Offer, (ii) the maintenance of such Registration Statement continuously
     effective and the keeping of the Exchange Offer open for a period not less
     than the minimum period required pursuant to Section 3(b) hereof, and (iii)
     the delivery by the Company to the Registrar under the Indenture of
     Exchange Notes in the same aggregate principal amount as the aggregate
     principal amount of Initial Notes that were tendered by Holders thereof
     pursuant to the Exchange Offer.

          Effectiveness Target Date: As defined in Section 5.

          Exchange Act: The Securities Exchange Act of 1934, as amended.

          Exchange Notes: The 5.625% Notes due 2013, of the same series under
     the Indenture as the Initial Notes, to be issued to Holders in exchange for
     Registrable Notes pursuant to this Agreement.

          Exchange Offer: The registration by the Company under the Securities
     Act of the Exchange Notes pursuant to a Registration Statement pursuant to
     which the Company offers the Holders of all outstanding Registrable Notes
     the opportunity to exchange all such outstanding Registrable Notes held by
     such Holders for Exchange Notes in an aggregate principal amount equal to
     the aggregate principal amount of the Registrable Notes tendered in such
     exchange offer by such Holders.

          Exchange Offer Registration Statement: The Registration Statement
     relating to the Exchange Offer, including the related Prospectus.



          Exchange Offer Consummation Deadline: As defined in Section 3(b).

          Exempt Resales: The transactions in which the Initial Purchasers
     propose to sell the Initial Notes to certain "qualified institutional
     buyers," as such term is defined in Rule 144A under the Securities Act.

          Holder: As defined in Section 2(b) hereof.

          Indemnified Holder: As defined in Section 8(a) hereof.

          Indenture: The Indenture, dated as of February 14, 2003, among the
     Company and Wachovia Bank, National Association, as trustee (the
     "Trustee"), pursuant to which the Notes are to be issued, as such Indenture
     is amended or supplemented from time to time in accordance with the terms
     thereof.

          Initial Purchasers: As defined in the preamble hereto.

          Initial Notes: The 5.625% Notes due 2013, of the same series under the
     Indenture as the Exchange Notes, for so long as such securities constitute
     Registrable Notes.

          Initial Placement: The issuance and sale by the Company of the Initial
     Notes to the Initial Purchasers pursuant to the Purchase Agreement.

          NASD: National Association of Securities Dealers, Inc.

          Notes: The Initial Notes and the Exchange Notes.

          Person: An individual, partnership, corporation, trust or
     unincorporated organization, or a government or agency or political
     subdivision thereof.

          Prospectus: The prospectus included in a Registration Statement, as
     amended or supplemented by any prospectus supplement and by all other
     amendments thereto, including post-effective amendments, and all material
     incorporated by reference into such Prospectus.

          Registrable Notes: Each Note, until the earliest to occur of (a) the
     date on which such Note is exchanged in the Exchange Offer and entitled to
     be resold to the public by the Holder thereof without complying with the
     prospectus delivery requirements of the Securities Act, (b) the date on
     which such Note has been effectively registered under the Securities Act
     and disposed of in accordance with a Shelf Registration Statement, (c) the
     date on which such Note ceases to be outstanding, and (d) the date on which
     such Note is distributed to the public pursuant to Rule 144 under the
     Securities Act or by a Broker-Dealer pursuant to the "Plan of Distribution"
     contemplated by the Exchange Offer Registration Statement (including
     delivery of the Prospectus contained therein).

          Registration Default: As defined in Section 5 hereof.

          Registration Statement: Any registration statement of the Company
     relating to (a) an offering of Exchange Notes pursuant to an Exchange Offer
     or (b) the registration for resale of Registrable Notes pursuant to the
     Shelf Registration Statement, which is filed pursuant to the provisions of
     this Agreement, in each case, including the Prospectus included therein,
     all amendments and supplements thereto (including post-effective
     amendments) and all exhibits and material incorporated by reference
     therein.

          Securities Act: The Securities Act of 1933, as amended.

                                        2



          Shelf Filing Deadline: As defined in Section 4 hereof.

          Shelf Registration Statement: As defined in Section 4 hereof.

          Trust Indenture Act: The Trust Indenture Act of 1939 (15 U.S.C.
     Section 77aaa to 77bbbb) as in effect on the date of the Indenture.

          Underwritten Registration or Underwritten Offering: A registration in
     which securities of the Company are sold to an underwriter for reoffering
     to the public.

Section 2. Securities Subject To This Agreement

     (a) Registrable Notes. The securities entitled to the benefits of this
Agreement are the Registrable Notes.

     (b) Holders of Registrable Notes. A Person is deemed to be a Holder of
Registrable Notes (each, a "Holder") whenever such Person owns Registrable
Notes.

Section 3. Registered Exchange Offer

     (a) Unless the Exchange Offer shall not be permissible under applicable law
or the Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Company shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 120 days after the Closing Date, a Registration Statement under the
Securities Act relating to the Exchange Notes and the Exchange Offer, (ii) use
its reasonable best efforts to cause such Registration Statement to be declared
effective by the Commission no later than 180 days after the Closing Date, (iii)
in connection with the foregoing, file (A) all pre-effective amendments to such
Registration Statement as may be necessary in order to cause such Registration
Statement to become effective, (B) if applicable, a post-effective amendment to
such Registration Statement pursuant to Rule 430A under the Securities Act and
(C) all necessary filings in connection with the registration and qualification
of the Exchange Notes to be made under the Blue Sky laws of such jurisdictions
as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the
effectiveness of such Registration Statement, commence the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of the
Exchange Notes to be offered in exchange for the Registrable Notes and to permit
resales of Notes held by Broker-Dealers as contemplated by Section 3(c) below.

