Exhibit 10.1

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “First Amendment”) is made and
entered into as of the 30th day of April, 2008, by and among

(i) RADIAN GROUP INC., a Delaware corporation, and its successors and assigns
(the “Borrower”);

(ii) THE FINANCIAL INSTITUTIONS as signatory lender parties hereto and their
successors and assigns (collectively, the “Lenders”, with each individually a
“Lender”);

(iii) KEYBANK NATIONAL ASSOCIATION, a national banking association, in its
capacity as Administrative Agent for the Lenders under the Credit Agreement (as
defined below), and its successors and assigns (the “Administrative Agent”); and

(iv) KEYBANK NATIONAL ASSOCIATION, a national banking association, in its
capacity as Collateral Agent for the Lender Parties, as defined in the Credit
Agreement, and its successors and assigns (the “Collateral Agent”).

Recitals:

A. The Borrower, the Lenders, the Administrative Agent and certain other parties
are the parties to that certain Credit Agreement dated as of December 13, 2006,
as amended by that certain Limited Conditional Waiver Agreement dated April 9,
2008 (the “Credit Agreement”), pursuant to which, inter alia, the Lenders
agreed, subject to the terms and conditions thereof, to advance Loans (as this
and other capitalized terms used herein and not otherwise defined herein are
defined in the Credit Agreement) to the Borrower.

B. As of the date hereof, the aggregate unpaid principal balance of Revolving
Loans is Two Hundred Million Dollars ($200,000,000).

C. The Borrower has requested that the Lenders agree to amend certain of the
provisions of the Credit Agreement.

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D. Subject to the terms and conditions of this First Amendment, the Lenders have
agreed to grant such request.

Agreements:

NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual
agreements hereinafter set forth, the Borrower, the Lenders and the
Administrative Agent, intending to be legally bound, hereby agree as follows:

 

  1. Amendments to Credit Agreement.

(a) The definitions of “Applicable Rate”, “Borrowing Request”, “Commitment”,
“Consolidated Net Worth”, “Financial Officer”, “Interest Period”, “Lender
Parties”, “Loan Documents”, “Material Debt”, “Permitted Liens” and “Revolving
Availability Termination Date” in Section 1.01 (Defined Terms) of the Credit
Agreement are hereby amended and restated in their entirety to provide,
respectively, as follows:

“Applicable Rate” means for any day:

(a) with respect to any Revolving Loan that is a Eurodollar Loan, the applicable
rate per annum set forth in the Pricing Schedule in the row opposite the caption
“Eurodollar Margin” and in the column corresponding to the “Pricing Level” that
applies for such day;

(b) with respect to any Revolving Loan that is a Base Rate Loan, the applicable
rate per annum set forth in the Pricing Schedule in the row opposite the caption
“Base Rate Margin” and in the column corresponding to the “Pricing Level” that
applies for such day; and

(c) with respect to the facility fees payable hereunder, the applicable rate per
annum set forth in the Pricing Schedule in the row opposite the caption
“Facility Fee Rate” and in the column corresponding to the “Pricing Level” that
applies for such day.

In each case, the “Applicable Rate” will be based on the Borrower’s Pricing
Rating (as defined in the Pricing Schedule) as of the relevant determination
date; provided that at any time when an Event of Default has occurred and is
continuing, such Applicable Rates will be those set forth in the Pricing
Schedule as “Level III Pricing”, effective upon the Agent’s giving notice to the
Borrower of such applicability of Level III Pricing.

 

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On the First Amendment Effective Date and until adjusted pursuant to the
provisions of this definition and the Pricing Schedule, the Applicable Rate will
be determined by reference to Level II Pricing.

“Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03; provided that any Borrowing Request in respect of
a Borrowing that would increase the Exposures shall be signed by a Financial
Officer.

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Revolving Loans in the maximum aggregate amount, and upon and subject to
the other terms and conditions, set forth in this Agreement, as such commitment
may be (a) reduced from time to time pursuant to Section 2.09, and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The amount of each Lender’s Commitment as of the First
Amendment Effective Date is set forth on Schedule 2.01(a). The aggregate amount
of the Commitments as of the First Amendment Effective Date is $250,000,000.

“Consolidated Net Worth” means, as at any date of determination, the remainder
of (a) all Consolidated Assets as of such date, minus (b) all Consolidated
Liabilities as of such date; provided that, commencing as of March 31, 2008 and
thereafter, Consolidated Net Worth shall be computed without giving effect to
any gain or loss by reason of the sale of all or any portion of the stock of
Radian Asset Assurance Inc. and, if the stock of Radian Asset Assurance Inc. is
sold, Radian Asset Securities Inc., or the sale of all or any portion of the
Equity Interests of Sherman.

“Financial Officer” means the chief financial officer or treasurer of the
Borrower.

“Interest Period” means, with respect to any Eurodollar Borrowing, the period
beginning on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two or three months (or
other periods available from all Lenders and acceptable to all Lenders)
thereafter, as the Borrower may elect; provided that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be deemed to be the effective date of the most recent conversion or continuation
of such Borrowing.

“Lender Parties” means the Lenders, the Administrative Agent and the Collateral
Agent.

 

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“Loan Documents” means this Agreement, any promissory note issued by the
Borrower pursuant to Section 2.10(e), the Security Documents and any certificate
required to be delivered by the Borrower pursuant to Article 2, Article 5 or any
Security Document.

“Material Debt” means an issuance or series of related issuances of Debt (other
than obligations in respect of the Loans) of any one or more of the Borrower and
its Subsidiaries in an aggregate principal amount exceeding $25,000,000.

“Permitted Liens” means:

(a) Liens granted pursuant to the Security Documents;

(b) Liens existing on April 4, 2008 and set forth on Schedule 6.02 hereto and
cash collateral pledged to secure letters of credit, in excess of the amounts so
secured and identified in Schedule 6.02, so long as such excess does not at any
time exceed $5,000,000;

(c) Liens imposed by law for taxes that are not yet due or are being contested
in compliance with Section 5.05;

(d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other
like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 90 days or are being
contested in good faith by appropriate proceedings;

(e) pledges and deposits made in the ordinary course of business in compliance
with workers’ compensation, unemployment insurance and other social security
laws or regulations (including, without limitation, deposits made in the
ordinary course of business to cash collateralize letters of credit described in
the parenthetical in clause (i) of the definition of “Debt”);

(f) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, and Liens imposed by statutory or common law
relating to banker’s liens or rights of setoff or similar rights relating to
deposit accounts, in each case in the ordinary course of business;

(g) Liens arising in the ordinary course of business in favor of issuers of
documentary letters of credit;

(h) contractual set-off rights, rights of lessees and licensees arising in the
ordinary course of business;

(i) judgment Liens in respect of judgments that do not constitute an Event of
Default under clause (k) of Article 7;

 

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(j) easements, zoning restrictions, rights-of-way, licenses, reservations, minor
irregularities of title and similar encumbrances on real property imposed by law
or arising in the ordinary course of business that do not secure any monetary
obligation and do not materially detract from the value of the affected property
or interfere with the ordinary conduct of business of the Borrower or any
Material Subsidiary;

(k) any extensions, replacements, renewals or refinancing of the foregoing; and

(l) statutory reserves for Insurance Subsidiaries.

“Revolving Availability Termination Date” means February 28, 2011 (or if such
date is not a Business Day with respect to Eurodollar Loans, the next preceding
day that is a Business Day with respect to Eurodollar Loans).

(b) Clause (a) of the definition of “Change in Control” in Section 1.01 (Defined
Terms) is amended and restated in its entirety to provide as follows:

(a) the acquisition by any Person, including any syndicate or group deemed to be
a “person” under Section 13(d)(3) of the Exchange Act of beneficial ownership,
directly or indirectly through a purchase, merger or other acquisition
transaction or series of purchase, merger or other acquisition transactions, of
shares of the Capital Stock of the Borrower entitling that person to exercise
33% or more of the total voting power of all shares of the Capital Stock of the
Borrower entitled to vote generally in elections of directors (“Voting Stock”),
other than (i) any acquisition by the Borrower, any of its Subsidiaries or any
of its employee benefit plans (except that any of those Persons shall be deemed
to have beneficial ownership of all securities it has the right to acquire,
whether the right is currently exercisable or its exercisable only upon the
occurrence of a subsequent condition), (ii) an acquisition that is the result of
a Full Pay-down Issuance and (iii) an acquisition by a Person who, as of the
First Amendment Effective Date, owns at least 13% of the Voting Stock.