     (b) The Company shall cause the Exchange Offer Registration Statement to be
effective continuously and shall keep the Exchange Offer open for a period of
not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that in no
event shall such period be less than 20 business days after the date notice of
the Exchange Offer is mailed to the Holders. The Company shall cause the
Exchange Offer to comply with all applicable federal and state securities laws.
No securities other than the Notes shall be included in the Exchange Offer
Registration Statement. The Company shall use its reasonable best efforts to
cause the Exchange Offer to be Consummated no later than 30 business days after
the Exchange Offer Registrations Statement becomes effective (such 30th business
day being the "Exchange Offer Consummation Deadline").

     (c) The Company shall indicate in a "Plan of Distribution" section
contained in the Prospectus forming a part of the Exchange Offer Registration
Statement that any Broker-Dealer who holds Initial Notes that are Registrable
Notes and that were acquired for its own account as a result of market-making
activities or other trading activities (other than Registrable Notes acquired
directly from the Company), may exchange such Initial Notes pursuant to the
Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter"
within the meaning of the Securities Act and must, therefore, deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resales of the Exchange Notes received by such

                                        3



Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales by
Broker-Dealers that the Commission may require in order to permit such resales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer
except to the extent required by the Commission as a result of a change in
policy after the date of this Agreement.

          The Company shall use its reasonable best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of Notes acquired by Broker-Dealers for
their own accounts as a result of market-making activities or other trading
activities, and to ensure that it conforms with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period ending on the earlier of
(i) 180 days from the date on which the Exchange Offer Registration Statement is
declared effective and (ii) the date on which a Broker-Dealer is no longer
required to deliver a prospectus in connection with market-making or other
trading activities.

          The Company shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time during such
180 days (or shorter as provided in the foregoing sentence) period in order to
facilitate such resales.

Section 4. Shelf Registration

     (a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or by the staff of
the Commission (after the procedures set forth in Section 6(a) below have been
complied with), (ii) the Exchange Offer is not Consummated by the Exchange Offer
Consummation Deadline, or (iii) such registration is requested by any Holder of
the Registrable Notes, other than certain broker-dealers, before the date that
is 20 business days after the consummation of the exchange offer if (A) such
Holder is prohibited by applicable law or by the staff of the Commission from
participating in the Exchange Offer, or (B) such Holder may not resell the
Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, or (C) such Holder is a Broker-Dealer and holds Registrable Notes
acquired directly from the Company or one of its affiliates, then, upon the
request of any Holder of Registrable Notes, the Company shall:

          (x) cause to be filed a shelf registration statement pursuant to Rule
     415 under the Securities Act, which may be an amendment to the Exchange
     Offer Registration Statement (in either event, the "Shelf Registration
     Statement") on or before 30 days after the earliest to occur of (1) the
     date on which the Company determines that it is not required to file the
     Exchange Offer Registration Statement, (2) the date on which the Company
     receives notice from a Holder of Registrable Notes as contemplated by
     clause (a)(iii) above, and (3) the Exchange Offer Consummation Deadline
     (such earliest date being the "Shelf Filing Deadline"), which Shelf
     Registration Statement shall provide for resales of all Registrable Notes
     the Holders of which shall have provided the information required pursuant
     to Section 4(b) hereof; and

          (y) use its reasonable best efforts to cause such Shelf Registration
     Statement to be declared effective by the Commission on or before the 90th
     day after the Shelf Filing Deadline.

     The Company shall use its reasonable best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (c)

                                        4



hereof to the extent necessary to ensure that it is available for resales of
Notes by the Holders of Registrable Notes entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of at least two years
following the Closing Date (or one year, if it is filed at the request of a
Holder of Registrable Notes) or, if earlier, until all the Registrable Notes
covered by the Shelf Registration Statement are sold thereunder, become eligible
for resale pursuant to Rule 144 under the Securities Act, or cease to be
Registrable Notes.

     Notwithstanding the foregoing, the Company may, by notice to Holders of
Registrable Notes, suspend the availability of a Shelf Registration Statement
and the use of the related Prospectus, if (i) such action is required by
applicable law, (ii) the board of directors of the Company determines in good
faith that it is in the Company's best interests to refrain from disclosing the
existence of or facts surrounding any proposed or pending material corporate
transaction, or (iii) the existence of any fact or the happening of any event
that makes any statement or a material fact made in the Shelf Registration
Statement or the related Prospectus untrue or requires the making of any changes
in or additions to the Shelf Registration Statement or related Prospectus to
make the statements therein not misleading.

     The period for which the Company is obligated to keep the shelf
registration statement continuously effective shall be extended by the period of
such suspension. Each Holder of Registrable Notes shall be required to
discontinue disposition of Registrable Notes pursuant to the Shelf Registration
Statement upon receipt from us of notice of any events described in the
preceding paragraph or certain other events specified in the registration rights
agreement.

     (b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Registrable Notes may include any of
its Registrable Notes in any Shelf Registration Statement pursuant to this
Agreement unless and until such Holder furnishes to the Company in writing,
within 15 business days after receipt of a request therefor, such information as
the Company may reasonably request for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein.
Each Holder as to which any Shelf Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading.

Section 5. Additional Interest

          If (i) any of the Registration Statements required by this Agreement
is not filed with the Commission on or prior to the date specified for such
filing in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the
Exchange Offer has not been Consummated on or before the Exchange Offer
Consummation Deadline or (iv) the Shelf Registration Statement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded, if necessary, as soon
as practicable by a supplement or post-effective amendment to such Registration
Statement that cures such failure and that is itself promptly declared effective
(except during limited periods as a result of the exercise by the Company of its
right to suspend use of the Shelf Registration Statement and the related
Prospectus pursuant to Section 4 hereof) (each such event referred to in clauses
(i) through (iv), a "Registration Default"), then the Company hereby agrees to
pay to each Holder of Registrable Notes, as liquidated damages for such
Registration Default, additional interest ("Additional Interest"), in addition
to the Base Interest, which Additional Interest shall accrue at a rate of 0.25%
per annum during the 90-day period immediately following the occurrence of any
such Registration Default and a rate of 0.50% per annum thereafter for any
remaining time at the end of each subsequent 90-day period until all
Registration Defaults have been cured; provided, however, that in no event the
rate of Additional Interest will exceed 0.50% per year; provided further that if
after all such Registration Defaults have been cured, a different Registration
Default occurs, the interest rate borne by the relevant Registrable Notes shall
again be increased pursuant to the foregoing provisions. Notwithstanding
anything to the contrary

                                        5



set forth herein, (1) upon filing of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of (i)
above, (2) upon the effectiveness of the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement), in the case of (ii)
above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above,
or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable in the case of (iv) above, the
Additional Interest payable with respect to the Registrable Notes as a result of
such clause (i), (ii), (iii) or (iv), as applicable, shall cease.

          All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Registrable Note at the time such
security ceases to be a Registrable Note shall survive until such time as all
such obligations with respect to such Registrable Note shall have been satisfied
in full.

Section 6. Registration Procedures

     (a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company shall comply with all of the provisions of Section 6(c)
below, shall use its reasonable best efforts to effect such exchange to permit
the sale of Registrable Notes being sold in accordance with the intended method
or methods of distribution thereof, and shall comply with all of the following
provisions:

          (i) If in the reasonable opinion of counsel to the Company there is a
     question as to whether the Exchange Offer is permitted by applicable law,
     the Company hereby agrees to seek a no-action letter or other favorable
     decision from the Commission allowing the Company to Consummate an Exchange
     Offer for such Initial Notes. The Company hereby agrees to pursue the
     issuance of such a decision to the Commission staff level but shall not be
     required to take commercially unreasonable action to effect a change of
     Commission policy. The Company hereby agrees, however, to (A) participate
     in telephonic conferences with the Commission, (B) deliver to the
     Commission staff an analysis prepared by counsel to the Company setting
     forth the legal bases, if any, upon which such counsel has concluded that
     such an Exchange Offer should be permitted and (C) diligently pursue a
     favorable resolution by the Commission staff of such submission.

          (ii) As a condition to its participation in the Exchange Offer
     pursuant to the terms of this Agreement, each Holder of Registrable Notes
     shall furnish, upon the request of the Company, prior to the Consummation
     thereof, a written representation to the Company (which may be contained in
     the letter of transmittal contemplated by the Exchange Offer Registration
     Statement) to the effect that (A) it is not an affiliate of the Company,
     (B) it is not engaged in, and does not intend to engage in, and has no
     arrangement or understanding with any person to participate in, a
     distribution of the Exchange Notes to be issued in the Exchange Offer, and
     (C) it is acquiring the Exchange Notes in its ordinary course of business.
     In addition, all such Holders of Registrable Notes shall otherwise
     cooperate in the Company's preparations for the Exchange Offer. Each Holder
     hereby acknowledges and agrees that any Broker-Dealer and any such Holder
     using the Exchange Offer to participate in a distribution of the securities
     to be acquired in the Exchange Offer (1) could not under Commission policy
     as in effect on the date of this Agreement rely on the position of the
     Commission enunciated in Morgan Stanley and Co., Inc. (available June 5,
     1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as
     interpreted in the Commission's letter to Shearman & Sterling dated July 2,
     1993, and similar no-action letters (which may include any no-action letter
     obtained pursuant to clause (i) above), and (2) must comply with the
     registration and prospectus delivery requirements of the Securities Act in
     connection with a secondary resale transaction and that such a secondary
     resale transaction should be covered by an effective registration statement
     containing the selling security Holder information required by Item 507 or
     508, as applicable, of Regulation S-K if the resales are of Exchange Notes
     obtained by such Holder in exchange for Initial Notes acquired by such
     Holder directly from the Company.

                                        6



     (b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Company shall comply with all the provisions of Section 6(c)
below and shall use its reasonable best efforts to effect such registration to
permit the sale of the Registrable Notes being sold in accordance with the
intended method or methods of distribution thereof, and pursuant thereto the
Company will as expeditiously as possible prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Securities Act, which form shall be available for the sale of the
Registrable Notes in accordance with the intended method or methods of
distribution thereof.