(c) Clause (b) of the definition of “Debt” in Section 1.01 (Defined Terms) is
amended and restated in its entirety to provide as follows:

(b) all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments (but excluding surety and appeal bonds, performance bonds
and other obligations of a like nature),

(d) The definition of “Guarantee” in Section 1.01 (Defined Terms) is amended by
adding the following sentence to the end thereof:

For the sake of clarity, a Guarantee does not include a guarantee of a financial
guarantee described in clause (ii).

 

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(e) The definition of “Re-domestication Requirements” in Section 1.01 (Defined
Terms) is deleted in its entirety.

(f) The following provisions are added to Section 1.01 (Defined Terms), at the
appropriate alphabetical order, as new defined terms thereunder:

“2001 Indenture” means that certain Indenture dated May 29, 2001 between the
Borrower and First Union National Bank, in its capacity as trustee thereunder,
as amended, supplemented and replaced after the First Amendment Effective Date
pursuant to the terms hereof.

“2003 Indenture” means that certain Indenture dated February 14, 2003 between
the Borrower and Wachovia Bank, National Association, in its capacity as trustee
thereunder, as amended, supplemented and replaced after the First Amendment
Effective Date pursuant to the terms hereof.

“2005 Indenture” means that certain Senior Indenture dated June 7, 2005 between
the Borrower and Wells Fargo Bank, National Association, in its capacity as
trustee thereunder, as supplemented by the Terms of Securities certified by the
Borrower on June 7, 2005, as amended, supplemented and replaced after the First
Amendment Effective Date pursuant to the terms hereof.

“Agents” means, collectively, the Administrative Agent and the Collateral Agent.

“Assured Income” means, for any period, without duplication, the sum of

 

  (a) the aggregate amount, without duplication, of (i) dividends received by
the Borrower in cash from its Insurance Subsidiaries during the immediately
preceding Fiscal Year pursuant to the restrictions and limitations of the
Applicable Insurance Regulatory Authorities and (ii) dividends that were
permitted to have been received by the Borrower in cash from its Insurance
Subsidiaries during the immediately preceding Fiscal Year pursuant to the
restrictions and limitations of the Applicable Insurance Regulatory Authorities
but were not so received;

 

  (b) shared expense reimbursement payments received in cash by the Borrower
during such period from Subsidiaries, which payments, to the extent required by
applicable law, have been approved by the Applicable Insurance Regulatory
Authorities; and

 

  (c) dividends received in cash by the Borrower during such period from Radian
Asset Management Inc. arising from distributions or dividends received from
Sherman.

 

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“Bond Parties” means, collectively, (i) the Bond Trustees and (ii) the “Holders”
as defined and used in each of the 2001 Indenture, the 2003 Indenture and the
2005 Indenture.

“Bond Trustee” means each of (i) First Union National Bank, in its capacity as
trustee under the 2001 Indenture, (ii) Wachovia Bank, National Association, in
its capacity as trustee under the 2003 Indenture, and (iii) Wells Fargo Bank,
National Association, in its capacity as trustee under the 2005 Indenture, and
the respective successors of each.

“Designated Subsidiary” has the meaning specified in each of the 2001 Indenture,
the 2003 Indenture and the 2005 Indenture.

“Collateral” means, collectively, the Facility Collateral and the Shared
Collateral.

“Collateral Agent” means KeyBank National Association, in its capacity as
collateral agent for the Lender Parties under and pursuant to the Security
Documents.

“Coverage Ratio Commencement Quarter” means the Fiscal Quarter in which either
(i) the approval of any Applicable Insurance Regulatory Authority in respect of
any shared expense reimbursement payment otherwise owing to the Borrower or a
Material Insurance Subsidiary by another Material Insurance Subsidiary is
rescinded or otherwise ceases to be effective or (ii) any Material Insurance
Subsidiary otherwise fails to pay any shared expense reimbursement payment owing
pursuant to the shared expense reimbursement arrangement among the Borrower and
its Material Insurance Subsidiaries in effect of the First Amendment Effective
Date, as from time to time modified with the prior written consent of the
Administrative Agent.

“Enhance Financial” means Enhance Financial Services Group Inc., a New York
corporation and a Subsidiary.

“Facility Collateral” means (a) any and all “Collateral”, as defined in any
applicable Facility Security Document and (b) any other assets or property of
the Borrower in which a Lien is granted pursuant to any Facility Security
Document.

“Facility Collateral Requirement” means the requirement (except where such
requirement is expressly limited pursuant to a Security Document) that:

(a) the Collateral Agent shall have received from the Borrower a counterpart of
the Facility Security Agreement duly executed and delivered on behalf of the
Borrower;

(b) all outstanding Equity Interests of each first-tier Subsidiary, other than
Radian Asset Securities Inc., that is not a Designated Subsidiary shall have
been pledged pursuant to the Facility Security Agreement, and the Collateral
Agent shall have received certificates or other instruments representing all
such Equity Interests (except any such Equity Interests of any Subsidiary that
are not evidenced by certificates or other instruments), together with stock
powers or other instruments of transfer with respect thereto endorsed in blank;

 

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(c) all Debt of each Subsidiary that is owing to the Borrower and evidenced by
an instrument shall have been pledged pursuant to the Facility Security
Agreement, and the Collateral Agent shall have received all such instruments,
together with instruments of transfer with respect thereto endorsed in blank;

(d) all documents and instruments, including Uniform Commercial Code financing
statements, required by law or reasonably requested by the Collateral Agent to
be filed, registered or recorded to create the Liens intended to be created by
the Facility Security Agreement and perfect such Liens to the extent required
by, and with the priority required by, the Facility Security Agreement, shall
have been filed, registered or recorded or delivered to the Collateral Agent for
filing, registration or recording; and

(e) the Borrower shall have obtained all consents and approvals required to be
obtained by it in connection with the execution and delivery of all Facility
Security Documents, the performance of its obligations thereunder and the
granting by it of the Liens thereunder.

“Facility Security Agreement” means the Pledge and Security Agreement (Facility
Collateral) dated April 30, 2008 between the Borrower, as debtor, and the
Collateral Agent, as secured party, for the benefit of the Lender Parties.

“Facility Security Documents” means, collectively, the Facility Security
Agreement and each other document executed or filed in connection therewith.

“First Amendment Effective Date” means the “First Amendment Effective Date” as
defined in the First Amendment to this Agreement dated April 30, 2008.

“Fixed Charge Coverage Ratio” means, as of the end of any Fiscal Quarter, the
ratio of (i) Assured Income for the four Fiscal Quarter period then ending to
(ii) Fixed Charges for such period.

“Fixed Charges” means, for any period, the sum of interest expense, scheduled
reductions in Debt principal, other mandatory reductions in Debt principal (but
only to the extent that any such mandatory reduction exceeds the proceeds of
sale, equity issuance or other event that gives rise to such mandatory
reduction), taxes on income paid, sums paid to redeem or otherwise purchase
Equity Interests of the Borrower, dividends paid in cash, and other Restricted
Payments (determined on a Consolidated basis) made in cash during such period.

“Full Pay-down Issuance” means the issuance (or series of related issuances
consummated during a period of not more that fifteen (15) days) of Equity
Interests in the Borrower under which both (a) the Net Proceeds of such issuance
(or such series of related issuances) are in an amount that equals or exceeds
the Total Outstanding Amount on the close of business of the

 

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Business Day immediately preceding the date of such issuance (or the date of the
first issuance in such series of related issuances) and (b) immediately upon
receipt of such Net Proceeds, pursuant to Section 2.11(b)(ii)(B), the Borrower
pays to the Administrative Agent an amount equal to 100% of such Net Proceeds to
the extent necessary to prepay the Total Outstanding Amount in full.

“Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest rate, currency exchange rate or commodity price hedging arrangement.

“Net Proceeds” means, with respect to any Prepayment Sale or sale or issuance of
Equity Interests, convertible, trust preferred and other so-called ‘hybrid’
securities, or Debt securities or other incurrence of Debt, the proceeds
resulting therefrom, net of (i) commissions, cost valuations and other
reasonable and customary expenses incurred in connection with such Prepayment
Sale, other disposition or issuance, and other reasonable and customary fees and
expenses incurred, and all federal, state, and local taxes paid or reasonably
estimated to be payable by the Borrower or a Subsidiary, as a consequence of
such Prepayment Sale or other disposition, (ii) incremental income taxes paid or
payable as a result thereof, (iii) any sums payable to the Bond Parties pursuant
to the Shared Collateral Trust Agreement, and (iv) reserves reasonably
established in respect of sale price adjustments and assumed or retained
liabilities associated therewith; provided that upon release of any such
reserve, the amount released shall be considered Net Proceeds.