     (c) General Provisions. In connection with any Registration Statement and
any Prospectus required by this Agreement to permit the sale or resale of
Registrable Notes (including, without limitation, any Registration Statement and
the related Prospectus required to permit resales of Notes by Broker-Dealers),
the Company shall:

          (i) use its reasonable best efforts to keep such Registration
     Statement continuously effective and provide all requisite financial
     statements for the period specified in Section 3 or 4 of this Agreement, as
     applicable; upon the occurrence of any event that would cause any such
     Registration Statement or the Prospectus contained therein (A) to contain a
     material misstatement or omission or (B) not to be effective and usable for
     resale of Registrable Notes during the period required by this Agreement,
     the Company shall file promptly an appropriate amendment to such
     Registration Statement, in the case of clause (A), correcting any such
     misstatement or omission, and, in the case of either clause (A) or (B), use
     its reasonable best efforts to cause such amendment to be declared
     effective and such Registration Statement and the related Prospectus to
     become usable for their intended purpose(s) as soon as practicable
     thereafter;

          (ii) prepare and file with the Commission such amendments and
     post-effective amendments to the Registration Statement as may be necessary
     to keep the Registration Statement effective for the applicable period set
     forth in Section 3 or 4 hereof, as applicable, or such shorter period as
     will terminate when all Registrable Notes covered by such Registration
     Statement have been sold; cause the Prospectus to be supplemented by any
     required Prospectus supplement, and as so supplemented to be filed pursuant
     to Rule 424 under the Securities Act, and to comply fully with the
     applicable provisions of Rules 424 and 430A under the Securities Act in a
     timely manner; and comply with the provisions of the Securities Act with
     respect to the disposition of all securities covered by such Registration
     Statement during the applicable period in accordance with the intended
     method or methods of distribution by the sellers thereof set forth in such
     Registration Statement or supplement to the Prospectus;

          (iii) advise the underwriter(s), if any, and selling Holders promptly
     and, if requested by such Persons, to confirm such advice in writing, (A)
     when the Prospectus or any Prospectus supplement or post-effective
     amendment has been filed, and, with respect to any Registration Statement
     or any post-effective amendment thereto, when the same has become
     effective, (B) of any request by the Commission for amendments to the
     Registration Statement or amendments or supplements to the Prospectus or
     for additional information relating thereto, (C) of the issuance by the
     Commission of any stop order suspending the effectiveness of the
     Registration Statement under the Securities Act or of the suspension by any
     state securities commission of the qualification of the Registrable Notes
     for offering or sale in any jurisdiction, or the initiation of any
     proceeding for any of the preceding purposes, and (D) of the existence of
     any fact or the happening of any event that makes any statement of a
     material fact made in the Registration Statement, the Prospectus, any
     amendment or supplement thereto, or any document incorporated by reference
     therein untrue, or that requires the making of any additions to or changes
     in the Registration Statement or the Prospectus in order to make the
     statements therein not misleading. If at any time the Commission shall
     issue any stop order suspending the effectiveness of the Registration
     Statement, or any state securities commission or other regulatory authority
     shall issue an order suspending the qualification or exemption from
     qualification

                                        7



     of the Registrable Notes under state securities or Blue Sky laws, the
     Company shall use its reasonable best efforts to obtain the withdrawal or
     lifting of such order at the earliest possible time;

          (iv) furnish without charge to each of the Initial Purchasers, each
     selling Holder named in any Registration Statement, and each of the
     underwriter(s), if any, before filing with the Commission, copies of any
     Registration Statement or any Prospectus included therein or any amendments
     or supplements to any such Registration Statement or Prospectus (including
     all documents incorporated by reference after the initial filing of such
     Registration Statement), which documents will be subject to the review of
     such Holders and underwriter(s) in connection with such sale, if any, for a
     period of at least five business days, and the Company will not file any
     such Registration Statement or Prospectus or any amendment or supplement to
     any such Registration Statement or Prospectus (including all such documents
     incorporated by reference) to which an Initial Purchaser of Registrable
     Notes covered by such Registration Statement or the underwriter(s), if any,
     shall reasonably object in writing within five business days after the
     receipt thereof (such objection to be deemed timely made upon confirmation
     of telecopy transmission within such period). The objection of an Initial
     Purchaser or underwriter, if any, shall be deemed to be reasonable if such
     Registration Statement, amendment, Prospectus or supplement, as applicable,
     as proposed to be filed, contains a material misstatement or omission;

          (v) upon written request, promptly prior to the filing of any document
     that is to be incorporated by reference into a Registration Statement or
     Prospectus, provide copies of such document to the Initial Purchasers, each
     selling Holder named in any Registration Statement, and to the
     underwriter(s), if any, make the Company's representatives available for
     discussion of such document and other customary due diligence matters, and
     include such information in such document prior to the filing thereof as
     such selling Holders or underwriter(s), if any, reasonably may request;

          (vi) make available at reasonable times for inspection by the Initial
     Purchasers, any managing underwriter participating in any disposition
     pursuant to such Registration Statement and any attorney or accountant
     retained by such Initial Purchasers or any of the underwriter(s), all
     financial and other records, pertinent corporate documents and properties
     of the Company and cause the Company's officers, directors and employees to
     supply all information reasonably requested by any such Holder,
     underwriter, attorney or accountant in connection with such Registration
     Statement subsequent to the filing thereof and prior to its effectiveness;

          (vii) if requested by any selling Holders or the underwriter(s), if
     any, promptly incorporate in any Registration Statement or Prospectus,
     pursuant to a supplement or post-effective amendment if necessary, such
     information as such selling Holders and underwriter(s), if any, may
     reasonably request to have included therein, including, without limitation,
     information relating to the "Plan of Distribution" of the Registrable
     Notes, information with respect to the principal amount of Registrable
     Notes being sold to such underwriter(s), the purchase price being paid
     therefor and any other terms of the offering of the Registrable Notes to be
     sold in such offering; and make all required filings of such Prospectus
     supplement or post-effective amendment as soon as practicable after the
     Company is notified of the matters to be incorporated in such Prospectus
     supplement or post-effective amendment;