“Prepayment Sale” means a sale, assignment, conveyance, license, transfer or
other disposition to, or any exchange of property with, any Person, in one
transaction or a series of related transactions, of all or any part of the
Equity Interests in Radian Asset Assurance Inc., Radian Asset Securities Inc.,
Radian Asset Management Inc. or Sherman.

“Qualified Stock Agreement” shall mean a complete, binding, and legally
enforceable definitive written agreement between Enhance Financial and a
financially capable purchaser for the sale to such purchaser of all or a portion
of the capital stock of Radian Asset Assurance Inc. owned by Enhance Financial,
which agreement (i) shall be in form and substance customary for the sale of
securities of issuers of like kind, size and nature of business, and of issuers
under similar circumstances, as that of Radian Asset Assurance Inc., (ii) shall
not contain any contingency to a reasonably prompt closing (and in any event by
the first anniversary of the First Amendment Effective Date), other than
customary conditions to closing, such as, the delivery and filing of instruments
and the approval, if required, of any Applicable Insurance Regulatory Authority,
(iii) shall provide that the entire purchase price or consideration shall be
paid in cash at the consummation of such sale, and (iv) shall be on other terms
reasonably satisfactory to the Administrative Agent.

“Security Documents” means, collectively, the Facility Security Documents and
the Shared Security Documents.

 

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“Shared Collateral” means (a) any and all “Collateral”, as defined in any
applicable Shared Security Document and (b) any other assets or property of the
Borrower in which a Lien is granted pursuant to any Shared Security Document.

“Shared Collateral Requirement” means the requirement that:

(a) the Shared Collateral Trustee shall have received from the Borrower a
counterpart of the Shared Security Agreement duly executed and delivered on
behalf of the Borrower and a counterpart of the Shared Collateral Trust
Agreement duly executed and delivered on behalf of the Borrower and the Bond
Trustees;

(b) all outstanding Equity Interests of each first-tier Subsidiary that is a
Designated Subsidiary, other than Enhance Financial shall have been pledged
pursuant to the Shared Security Agreement, and the Shared Collateral Trustee
shall have received certificates or other instruments representing all such
Equity Interests (except any such Equity Interests of any Subsidiary that are
not evidenced by certificates or other instruments), together with stock powers
or other instruments of transfer with respect thereto endorsed in blank;

(c) all documents and instruments, including Uniform Commercial Code financing
statements, required by law or reasonably requested by the Shared Collateral
Trustee to be filed, registered or recorded to create the Liens intended to be
created by the Shared Security Agreement and perfect such Liens to the extent
required by, and with the priority required by, the Shared Security Agreement,
shall have been filed, registered or recorded or delivered to the Shared
Collateral Trustee for filing, registration or recording; and

(d) the Borrower shall have obtained all consents and approvals required to be
obtained by it in connection with the execution and delivery of all Shared
Security Documents, the performance of its obligations thereunder and the
granting by it of the Liens thereunder.

“Shared Collateral Trust Agreement” means the Collateral Trust Agreement (Shared
Collateral) dated April 30, 2008 among (i) the Borrower, (ii) the Shared
Collateral Trustee, (iii) the Collateral Agent for the benefit of the Lender
Parties, and (iv) the Bond Trustees, for the benefit of the Bond Parties.

“Shared Collateral Trustee” means KeyBank National Association, in its capacity
as collateral trustee under and pursuant to the Shared Security Documents.

“Shared Security Agreement” means the Pledge and Security Agreement (Shared
Collateral) dated April 30, 2008 between the Borrower, as debtor, and the Shared
Collateral Trustee, as secured party, for the benefit of (i) the Collateral
Agent and the other Lender Parties and (ii) the Bond Trustee and the other Bond
Parties.

 

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“Shared Security Documents” means, collectively, the Shared Security Agreement,
the Shared Collateral Trust Agreement and each other document executed or filed
in connection therewith.

“Sherman” means Sherman Financial Group LLC, a Delaware limited liability
company.

“Subordinated Debt” means the Debt that has been subordinated to the Loans and
other obligations of the Borrower under and pursuant to the Loan Documents in
right and time of payment upon terms that are satisfactory to the Administrative
Agent, which terms may, in the Administrative Agent’s determination, include
(without limitation) limitations or restrictions on the right of the holder of
such Debt to receive payments and exercise remedies.

“Total Capitalization” means, at any date, the aggregate of, without
duplication, (i) Total Debt and (ii) Consolidated Net Worth on such date.

“Total Debt” means, at any date, Consolidated Debt of the Borrower on such date
(other than Debt of the type that is described in any of clause (f), clause
(g) and clause (k) of the definition of “Debt” hereunder and other than
cash-secured reimbursement obligations in respect of letters of credit).

(g) Clause (ii) of paragraph (a) of Section 2.04 (Swingline Loans) is amended
and restated in its entirety to provide as follows:

(ii) will not result in the aggregate outstanding principal amount of all
Swingline Loans to exceed an amount equal to ten percent (10%) of the Total
Commitment then in effect,

(h) Section 2.06 (Extension of Revolving Availability Termination Date) is
amended and restated in its entirety to provide as follows:

Section 2.06. [Reserved]

(i) The following provision is added to the end of Section 2.09 (Termination or
Reduction of Commitments) as a new paragraph (d) thereof:

(d) Until such time as the Total Commitment has been reduced to $150,000,000,
the Commitment of each Lender shall be reduced permanently, without premium or
penalty, at the time that any mandatory prepayment of Revolving Loans would be
made pursuant to Section 2.11(b) if the Revolving Loans of such Lender were then
outstanding in the full amount of such Lender’s Commitment then in effect, in an
amount equal to the required prepayment of principal of such Lender’s Revolving
Loans that would be required to be made in such circumstance. Any such reduction
shall apply to reduce proportionately and

 

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permanently the Commitment of each of the Lenders. The Borrower will provide at
least three Business Days’ (or such shorter period to which the Administrative
Agent may in its discretion agree in writing) prior written notice (or
telephonic notice confirmed in writing) to the Administrative Agent of any
reduction of the Commitments pursuant to this Section 2.09(d), specifying the
date and amount of the reduction.

(j) Paragraphs (b) (Mandatory Prepayments) and (c) (Allocation of Prepayments)
of Section 2.11 (Optional and Mandatory Prepayments) are amended and restated in
their entirety to provide, respectively, as follows:

(b) Mandatory Prepayments.

(i) If at any date the Total Outstanding Amount exceeds the Total Commitment
calculated as of such date, then not later than the next succeeding Business
Day, the Borrower shall be required to prepay the Loans in an amount equal to
such excess until the Total Outstanding Amount does not exceed the Total
Commitment.

(ii) If at any time:

(A) the Borrower or any Subsidiary receives Net Proceeds of a Prepayment Sale,
then immediately upon receipt thereof, the Borrower shall pay to the
Administrative Agent, an amount equal to 100% of the Net Proceeds from such
Prepayment Sale (or such lesser amount that is sufficient to pay in full the
Total Outstanding Amount on such date), which payment shall be applied as a
mandatory prepayment of the principal of the Revolving Loans as provided in this
Section 2.11; provided, however, that with respect to a Prepayment Sale in
respect of Radian Asset Assurance Inc., such prepayment shall be in an amount
equal to the aggregate of (I) 89.51% of the Net Proceeds therefrom, and (II)
such portion, if any, of such Net Proceeds that, if paid by Radian Guaranty Inc.
to the Borrower as a dividend or other distribution or expense reimbursement,
would not violate any Applicable Regulatory Law (as defined in the Facility
Security Agreement) or contravene any directive of an Applicable Insurance
Regulatory Authority and in the judgment of the Administrative Agent, based on
evidence provided to the Administrative Agent by the Rating Agencies, would not
cause a material adverse effect on the financial strength rating of Radian
Guaranty Inc.; and

(B) the Borrower or any Subsidiary (for the purposes of this clause (B), the
“Initial Subsidiary”) receives Net Proceeds of any sale or issuance of Equity
Interests, convertible, trust preferred and other so-called ‘hybrid’ securities,
or Debt securities or other incurrence of Debt of the type described in clauses
(a) and (b) of the definition of such term, other than (I) Debt under this
Agreement, (II) all net obligations of the Borrower or any Subsidiary under any
Hedging Agreement, (III) Debt of the Borrower or any Subsidiary to any
Subsidiary or the Borrower, (IV) Debt permitted pursuant

 

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to Section 6.01 of this Agreement (other than pursuant to clause (ix) thereof),
(V) Equity Interests issued to management personnel, directors, consultants, or
advisors of, or pursuant to an employee incentive plan of, the Borrower or a
Subsidiary, and (VI) Equity Interests issued to the Borrower or a Subsidiary,
then immediately upon receipt thereof, an amount equal to 100% of the Net
Proceeds from such sale, issuance or incurrence (or such lesser amount that is
sufficient to pay in full the Total Outstanding Amount on such date) shall,
immediately upon receipt, be paid to the Administrative Agent and applied as a
mandatory prepayment of the principal of the Revolving Loans as provided in this
Section 2.11; provided, however, that if the Initial Subsidiary or any
Subsidiary that is the direct or indirect parent of such Subsidiary (for the
purposes of this clause (B), an “Intervening Subsidiary”) is an Insurance
Subsidiary, the amount of such prepayment shall be reduced by the portion of
such Net Proceeds that, if paid by, as applicable, the Initial Subsidiary or an
Intervening Subsidiary to, as applicable, the Borrower or an Intervening
Subsidiary as a dividend or other distribution or expense reimbursement, would
(x) violate any Applicable Regulatory Law or contravene any directive of an
Applicable Insurance Regulatory Authority for the Initial Subsidiary or such
Intervening Subsidiary or (y) in the judgment of the Administrative Agent, based
on evidence provided to the Administrative Agent by the Rating Agencies, cause a
material adverse effect on the financial strength rating of, as applicable, the
Initial Subsidiary or such Intervening Subsidiary.

The Borrower shall make commercially reasonable best efforts to cause any
applicable Insurance Subsidiary (i) to obtain the approval, to the extent
required for the payment to the Borrower or any Intervening Subsidiary of any
such Net Proceeds, of the Applicable Insurance Regulatory Authority for such
Insurance Subsidiary and (ii) to take such actions as may reverse the Rating
Agencies’ determination that the payment to the Borrower or any Intervening
Subsidiary of any such Net Proceeds would have a material adverse effect on the
financial strength rating of such Insurance Subsidiary.

To the extent that any of the above-described conditions (relating to Applicable
Regulatory Laws, directives of Applicable Insurance Regulatory Authorities or
financial strength ratings) reduces the amount of a prepayment that would
otherwise be payable pursuant to the provisions of this clause (ii) (each a
“Reduced Prepayment”) ceases to exist as to all or any portion thereof (and such
Reduced Prepayment would not be prevented by another such condition then
existing), the Borrower shall promptly (and in any event within 15 days of such
cessation) pay such Reduced Prepayment (or the portion thereof to which such
conditions cease to apply) to the Administrative Agent for application as a
mandatory prepayment of the principal of the Revolving Loans as provided in this
Section 2.11.

(c) Allocation of Prepayments. Before any optional or mandatory prepayment of
Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings to
be prepaid and shall specify such selection in the notice of such prepayment
pursuant to

 

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Section 2.11(f). If any mandatory prepayment made pursuant to Section 2.11(b)
would otherwise result in any amounts payable under Section 2.17, so long as no
Event of Default then exists, the Borrower may elect to have the Administrative
Agent hold such prepayment, on terms reasonably determined by the Administrative
Agent and reasonably acceptable to the Borrower, as cash collateral, until the
end of the Interest Period of the Eurodollar Loans to be prepaid.

(k) Paragraph (b) of Section 2.13 (Fees) is amended and restated in its entirety
to provide as follows:

(b) The Borrower shall pay to the Administrative Agent for the benefit of each
Lender a utilization fee at the Utilization Fee Rate per annum, computed on the
Exposure of such Lender, for each day prior to the Revolving Availability
Termination Date on which such Lender’s Exposure exceeds an amount equal to
one-half ( 1/2) of such Lender’s Commitment on such day. Such utilization fee
shall be payable in arrears on the last day of each calendar quarter in respect
of the calendar quarter then ending and on the earlier date on which the
Commitment of such Lender shall be terminated. As used herein, “Utilization Fee
Rate” shall mean three-fourths of one percent (0.75%); provided that such rate
shall be increased by an additional one-fourth of one percent (0.25%) as of the
last day of each Fiscal Quarter, commencing September 30, 2008, unless, on such
date, the Total Commitment is equal to or less than $150,000,000.

(l) Paragraph (a) of Section 2.14 (Interest) is amended and restated in its
entirety to provide as follows:

(a) The Loans comprising each Base Rate Borrowing shall bear interest for each
day at the Alternate Base Rate, plus the Applicable Rate.

(m) Section 2.21 (Optional Increase in Commitments) is amended and restated in
its entirety to provide as follows:

Section 2.21. Collateral Security. From and after the First Amendment Effective
Date, the payment and performance of the Debt and other obligations of the
Borrower under and pursuant to this Agreement and the other Loan Documents shall
be secured by a Lien on the Collateral, which shall consist of all of the
personal property assets of the Borrower other than as provided in paragraph
(a), below, upon and subject to the terms of this Section 2.21 and the Security
Documents; provided that the Administrative Agent may exclude from the Lien of
the Security Documents, or may determine not require the perfection of such Lien
on, such other property as the Administrative Agent may determine not to provide
sufficient collateral value when compared to the cost or other detriment
incurred in connection with the attachment or perfection of such Lien thereon or
the Borrower’s inability, notwithstanding commercially reasonable efforts, to
obtain such consent of any Applicable Insurance Regulatory Authority, if any, as
may be required by law to permit such Lien thereon.

 

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(a) Enhance Financial and Related Subsidiary. On the First Amendment Effective
Date the Equity Interests of Enhance Financial and Radian Asset Securities Inc.
owned by the Borrower shall not constitute part of the Collateral. Following the
First Amendment Effective Date, the following shall apply:

(i) On October 15, 2008 the Borrower shall grant (A) to the Shared Collateral
Trustee, pursuant to a supplement to the Shared Security Agreement in form and
substance satisfactory to the Shared Collateral Trustee, a perfected first
priority security interest in any and all of the capital stock of Enhance
Financial that is then owned by the Borrower and (B) to the Collateral Agent,
pursuant to a supplement to the Facility Security Agreement in form and
substance satisfactory to the Collateral Agent, a perfected first priority
security interest in any and all of the capital stock of Radian Asset Securities
Inc. that is then owned by the Borrower, unless on or before September 30, 2008,
the Borrower shall have delivered to the Administrative Agent a firm letter of
intent contemplating the execution and delivery of a Qualifying Stock Agreement
no later than December 31, 2008 and otherwise in form and content reasonably
satisfactory to the Administrative Agent;

(ii) On January 15, 2009 the Borrower shall grant (A) to the Shared Collateral
Trustee, pursuant to a supplement to the Shared Security Agreement in form and
substance satisfactory to the Shared Collateral Trustee, a perfected first
priority security interest in any and all of the capital stock of Enhance
Financial that is then owned by the Borrower and (B) to the Collateral Agent,
pursuant to a supplement to the Facility Security Agreement in form and
substance satisfactory to the Collateral Agent, a perfected first priority
security interest in any and all of the capital stock of Radian Asset Securities
Inc. that is then owned by the Borrower, unless on or before December 31, 2008
the Borrower shall have delivered to the Administrative Agent a Qualifying Stock
Agreement; and

(iii) On the earlier of (A) the date that is fifteen (15) days after the date on
which an aggregate of more than 50% of the issued and outstanding Equity
Interests of Radian Asset Assurance Inc. have been sold following the First
Amendment Effective Date and (B) the first anniversary of the First Amendment
Effective Date the Borrower shall grant (I) to the Shared Collateral Trustee,
pursuant to a supplement to the Shared Security Agreement in form and substance
satisfactory to the Shared Collateral Trustee, a perfected first priority
security interest in any and all of the capital stock of Enhance Financial that
is then owned by the Borrower and (II) to the Collateral Agent, pursuant to a
supplement to the Facility Security Agreement in form and substance satisfactory
to the Collateral Agent, a perfected first priority security interest in any and
all of the capital stock of Radian Asset Securities Inc. that is then owned by
the Borrower;

provided, however, that if on any date prior to the Borrower’s grant of a
security interest in the capital stock of Enhance Financial and Radian Asset
Securities Inc. pursuant to clause (i), (ii) or (iii), above, Enhance Financial
ceases to be a Designated Subsidiary, the Borrower shall, within fifteen
(15) days after such date, grant to the Collateral Agent, pursuant to a
supplement

 

15

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to the Facility Security Agreement in form and substance satisfactory to the
Collateral Agent, a perfected first priority security interest in any and all of
the capital stock of Enhance Financial and Radian Asset Securities Inc. that is
then owned by the Borrower.