          (viii) use its reasonable best efforts to cause the Registrable Notes
     covered by the Registration Statement to be rated with the appropriate
     rating agencies, if so requested by the Holders of a majority in aggregate
     principal amount of Notes covered thereby or the underwriter(s), if any;

          (ix) furnish to each selling Holder and each of the underwriter(s), if
     any, without charge, at least one copy of the Registration Statement, as
     first filed with the Commission, and of each amendment thereto, including
     financial statements and schedules, all documents incorporated by reference
     therein and all exhibits (including exhibits incorporated therein by
     reference);

                                        8



          (x) deliver to each selling Holder and each of the underwriter(s), if
     any, without charge, as many copies of the Prospectus (including each
     preliminary prospectus) and any amendment or supplement thereto as such
     Persons reasonably may request; the Company hereby consents to the use of
     the Prospectus and any amendment or supplement thereto by each of the
     selling Holders and each of the underwriter(s), if any, in connection with
     the offering and the sale of the Registrable Notes covered by the
     Prospectus or any amendment or supplement thereto;

          (xi) enter into such agreements (including an underwriting agreement),
     and make such representations and warranties with respect to the business
     of the Company as are customarily addressed in representations and
     warranties made by issuers to underwriters in underwritten offerings, and
     take all such other actions in connection therewith in order to expedite or
     facilitate the disposition of the Registrable Notes pursuant to any
     Registration Statement contemplated by this Agreement, all to such extent
     as may be reasonably requested by any Initial Purchaser or by any Holder of
     Registrable Notes or underwriter in connection with any sale or resale
     pursuant to any Registration Statement contemplated by this Agreement; and
     whether or not an underwriting agreement is entered into and whether or not
     the registration is an Underwritten Registration, the Company shall:

               (A) furnish to each Initial Purchaser, each selling Holder and
          each underwriter, if any, in such substance and scope as they may
          reasonably request and as are customarily made by issuers to
          underwriters in primary underwritten offerings, upon the date of the
          Consummation of the Exchange Offer and, if applicable, the
          effectiveness of the Shelf Registration Statement:

                    (A) a certificate, dated the date of Consummation of the
               Exchange Offer or the date of effectiveness of the Shelf
               Registration Statement, as the case may be, signed by (y) the
               President or any Vice President and (z) a principal financial or
               accounting officer of the Company, confirming, as of the date
               thereof, the matters set forth in paragraphs (i), (ii) and (iii)
               of Section 5 (f) of the Purchase Agreement and such other matters
               as such parties may reasonably request;

                    (B) an opinion, dated the date of Consummation of the
               Exchange Offer or the date of effectiveness of the Shelf
               Registration Statement, as the case may be, of counsel for the
               Company, covering the matters set forth in paragraph (c) of
               Section 5 of the Purchase Agreement and such other matters as
               such parties may reasonably request, and in any event including a
               statement to the effect that such counsel has participated in
               conferences with officers and other representatives of the
               Company, representatives of the independent public accountants
               for the Company, the Initial Purchasers' representatives and the
               Initial Purchasers' counsel in connection with the preparation of
               such Registration Statement and the related Prospectus and have
               considered the matters required to be stated therein and the
               statements contained therein, although such counsel has not
               independently verified the accuracy, completeness or fairness of
               such statements; and that such counsel advises that, on the basis
               of the foregoing, no facts came to such counsel's attention that
               caused such counsel to believe that the applicable Registration
               Statement, at the time such Registration Statement or any
               post-effective amendment thereto became effective, and, in the
               case of the Exchange Offer Registration Statement, as of the date
               of Consummation, contained an untrue statement of a material fact
               or omitted to state a material fact required to be stated therein
               or necessary to make the statements therein not misleading, or
               that the Prospectus contained in such Registration Statement as
               of its date and, in the case of the opinion dated the date of
               Consummation of the Exchange Offer, as of the date of
               Consummation, contained an untrue statement of a material fact or
               omitted to state a material fact necessary in order to make the
               statements therein, in light of the circumstances under which
               they

                                        9



               were made, not misleading. Without limiting the foregoing, such
               counsel may state further that such counsel assumes no
               responsibility for, and has not independently verified, the
               accuracy, completeness or fairness of the financial statements,
               notes and schedules and other financial and statistical data
               derived therefrom included in any Registration Statement,
               including the exhibits thereto, contemplated by this Agreement or
               the related Prospectus; and

                    (C) a customary comfort letter, in the case of resale of
               Registrable Notes pursuant to the Shelf Registration Statement,
               the date of effectiveness of the Shelf Registration Statement, as
               the case may be, from the Company's independent accountants, in
               the customary form and covering matters of the type customarily
               covered in comfort letters by underwriters in connection with
               primary underwritten offerings, and affirming the matters set
               forth in the comfort letters delivered pursuant to Section 5(a)
               of the Purchase Agreement, without exception;

               (B) set forth in full or incorporate by reference in the
          underwriting agreement, if any, the indemnification provisions and
          procedures of Section 8 hereof with respect to all parties to be
          indemnified pursuant to said Section; and

               (C) deliver such other documents and certificates as may be
          reasonably requested by such parties to evidence compliance with
          clause (A) above and with any customary conditions contained in the
          underwriting agreement or other agreement entered into by the Company
          pursuant to this clause (xi), if any.