(b) Release of Collateral. The Administrative Agent shall, promptly following
the request of the Borrower, issue and deliver to the Collateral Agent and the
Shared Collateral Trustee a written notice terminating the Facility Security
Agreement, the Shared Security Agreement and the Shared Collateral Trust
Agreement and the Liens created thereunder at such time as all four of the
following conditions shall exist on the date of such request and on the date of
issuance of such notice:

(i) the Borrower shall have delivered to the Administrative Agent and the
Lenders financial statements required pursuant to Section 5.01 and Section 5.03
(in each case accompanied by the concurrent certificates and opinions also
required by those Sections) evidencing that for two consecutive Fiscal Quarters
each of the Borrower and each Material Insurance Subsidiary had net income,
determined in accordance with, respectively, GAAP or statutory accounting
practices required or permitted by the Applicable Insurance Regulatory
Authority, of not less than $1;

(ii) the Senior Debt Rating by S&P is then not less than A-;

(iii) the Senior Debt Rating by Moody’s is then not less than A3; and

(iv) there shall not then exist a Default, and the Borrower shall have delivered
to the Administrative Agent and the Lenders a certificate to that effect
executed by a Senior Officer.

If any Collateral is sold, transferred, conveyed or disposed of pursuant to any
transaction permitted under this Agreement, the Administrative Agent shall
promptly release, or provide notice to the Collateral Agent and the Shared
Collateral Trustee to release, any and all Liens of the Security Documents
attached to such Collateral.

(c) Reinstatement of Security Documents. If at any time after the terminations
of the Facility Security Agreement, the Shared Security Agreement and the Shared
Collateral Trust Agreement (i) the Senior Debt Rating by S&P is less than A- or
(ii) the Senior Debt Rating by Moody’s is less than A3, the Borrower shall,
promptly, and in any event within thirty (30) days, following notice from the
Administrative Agent, cause the Facility Collateral Requirement and the Shared
Collateral Requirement to be satisfied. The Borrower shall not enter into with
any Person any agreement from and after the First Amendment Effective Date that
effectively prohibits or limits the ability of the Borrower to create, incur,
assume or suffer to exist any Lien upon or otherwise transfer any interest in
any of its assets as Collateral in favor of the Lender Parties, whether now
owned or hereafter acquired.

(d) Transfer of Designated Subsidiaries and Subsidiaries That Are Not Designated
Subsidiaries. The Security Documents contain provisions that provide for (i) the
release of the Equity Interests in Subsidiaries from the Lien of the

 

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Shared Security Documents at such time as they cease to be Designated
Subsidiaries and the attachment (or the continuation, if applicable) of the Lien
of the Facility Security Agreement to any Equity Interests so released and
(ii) the release of the Equity Interests in Subsidiaries from the Lien of the
Facility Security Documents at such time as they become Designated Subsidiaries
and, at the request of the Required Lenders, the attachment of the Lien of the
Shared Security Agreement to any Equity Interests so released.

(n) Section 3.04 (Financial Statements; No Material Adverse Change) is amended
and restated in its entirety to provide as follows:

Section 3.04. Financial Statements; No Material Adverse Change. (a) The Borrower
has heretofore furnished to the Lenders (or has made available to the Lenders
through its filings with the SEC’s EDGAR filing system) the audited Consolidated
balance sheet of the Borrower and its Subsidiaries as of December 31, 2007 and
the related Consolidated statements of income and cash flows for the Fiscal Year
then ended, reported on by PricewaterhouseCoopers LLP, independent public
accountants.

(b) Since December 31, 2007 (and, after the First Amendment Effective Date,
since the last day of the Fiscal Year in respect of which the Borrower has
delivered audited financial statements pursuant to Section 5.01(a)) there has
been no material adverse change in the business, operations, properties, assets,
or financial condition of the Borrower and its Subsidiaries, taken as a whole.

(o) Section 3.07 (Litigation) is amended and restated in its entirety to provide
as follows:

Section 3.07. Litigation. Except as set forth in any filings of the Borrower
made to the SEC, there is no action, suit, arbitration proceeding or other
proceeding, inquiry or investigation, at law or in equity, before or by any
arbitrator or Governmental Authority pending against the Borrower or any
Material Subsidiary or of which the Borrower or any Material Subsidiary has
otherwise received notice or which, to the knowledge of the Borrower, is
threatened against the Borrower or any Material Subsidiary (i) which would
reasonably be expected to result in a Material Adverse Effect or (ii) that
involves any of the Loan Documents or the Financing Transactions.

(p) Each reference in Article 3 (Representations and Warranties), other than
Sections 3.04 and 3.07 (which are amended and restated in their entirety as
provided in paragraphs (n) and (o), above), to the “Effective Date” shall be
deemed to refer to the “First Amendment Effective Date”; and Section 3.10 is
further amended by deleting therefrom the sum “$50,000,000” and by inserting
therein the sum “$25,000,000” in its stead.

 

17

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(q) Clause (y) of paragraph (iii) of Section 5.01 (Financial Statements and
Other Information) is amended and restated in entirety to provide as follows:

(y) setting forth reasonably detailed calculations demonstrating compliance with
Section 6.09, Section 6.10(b) and, from and after the end of the Coverage Ratio
Commencement Quarter, Section 6.10(a) and

(r) Section 5.01 (Financial Statements and Other Information) is amended by
adding the following two paragraphs to the end thereof:

Notwithstanding the provisions of clauses (i) and (ii), above:

(a) the Borrower may at its option defer satisfying the requirements of clause
(i) until the Outside Date by delivering to the Administrative Agent (for
delivery to each Lender) as soon as available and in any event within 90 days
after the end of each Fiscal Year,

(I) the Borrower’s interim Consolidated balance sheet as of the end of such
Fiscal Year and the related statement of income for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous Fiscal Year,
all certified by a Financial Officer as presenting fairly in all material
respects the financial position and results of operations of the Borrower and
its Subsidiaries on a Consolidated basis in accordance with GAAP, subject only
to adjustments pursuant to (A) Financial Accounting Standard No. 133 with
respect to credit derivatives insured or entered into by Subsidiaries of the
Borrower, (B) Financial Accounting Standard No. 157 with respect to fair value
determinations, (C) such other Financial Accounting Standards as may be
acceptable to the Administrative Agent, (D) receipt of final financial
information for such period in respect of Credit-Based Asset Servicing and
Securitization LLC and (E) receipt of final financial information for such
period in respect of Sherman and

(II) a certificate of a Financial Officer certifying as to whether a Default has
occurred and is continuing and, if a Default has occurred and is continuing,
specifying the details thereof and any action taken or proposed to be taken with
respect thereto; and

(b) the Borrower may at its option defer satisfying the requirements of clause
(ii) until the Outside Date by delivering to the Administrative Agent (for
delivery to each Lender) as soon as available and in any event within 45 days
after the end of each of the first three Fiscal Quarters of each Fiscal Year,

(I) the Borrower’s interim Consolidated balance sheet as of the end of such
Fiscal Quarter and the related statement of income for such Fiscal Quarter and
for the then elapsed portion of such Fiscal Year, setting forth in

 

18

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each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
Fiscal Year, all certified by a Financial Officer as presenting fairly in all
material respects the financial position, results of operations and cash flows
of the Borrower and its Subsidiaries on a Consolidated basis in accordance with
GAAP, subject only to (A) customary year-end adjustments and excluding footnotes
and (B) adjustments pursuant to (v) Financial Accounting Standard No. 133 with
respect to credit derivatives insured or entered into by Subsidiaries of the
Borrower, (w) Financial Accounting Standard No. 157 with respect to fair value
determinations, (x) such other Financial Accounting Standards as may be
acceptable to the Administrative Agent, (y) receipt of final financial
information for such period in respect of Credit-Based Asset Servicing and
Securitization LLC and (z) receipt of final financial information for such
period in respect of Sherman and

(II) a certificate of a Financial Officer certifying as to whether a Default has
occurred and is continuing and, if a Default has occurred and is continuing,
specifying the details thereof and any action taken or proposed to be taken with
respect thereto.

As used in this paragraph, the term “Outside Date” means the date that is thirty
(30) days after the date on which the Borrower’s performance of the covenants
in, as the case may be, clause (i) or clause (ii) of this Section 5.01 would
otherwise be due.

Notwithstanding the provisions of the immediately preceding paragraph, if the
Borrower fails to comply fully with the provisions of, as the case may be,
clause (i) or clause (ii) of this Section 5.01 and, in each case, clause
(iii) of this Section 5.01 by the Outside Date for the financial statements and
other materials applicable thereto, an Event of Default shall exist under clause
(d) of Article 7 by reference to this Section 5.01; provided, however, that if,
notwithstanding commercially reasonable efforts by the Borrower, the Borrower is
unable to obtain the final financial information for such period in respect of
Credit-Based Asset Servicing and Securitization LLC or Sherman or both by such
Outside Date, and if the Borrower otherwise complies fully with the provisions
of, as the case may be, clause (i) or clause (ii) of this Section 5.01 and, in
each case, clause (iii) of this Section 5.01 by such Outside Date, the Borrower
shall be deemed to have performed its obligations under, as the case may be,
clause (i) or clause (ii) of this Section 5.01 by delivering financial
statements that are not prepared in accordance with, as applicable, generally
accepted auditing standards, GAAP and the applicable rules of the SEC, so long
as the absence of such final financial information in respect of Credit-Based
Asset Servicing and Securitization LLC or Sherman or both is the sole reason
that the Borrower is unable to deliver financial statements prepared in
accordance with, as applicable, generally accepted auditing standards, GAAP and
the applicable rules of the SEC.

 

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(s) The preamble of Section 5.02 (Notice of Material Events) is amended and
restated in its entirety to provide as follows:

The Borrower shall furnish to the Administrative Agent (for delivery to each
Lender) written notice of any of the following events or conditions promptly,
and in any event within three (3) Business days, following knowledge of such
event or condition by a Senior Officer:

(t) Section 5.03 (Material Insurance Subsidiary Reporting) is amended and
restated in its entirety to provide as follows:

Section 5.03. Material Insurance Subsidiary, and Certain Other Subsidiary,
Reporting. The Borrower shall furnish to the Administrative Agent (for delivery
to each Lender) copies of the following:

(a) promptly after filing with the Applicable Insurance Regulatory Authority and
in any event within 60 days after the end of each of the first three quarterly
fiscal periods of each fiscal year of each Material Insurance Subsidiary,
(i) its quarterly Statutory Statement for such quarterly fiscal period, together
with the opinion thereon of a senior financial officer of such Material
Insurance Subsidiary stating that such Statutory Statement presents in all
material respects the financial condition of such Material Insurance Subsidiary
for such quarterly fiscal period in accordance with statutory accounting
practices required or permitted by the Applicable Insurance Regulatory
Authority, (ii) the consolidating balance sheet of the Insurance Subsidiaries
that are engaged in the business of mortgage insurance, as a combined group, and
the consolidating balance sheet of the Insurance Subsidiaries that are engaged
in the business of financial guaranty, as a combined group, as of the end of
such quarterly fiscal period and the respective related statements of income for
such fiscal quarter and for the then elapsed portion of such fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by a Financial Officer as presenting
fairly in all material respects the financial position and results of operations
of each such Subsidiary in accordance with GAAP, excluding GAAP consolidation
principles, subject to customary year-end adjustments and excluding footnotes,
and (iii) the balance sheet of Sherman (unless and until the Borrower ceases
directly or indirectly to own an Equity Interest therein and unless,
notwithstanding commercially reasonable efforts by the Borrower, the Borrower is
unable to obtain the financial statements herein described) as of the end of
such quarterly fiscal period and the related statements of income and cash flows
for such fiscal quarter and for the then elapsed portion of such fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, presenting fairly in all material respects the
financial position, results of operations and cash flows of Sherman in
accordance with GAAP, subject to customary year-end adjustments and excluding
footnotes;

 

20

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(b) promptly after filing with the Applicable Insurance Regulatory Authority and
in any event within 100 days after the end of each fiscal year of each Material
Insurance Subsidiary, (i) the annual Statutory Statement of such Material
Insurance Subsidiary for such year, together with (A) the opinion thereon of a
senior financial officer of such Material Insurance Subsidiary stating that said
annual Statutory Statement presents in all material respects the financial
condition of such Material Insurance Subsidiary for such fiscal year in
accordance with statutory accounting practices required or permitted by the
Applicable Insurance Regulatory Authority and (B) a certificate of a valuation
actuary (but only to the extent that the Borrower or such Material Insurance
Subsidiary obtains such certificate) affirming the adequacy of reserves taken by
such Material Insurance Subsidiary in respect of future policyholder benefits as
at the end of such fiscal year (as shown on such Statutory Statement), (ii) the
consolidating balance sheet of the Insurance Subsidiaries that are engaged in
the business of mortgage insurance, as a combined group, and the consolidating
balance sheet of the Insurance Subsidiaries that are engaged in the business of
financial guaranty, as a combined group, as of the end of such fiscal year and
the respective related statements of income for such fiscal year, setting forth
in each case in comparative form the figures for the previous fiscal year, all
certified by a Financial Officer as presenting fairly in all material respects
the financial position and results of operations of each such Subsidiary in
accordance with GAAP, excluding GAAP consolidation principles, and (iii) the
balance sheets of Sherman (unless and until the Borrower ceases directly or
indirectly to own an Equity Interest therein and unless, notwithstanding
commercially reasonable efforts by the Borrower, the Borrower is unable to
obtain the financial statements herein described) as of the end of such fiscal
year and the related statements of income and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, presenting fairly in all material respects the financial position,
results of operations and cash flows of Sherman in accordance with GAAP; and

(c) if and when prepared, the report of PricewaterhouseCoopers LLP (or other
independent certified public accountants of recognized national standing) on the
annual Statutory Statements of each Material Insurance Subsidiary delivered
pursuant to clause (b), above.

 

(u) Section 6.01 is amended and restated in its entirety to provide as follows:

Section 6.01 Debt. (a) The Borrower shall not, and shall not permit any of its
Material Subsidiaries to, create, incur, assume or permit to exist any Debt,
except:

(i) Debt created under the Loan Documents;

(ii) Debt owing to the Bond Parties;

(iii) other Debt existing on the First Amendment Effective Date and (other than
Debts that, individually, do not exceed $5,000,000 and, in the aggregate, do not
exceed $25,000,000 in principal amount) listed in Schedule 6.01;

 

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(iv) Debt of Material Subsidiaries to the Borrower or to other Material
Subsidiaries;

(v) Debt of the Borrower and its Material Subsidiaries (including, without
limitation, Capital Lease Obligations) secured by Liens permitted under clause
(b), clause (c) or clause (d) of Section 6.02 hereof or under clause (b) of the
definition of Permitted Liens;

(vi) obligations under Hedging Agreements in the ordinary course of business of
the Borrower and the Subsidiaries;

(vii) letter of credit reimbursement obligations in the ordinary course of
business of the Borrower and the Subsidiaries;

(viii) Debt in respect of netting services, overdraft protection and similar
customary services in connection with deposit accounts as part of cash
management programs in the ordinary course of business of the Borrower and the
Subsidiaries;

(ix) Subordinated Debt that is unsecured;

(x) Debt of any Person that exists immediately prior to its becoming a Material
Subsidiary pursuant to the provisions of this Agreement so long as such (A) Debt
was not incurred in connection with or in anticipation of its becoming a
Material Subsidiary and (B) the holder of such Debt has no recourse in respect
thereof against the Borrower, any other Material Subsidiary or any property
thereof (unless such recourse existed prior to its becoming a Material
Subsidiary and not in connection therewith or in anticipation thereof);

(xi) Guarantees of Debt permitted under clauses (i) through (xi), inclusive,
above; and

(xii) Refinancings of the Debt permitted under clauses (ii) and (iii), but only
so long as (A) there is no increase in, or shortening of the maturity of, the
principal amount of such Debt and (B) in the case of the Debt permitted under
clause (ii) only, any such refinancing is effected in order to permit the
Borrower and the Subsidiaries greater flexibility in the sale of Equity
Interests of a Designated Subsidiary and complies with the requirements for
amendments, waivers and modifications contained in Section 6.07(a); provided
that if any such Debt under clause (ii) is so refinanced, then references in
this Agreement and the other Loan Documents to, as applicable, the 2001
Indenture, the 2003 Indenture and the 2005 Indenture (and the Bond Trustee and
Bond Parties thereunder) shall be deemed to refer to the indenture that governs
such refinanced Debt (and the trustee and holders thereunder).

(b) The Borrower shall not issue Current Redeemable Equity.