          If at any time the representations and warranties of the Company
contemplated in clause (A)(1) above cease to be true and correct, the Company
shall so advise the Initial Purchasers and the underwriter(s), if any, and each
selling Holder promptly and, if requested by such Persons, shall confirm such
advice in writing;

          (xii) prior to any public offering of Registrable Notes, cooperate
     with the selling Holders, the underwriter(s), if any, and their respective
     counsel in connection with the registration and qualification of the
     Registrable Notes under the securities or Blue Sky laws of such
     jurisdictions as the selling Holders or underwriter(s) may request and do
     any and all other acts or things necessary or advisable to enable the
     disposition in such jurisdictions of the Registrable Notes covered by the
     Shelf Registration Statement; provided, however, that the Company shall not
     be required to register or qualify as a foreign corporation where it is not
     then so qualified or to take any action that would subject it to the
     service of process in suits or to taxation, other than as to matters and
     transactions relating to the Registration Statement, in any jurisdiction
     where it is not then so subject;

          (xiii) shall issue, upon the request of any Holder of Initial Notes
     covered by the Shelf Registration Statement, Exchange Notes, having an
     aggregate principal amount equal to the aggregate principal amount of
     Initial Notes surrendered to the Company by such Holder in exchange
     therefor or being sold by such Holder; such Exchange Notes to be registered
     in the name of such Holder or in the name of the purchaser(s) of such
     Notes, as the case may be; in return, the Initial Notes held by such Holder
     shall be surrendered to the Company for cancellation;

          (xiv) cooperate with the selling Holders and the underwriter(s), if
     any, to facilitate the timely preparation and delivery of certificates
     representing Registrable Notes to be sold and not bearing any restrictive
     legends; and enable such Registrable Notes to be in such denominations and
     registered in such names as the Holders or the underwriter(s), if any, may
     request at least two business days prior to any sale of Registrable Notes
     made by such Holders or underwriter(s);

                                       10



          (xv) use its reasonable best efforts to cause the Registrable Notes
     covered by the Registration Statement to be registered with or approved by
     such other governmental agencies or authorities as may be necessary to
     enable the seller or sellers thereof or the underwriter(s), if any, to
     consummate the disposition of such Registrable Notes;

          (xvi) if any fact or event contemplated by clause (c)(iii)(D) above
     shall exist or have occurred, prepare a supplement or post-effective
     amendment to the Registration Statement or related Prospectus or any
     document incorporated therein by reference or file any other required
     document so that, as thereafter delivered to the purchasers of Registrable
     Notes, the Prospectus will not contain an untrue statement of a material
     fact or omit to state any material fact necessary to make the statements
     therein not misleading;

          (xvii) provide a CUSIP number for all Registrable Notes not later than
     the effective date of the Registration Statement and provide the Trustee
     under the Indenture with printed certificates for the Registrable Notes
     which are in a form eligible for deposit with the Depositary Trust Company;

          (xviii) cooperate and assist in any filings required to be made with
     the NASD and in the performance of any due diligence investigation by any
     underwriter (including any "qualified independent underwriter") that is
     required to be retained in accordance with the rules and regulations of the
     NASD, and use its reasonable best efforts to cause such Registration
     Statement to become effective and approved by such governmental agencies or
     authorities as may be necessary to enable the Holders selling Registrable
     Notes to consummate the disposition of such Registrable Notes;

          (xix) otherwise use its reasonable best efforts to comply with all
     applicable rules and regulations of the Commission, and make generally
     available to its security Holders, as soon as practicable, a consolidated
     earnings statement meeting the requirements of Rule 158 (which need not be
     audited) for the twelve-month period (A) commencing at the end of any
     fiscal quarter in which Registrable Notes are sold to underwriters in a
     firm or best efforts Underwritten Offering or (B) if not sold to
     underwriters in such an offering, beginning with the first month of the
     Company's first fiscal quarter commencing after the effective date of the
     Registration Statement;

          (xx) cause the Indenture to be qualified under the Trust Indenture Act
     not later than the effective date of the first Registration Statement
     required by this Agreement, and, in connection therewith, cooperate with
     the Trustee and the Holders of Notes to effect such changes to the
     Indenture as may be required for such Indenture to be so qualified in
     accordance with the terms of the Trust Indenture Act; and to execute and
     use its best efforts to cause the Trustee to execute, all documents that
     may be required to effect such changes and all other forms and documents
     required to be filed with the Commission to enable such Indenture to be so
     qualified in a timely manner; and

          (xxi) provide promptly to each Holder upon request each document filed
     with the Commission pursuant to the requirements of Section 13 and Section
     15 of the Exchange Act.

     (d) Each Holder agrees by acquisition of Registrable Notes that, upon
receipt of any notice from the Company of the existence of any fact of the kind
described in Section 6(c)(iii)(D) hereof, such Holder will forthwith discontinue
disposition of Registrable Notes pursuant to the applicable Registration
Statement until such Holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is
advised in writing (the "Advice") by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus. If so directed by
the Company, each Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Notes that was current at the time
of receipt of such notice. In the event the Company shall give any such notice,
the time period regarding the effectiveness of such Registration Statement set
forth in Section 3 or 4 hereof, as applicable, shall be extended by the number
of days during the

                                       11



period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling Holder
covered by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice; however, no such extension shall be taken into
account in determining whether Additional Interest is due pursuant to Section 5
hereof or the amount of such Additional Interest, it being agreed that the
Company's option to suspend use of a Registration Statement pursuant to this
paragraph shall be treated as a Registration Default for purposes of Section 5.