(v) Section 6.02 (Liens) is amended and restated in its entirety to provide as
follows:

 

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Section 6.02. Liens. The Borrower shall not, and shall not permit any of its
Material Subsidiaries to, create or permit to exist any Lien on any property now
owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:

(a) Permitted Liens;

(b) any Lien existing on any property or asset before the acquisition thereof by
the Borrower or any Material Subsidiary or existing on any property or asset of
any Person that first becomes a Material Subsidiary after the date hereof before
the time such Person becomes a Material Subsidiary; provided that (i) such Lien
is not created in contemplation of or in connection with such acquisition or
such Person becoming a Material Subsidiary, (ii) such Lien will not apply to any
other property or asset of the Borrower or any Material Subsidiary and
(iii) such Lien will secure only those obligations which it secures on the date
of such acquisition or the date such Person first becomes a Material Subsidiary,
as the case may be, and extensions, renewals and replacements thereof that do
not increase the outstanding principal amount thereof;

(c) Liens on fixed or capital assets acquired, constructed or improved by the
Borrower or any Material Subsidiary and assets used on or with or derived from
those assets; provided that (i) such Liens and the Debt secured thereby are
incurred before or within 90 days after such acquisition or the completion of
such construction or improvement, (ii) the Debt secured thereby does not exceed
the cost of acquiring, constructing or improving such fixed or capital assets
and (iii) such Liens will not apply to any other property of the Borrower or any
Material Subsidiary;

(d) Liens to secure a Debt owing to the Borrower or a Material Subsidiary;

(e) any Lien arising out of the refinancing, extension, renewal or refunding of
any Debt secured by a Lien permitted by any of clauses (b) or (c) of this
Section; provided that such Debt is not increased (except by the amount of fees,
expenses and premiums required to be paid in connection with such refinancing,
extension, renewal or refunding) and is not secured by any additional assets;

(f) Liens on investment income relating to specific insurance payment
liabilities and other assets received in the ordinary course of business as an
insurance or reinsurance company in each case held in a segregated trust or any
other assets subject to any trust or other action arising out of contractual or
regulatory obligations;

(g) Liens securing liabilities in respect of Hedging Agreements in the ordinary
course of business (but to the extent such Liens encumber assets of the Borrower
the notional amount so secured by assets of the Borrower shall not exceed
$25,000,000);

(h) Liens in favor of a custodian, broker or similar fiduciary or agent arising
from securities transactions in the ordinary course of business and that do not
secure Debt;

 

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(i) Liens on invested assets pursuant to a trust or letter of credit in
connection with reinsurance agreements or primary policies or other regulatory
requirements; and

(j) Liens securing any Conduit Debt or Insured Debt (or any guaranty made by
Borrower of such Conduit Debt or Insured Debt, as the case may be), provided
that any such Liens attach only to the underlying assets that are the subject of
such Conduit Debt or Insured Debt, as applicable;

provided, however, that aggregate amount of Debt and other liabilities secured
by Liens of the types described in clauses (b), (c) and (e) shall not at any
time exceed $10,000,000.

(w) Section 6.03 (Fundamental Changes) is amended and restated in its entirety
to provide as follows:

Section 6.03 Fundamental Changes. (a) The Borrower shall not, and shall not
permit any of its Material Subsidiaries to, merge into or consolidate with any
other Person, or liquidate or dissolve, or permit any other Person to merge into
or consolidate with it, except that any Material Subsidiary may merge into any
other Subsidiary (so long as the surviving entity is a Material Subsidiary).

(b) Neither the Borrower nor any Subsidiary will engage in any business if,
after giving effect to such business, less than two-thirds ( 2/3 ) of the
Borrower’s Consolidated revenues, determined in accordance with GAAP, would not
be derived from the providing of insurance and other financial services.

(x) Section 6.04 (Subsidiary Acquisitions) is amended and restated in its
entirety to provide as follows:

Section 6.04. Acquisitions. The Borrower shall not, and shall not permit any of
its Material Subsidiaries to, acquire any division or line of business from, or
Equity Interests of, or be a party to any acquisition of, any Person or a
substantial portion of its business assets, except financial assets, investment
property and general intangibles held for investment purposes (as financial
assets, investment property and general intangibles are defined in the Uniform
Commercial Code as in effect in the State of New York) in the ordinary course of
business and consistent with past practice, and capital expenditures in the
ordinary course of business, except that the restrictions of this Section 6.04
shall not apply to acquisitions by the Borrower or any Subsidiaries of Equity
Interests and assets permitted under Section 6.05.

(y) Section 6.05 (Asset Sales) is amended and restated in its entirety to
provide as follows:

Section 6.05. Asset Sales. The Borrower shall not, and shall not permit any
Material Subsidiary to, (a) sell, transfer, lease or otherwise dispose of all or
any substantial portion of its assets or (b) sell, transfer, lease or otherwise
dispose of any capital

 

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stock or other Equity Interest of any Subsidiary to any Person or (c) as to a
Material Subsidiary only, issue its own Equity Interests, except that the
Borrower (or any such Material Subsidiary) may sell, transfer or otherwise
dispose of (i) pursuant to a Qualified Stock Agreement (or the issuance of
Equity Interests in Radian Asset Assurance Inc. having equivalent effect),
Equity Interests (but not such assets) of Radian Asset Assurance Inc. (and in
connection therewith, of Radian Asset Securities Inc.) for consideration
determined by the Board of Directors to be the fair market value thereof,
(ii) Equity Interests of Sherman, for consideration determined by the Board of
Directors to be the fair market value thereof, (iii) Equity Interests or assets
of a Subsidiary to the Borrower or to another Subsidiary but only so long as,
prior to any such sale, transfer or disposition, the Collateral Agent advises
the Borrower in writing of its determination that such sale, transfer or
disposition does not impair or otherwise adversely affect the Lien of the
Security Documents or the prepayments (if, as and when they may thereafter
occur) required pursuant to Section 2.11, and (iv) other assets, so long as the
aggregate value of all assets sold pursuant to this clause (iv) does not exceed
$10,000,000 in any Fiscal Year, in each instance so long as both immediately
before and immediately after giving effect to such sale, no Default shall have
occurred and be continuing; provided that this Section 6.05 shall not be
construed to restrict the Borrower’s and its Subsidiaries’ (A) use of cash in
the conduct of the business of, as the case may be, the Borrower or a Subsidiary
in a manner that does not cause a Default to occur or (B) sale of financial
assets, investment property and general intangibles held for investment (as
defined above) in the ordinary course of their business and consistent with past
practice, and provided further that the sale or issuance by Radian Asset
Securities Inc. (or by another Subsidiary serving an equivalent function) of its
perpetual preferred Equity Interests (or similar securities) pursuant to a ‘put’
to a money market committed preferred custodial trust affiliated with the
Borrower’s auction rate money market trust preferred ‘soft capital’ program as
it exists on the First Amendment Effective Date (or to another trust or Person
under a similar program) shall be excluded from the restrictions of this
Section 6.05.

(z) Section 6.06 (Restricted Payments) is amended by deleting the words “Event
of” therefrom.

(aa) Section 6.07 is amended and restated in its entirety to provide as follows:

Section 6.07. Amendment of Indentures; Prepayments. (a) The Borrower shall not
enter into any amendment, waiver, supplement or other modification of any of the
2001 Indenture, the 2003 Indenture or the 2005 Indenture (or other agreement
governing the Debt evidenced by, as the case may be, the “Securities” or the
“Notes”, as defined in any such Indenture) (i) if the effect of such amendment,
waiver, supplement or other modification is to increase the interest rate on
such Debt (except as permitted pursuant to the proviso at the end of this
paragraph (a)), increase the amount of principal owing thereunder, increase the
amount of principal due on any date specified therein, change (to an earlier
date) any date upon which a payment of principal or interest is due thereon,
change any event of default or condition to an event of default with respect
thereto (other than to

 

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eliminate or make less onerous for the Borrower any such event of default or
condition thereto or increase any grace period related thereto), make more
onerous for the Borrower the redemption, prepayment or defeasance provisions
thereof, or provide for any additional or different collateral therefor (other
than pursuant to the Shared Security Agreement and the Shared Collateral Trust
Agreement or to release such collateral), or (ii) if the effect of such
amendment or change, together with all other amendments or changes made, is to
increase in any material respect the obligations of the obligor thereunder or to
confer any additional rights on the holders of such Debt (or a trustee or other
representative on their behalf); provided that any amendment, waiver, supplement
or modification of the 2001 Indenture, the 2003 Indenture or the 2005 Indenture
permitting the Borrower and the Subsidiaries greater flexibility in the sale of
Equity Interests of a Designated Subsidiary (and Permitted Required Charges
necessary to obtain such amendment, waiver, supplement or modification) shall
not be construed to breach this Section 6.07(a). As used herein, the term
“Permitted Required Charges” means fees or increases in interest rate, or both,
that are required by the Bond Parties as a condition to their consent to such
amendment, waiver, supplement or modification.