Section 7. Registration Expenses

     (a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses (including filings made by any Initial
Purchaser or Holder with the NASD (and, if applicable, the fees and expenses of
any "qualified independent underwriter" and its counsel that may be required by
the rules and regulations of the NASD)); (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the Exchange Notes
to be issued in the Exchange Offer and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company and, subject to Section 7(b) below, the Holders of Registrable
Notes; (v) all application and filing fees in connection with listing the
Exchange Notes on a national securities exchange or automated quotation system
pursuant to the requirements thereof; and (vi) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance).

          The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company.

     (b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchasers and the Holders of Registrable Notes being tendered in the
Exchange Offer and/or resold pursuant to the "Plan of Distribution" contained in
the Exchange Offer Registration Statement or registered pursuant to the Shelf
Registration Statement, as applicable, for the reasonable fees and disbursements
of not more than one counsel, who shall be Shearman & Sterling or such other
counsel as may be chosen by the Holders of a majority in principal amount of the
Registrable Notes for whose benefit such Registration Statement is being
prepared.

Section 8. Indemnification

     (a) The Company agrees to indemnify and hold harmless each Holder, its
directors, officers and employees, and each person, if any, who controls any
Holder within the meaning of the Securities Act and the Exchange Act against any
loss, claim, damage, liability or expense, as incurred, to which such Holder or
such controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, or at common
law or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; and to reimburse each Holder and each such
controlling person for any and all expenses as such expenses are reasonably
incurred by such Holder or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage,

                                       12



liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by such Holder expressly for use in any
Registration Statement or Prospectus (or any amendment or supplement thereto).
The indemnity agreement set forth in this Section 8 shall be in addition to any
liabilities that the Company may otherwise have.

     (b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company and each of its directors and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, to the same extent as the indemnity from the Company as described under
paragraph (a) above, but only with respect to claims and actions based on
written information furnished to the Company by such Holder expressly for use
therein. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the proceeds received by such Holder
upon the sale of the Securities giving rise to such indemnification obligation.

     (c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof,
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 8 or to
the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in and, to the extent that it
shall elect, jointly with all other indemnifying parties similarly notified, by
written notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party, representing the indemnified parties who are parties to such
action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, in
each of which cases the fees and expenses of counsel shall be at the expense of
the indemnifying party.

     (d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b) in respect of any loss, claim, damage, liability,
judgment or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage, liability, judgment or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Holders, on the other, from
(A) the Initial Placement (which in the case of the Issuer shall be deemed to be
equal to the total gross proceeds from the Initial Placement as set forth on the
cover page of the Offering Memorandum), (B) the amount of Additional Interest
which did not become payable as a result of the filing of the Registration
Statement resulting in such losses, claims, damages, liabilities, judgments
actions or

                                       13



expenses, and (C) such Registration Statement or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Holders, on the other, with respect to the statements or omissions which
resulted in such loss, claim, damage, liability, judgment or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Holders, on the
other, with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Initial Notes
purchased under the Purchase Agreement (before deducting expenses) received by
the Company, on the one hand, and the total net proceeds received by such Holder
upon its resale of Registrable Notes less the amount paid by such Holder for
such Registrable Notes, on the other hand, bear to the total sum of such
amounts. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
or such Holder, the intent of the parties and their relative knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and equitable if
contributions pursuant to this Section 8 were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage, liability, judgment
or action in respect thereof, referred to above in this Section 8, shall be
deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Holder, and none of its directors, officers,
employees or controlling persons, shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total net proceeds
received by such Holder upon its resale of Registrable Notes exceeds the sum of
the amount paid by such Holder for such Registrable Notes and the amount of any
damages which such Holder has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations to contribute as provided in this Section 8(d) are several in
proportion to the respective principal amount of Registrable Notes held by each
of the Holders hereunder and not joint.

Section 9. Rule 144A

          The Company hereby agrees with each Holder, for so long as any
Registrable Notes remain outstanding, to make available to any Holder or
beneficial owner of Registrable Notes in connection with any sale thereof and
any prospective purchaser of such Registrable Notes from such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Notes pursuant to
Rule 144A.

Section 10. Participation In Underwritten Registrations

          No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Registrable Notes on the
basis provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
underwriting arrangements.

Section 11. Selection Of Underwriters

          The Holders of Registrable Notes covered by the Shelf Registration
Statement who desire to do so may sell such Registrable Notes in an Underwritten
Offering. In any such Underwritten Offering, the investment banker or investment
bankers and manager or managers that will administer the offering will be
selected by the Holders of a majority in aggregate principal amount of the
Registrable Notes included in such

                                       14



offering; provided, that such investment bankers and managers must be employed
by a nationally recognized firm reasonably satisfactory to the Company.

Section 12. Miscellaneous

     (a) Remedies. The Company hereby agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agree to waive the defense in any action
for specific performance that a remedy at law would be adequate.

     (b) No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with respect to the
Initial Notes to any Person. The rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with the rights granted to the
Holders of the Company's securities under any agreement in effect on the date
hereof.

     (c) Adjustments Affecting the Notes. The Company will not take any action,
or permit any change to occur, with respect to the Notes that would materially
and adversely affect the ability of the Holders to Consummate any Exchange
Offer.

     (d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Registrable Notes. Notwithstanding the foregoing, a waiver or consent to
departure from the provisions hereof that relates exclusively to the rights of
Holders whose securities are being tendered pursuant to the Exchange Offer and
that does not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be given
by the Holders of a majority of the outstanding principal amount of Registrable
Notes being tendered or registered; provided that, with respect to any matter
that directly or indirectly affects the rights of any Initial Purchaser
hereunder, the Company shall obtain the written consent of each such Initial
Purchaser with respect to which such amendment, qualification, supplement,
waiver, consent or departure is to be effective.

     (e) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telecopier, or air courier
guaranteeing overnight delivery:

          (i) if to a Holder, at the address set forth on the records of the
     Registrar under the Indenture, with a copy to the Registrar under the
     Indenture; and

          (ii) if to the Company:

                        Radian Group Inc.
                        1601 Market Street
                        Philadelphia, PA 19103
                        Telecopier No.: (215) 963-9658
                        Attention: Terry L. Latimer

          With a copy to:

                        Drinker Biddle & Reath LLP
                        1 Logan Square, 18th & Cherry Streets
                        Philadelphia, PA 19103-6996
                        Telecopier: (215) 988-2548
                        Attention: F. Douglas Raymond

                                       15



          All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.

          Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.

     (f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Registrable Notes; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign acquired Registrable Notes
from such Holder.

     (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

     (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.

     (j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

     (k) Entire Agreement. This Agreement together with the other Operative
Documents (as defined in the Purchase Agreement) is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the Registrable Notes. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

                                       16



          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                          RADIAN GROUP INC.


                                          By: /s/ C. Robert Quint
                                              ----------------------------------
                                              Name:  C. Robert Quint
                                              Title: CFO

The foregoing Registration Rights Agreement is hereby
confirmed and accepted as of the date first above written.

BANC OF AMERICA SECURITIES LLC
LEHMAN BROTHERS INC.
WACHOVIA SECURITIES, INC.
BEAR, STEARNS & CO. INC.
DEUTSCHE BANK SECURITIES INC.

By: BANC OF AMERICA SECURITIES LLC


By:
   -----------------------------------
   Name:
   Title:

                                       17



          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                          RADIAN GROUP INC.


                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:

The foregoing Registration Rights Agreement is hereby
confirmed and accepted as of the date first above written.

BANC OF AMERICA SECURITIES LLC
LEHMAN BROTHERS INC.
WACHOVIA SECURITIES, INC.
BEAR, STEARNS & CO. INC.
DEUTSCHE BANK SECURITIES INC.

By: BANC OF AMERICA SECURITIES LLC


By: /s/ Lily Chang
   -----------------------------------
   Name: Lily Chang
   Title: Principal

                                       18

EX-11

                                                                      EXHIBIT 11

                                RADIAN GROUP INC.
                 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS



                                                                    Quarter Ended March 31
                                                                     2003            2002
                                                                -------------------------------
                                                                           
(In thousands, except per-share amounts and market prices)

Net income                                                      $      104,772   $      103,933
Preferred stock dividend adjustment                                         --             (825)
                                                                --------------   --------------
Adjusted net income                                             $      104,772   $      103,108

Average diluted stock options outstanding                              5,727.0          5,492.6
Average exercise price per share                                $        29.18   $        26.84
Average market price per share - diluted basis                  $        35.72   $        45.72

Average common shares outstanding                                       93,394           94,224
Increase in shares due to exercise of options - diluted basis              903            1,657
                                                                --------------   --------------

Adjusted shares outstanding - diluted                                   94,297           95,881

Net income per share - basic                                    $         1.12   $         1.09
                                                                ==============   ==============

Net income per share - diluted                                  $         1.11   $         1.08
                                                                ==============   ==============

EX-99

                                                                      EXHIBIT 99

   CERTIFICATIONS REQUIRED UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Frank P. Filipps, Chief Executive Officer of Radian Group Inc., certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

    (1)     the Quarterly Report on Form 10-Q for the quarterly period ended
            March 31, 2003 (the "Periodic Report"), which this statement
            accompanies, fully complies with the requirements of Section 13(a)
            or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
            78o(d)); and

    (2)     information contained in the Periodic Report fairly presents, in all
            material respects, the financial condition and results of operations
            of Radian Group Inc.

This certificate is being furnished solely for purposes of Section 906 and is
not being filed as part of the Periodic Report.

Dated: May 14, 2003                     /s/ Frank P. Filipps
                                        --------------------
                                        Frank P. Filipps

A signed original of this written statement required by Section 906 has been
provided to Radian Group Inc. and will be retained by Radian Group Inc. and
furnished to the Securities and Exchange Commission or its Staff upon request.

I, C. Robert Quint, Chief Financial Officer of Radian Group Inc., certify,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

    (3)     the Quarterly Report on Form 10-Q for the quarterly period ended
            March 31, 2003 (the "Periodic Report"), which this statement
            accompanies, fully complies with the requirements of Section 13(a)
            or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
            78o(d)); and

    (4)     information contained in the Periodic Report fairly presents, in all
            material respects, the financial condition and results of operations
            of Radian Group Inc.

This certificate is being furnished solely for purposes of Section 906 and is
not being filed as part of the Periodic Report.

Dated: May 14, 2003                     /s/ C. Robert Quint
                                        -------------------
                                        C. Robert Quint

A signed original of this written statement required by Section 906 has been
provided to Radian Group Inc. and will be retained by Radian Group Inc. and
furnished to the Securities and Exchange Commission or its Staff upon request.