(b) The Borrower shall not, and shall not permit any Material Subsidiary to,
make or agree to pay or make, directly or indirectly (whether in cash,
securities or other property) any voluntary prepayment of any Prepayment
Restricted Debt, including, without limitation, Debt under any one or more of
the 2001 Indenture, the 2003 Indenture and the 2005 Indenture, other than a
refinancing of any thereof pursuant to the provisions of Section 6.01(a)(xii).
As used herein, (i) the term “prepayment” shall be deemed to include, without
limitation, any payment of principal and any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation,
defeasance or termination of any Prepayment Restricted Debt, except scheduled
payments (other than optional or voluntary prepayments) as and when due in
respect of such Prepayment Restricted Debt and (ii) the term “Prepayment
Restricted Debt” means an issuance or series of related issuances of Debt (other
than obligations in respect of the Loans) of any one or more of the Borrower and
its Material Subsidiaries in an aggregate principal amount exceeding
$50,000,000.

(bb) Section 6.09 (Consolidated Net Worth) is amended and restated in its
entirety to provide as follows:

Section 6.09. Consolidated Net Worth. The Borrower shall not permit its
Consolidated Net Worth at any time to be less than the sum of (a) One Billion
Seven Hundred Fifty Million Dollars ($1,750,000,000) and (b) an amount equal to
seventy-five percent (75%) of the aggregate amount of Net Proceeds of any and
all sales or issuances of Equity Interests or convertible, trust preferred and
other so-called ‘hybrid’ securities (other than to the Borrower or a Subsidiary)
made after the First Amendment Effective Date (but only to the extent that such
convertible, trust preferred and other so-called ‘hybrid’ securities do not
comprise part of the Consolidated Liabilities).

 

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(cc) Section 6.10 (Ratings) is amended and restated in its entirety to provide
as follows:

Section 6.10. Ratios. (a) Fixed Charge Coverage Ratio. The Borrower shall not
permit the Fixed Charge Coverage Ratio to be less than 1.250 to 1 as of the end
of the Coverage Ratio Commencement Quarter and as of the end of each Fiscal
Quarter thereafter.

(b) Total Debt to Total Capitalization Ratio. The Borrower shall not permit the
ratio of Total Debt to Total Capitalization as of the end of any Fiscal Quarter,
commencing with the Fiscal Quarter ending March 31, 2008, to be greater than
0.350 to 1.

(dd) Clauses (b), (d), (e), (g) and (m) of Article 7 (Events of Default) are
amended and restated in their entirety to provide, respectively, as follows:

(b) the Borrower shall fail to pay when due any interest on any Loan or any fee
or other amount (except an amount referred to in clause (a) above) payable under
any Loan Document, and such failure shall continue unremedied for a period of
three (3) days;

*        *        *

(d) the Borrower shall fail to observe or perform any covenant or agreement
contained in any one or more of Section 5.01, Section 5.02, Section 5.04 or
Article 6 (other than Section 6.02 thereof);

*        *        *

(e)(i) there shall occur an “Event of Default” (as that term is defined in any
one or more of the Security Documents or (ii) the Borrower shall fail to observe
or perform any provision of any other Loan Document and such failure shall
continue for 30 days after the earlier of notice of such failure to the Borrower
from the Administrative Agent or knowledge of such failure by a Senior Officer,
other than, in the case of clause (i) or (ii) hereof, any such “Event of
Default” or failure covered by clauses (a), (b), (c) and (d) of this Article 7);

*        *        *

(g) any event or condition occurs that (i) results in any Material Debt becoming
due before its scheduled maturity or (ii) enables or permits (after giving
effect to any required notice, grace period or both) the holder or holders of
Material Debt or any trustee or agent on its or their behalf to cause any
Material Debt to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, before its scheduled maturity or (iii) results
in the termination of or enables one or more banks or financial institutions to
terminate commitments to advance Material Debt;

 

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*        *        *

(m) any Material Insurance Subsidiary or its assets shall become subject to a
consent order, corrective order or similar document or agreement issued in
writing by its Applicable Insurance Regulatory Authority which (i) cites or
otherwise references such Material Insurance Subsidiary’s failure to meet
minimum levels of statutory capital or surplus, (ii) prohibits such Material
Insurance Subsidiary from writing or underwriting further business or
(iii) otherwise prohibits or materially restricts any of the core business
activities of such Material Insurance Subsidiary (including but not limited to
mortgage insurance and reinsurance businesses), and such consent order,
corrective order or similar document or agreement remains in effect and is
unsatisfied or uncorrected for more than five (5) Business Days or such longer
period as may be specified, if any, in the relevant order or agreement delaying
the effectiveness thereof; and, as to each of (i), (ii) and (iii), above, the
Borrower’s shared expense reimbursement payments from its Subsidiaries payable
and paid thereafter fail to equal or exceed 100% of all of the Borrower’s
operating expenses and debt service of the type that are covered by the
Borrower’s shared expense reimbursement arrangement as of the First Amendment
Effective Date;

(ee) Each of clause (k) and clause (l) of Article 7 (Events of Default) is
amended by deleting therefrom the sum “$50,000,000” and inserting therein the
sum “$40,000,000” in its stead.

(ff) Article 8 (The Administrative Agent) is amended and restated in its
entirety to provide as follows:

ARTICLE 8

THE AGENTS

Section 8.01. Appointment and Authorization. Each Lender Party irrevocably
appoints each Agent as its agent and authorizes each Agent to take such actions
as agent on its behalf and to exercise such powers as are delegated to the Agent
by the terms of the Loan Documents, together with such actions and powers as are
reasonably incidental thereto.

Section 8.02. Rights and Powers as a Lender. Each Agent shall, in its capacity
as a Lender, have the same rights and powers as any other Lender and may
exercise or refrain from exercising the same as though it were not one of the
Agents. Each Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Borrower or any Subsidiary
or Affiliate of the Borrower as if it were not an Agent hereunder.

Section 8.03. Limited Duties and Responsibilities. Neither of the Agents shall
have any duties or obligations except those expressly set forth in the Loan
Documents. Without limiting the generality of the foregoing, (a) neither of the
Agents shall be

 

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subject to any fiduciary or other implied duties, regardless of whether a
Default has occurred and is continuing, (b) neither of the Agents shall have any
duty to take any discretionary action or exercise any discretionary powers,
except discretionary rights and powers expressly contemplated by the Loan
Documents that such Agent is required in writing to exercise by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary
under the circumstances as provided in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, neither of the Agents shall have any
duty to disclose, or shall be liable for any failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the Agent or any of its Affiliates in any
capacity. Neither of the Agents shall be liable for any action taken or not
taken by it with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or willful misconduct. Each Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to
such Agent by the Borrower or a Lender, and neither of the Agents shall be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document,
(ii) the contents of any certificate, report or other document delivered
thereunder or in connection therewith, (iii) the performance or observance of
any of the covenants, agreements or other terms or conditions set forth in any
Loan Document, (iv) the validity, enforceability, effectiveness or genuineness
of any Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article 4 or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to such Agent.

Section 8.04. Authority to Rely on Certain Writings, Statements and Advice. Each
Agent shall be entitled to rely on, and shall not incur any liability for
relying on, any notice, request, certificate, consent, statement, instrument,
document or other writing believed by it to be genuine and to have been signed
or sent by the proper Person. Each Agent also may rely on any statement made to
it orally or by telephone and believed by it to be made by the proper Person,
and shall not incur any liability for relying thereon. Each Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

Section 8.05. Sub-Agents and Related Parties. Each Agent may perform any and all
its duties and exercise its rights and powers by or through one or more
sub-agents appointed by it. Each Agent and any such sub-agent may perform any
and all its duties and exercise its rights and powers through their respective
Related Parties. The exculpatory provisions of the preceding Sections of this
Article shall apply to any such sub-agent and to the Related Parties of each
Agent and any such sub-agent, and shall apply to activities in connection with
the syndication of the credit facilities provided for herein as well as
activities as an Agent hereunder.

 

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Section 8.06. Resignation; Successor Agents. Subject to the appointment and
acceptance of a successor Agent as provided in this Section, either Agent may
resign at any time (and, upon the request of the Required Lenders, will so
resign) by notifying the Lenders and the Borrower. The Administrative Agent or
the Collateral Agent may be removed as the Administrative Agent or the
Collateral Agent in the case of its gross negligence or willful misconduct upon
not less than 20 Business Days’ notice to, as the case may be, the
Administrative Agent or the Collateral Agent and the Borrower from the Required
Lenders. Upon any such resignation, the Required Lenders shall have the right,
in consultation with the Borrower, to appoint a successor Agent; provided that
consultation with the Borrower shall not be required if an Event of Default
shall have occurred and be continuing. If no successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent gives notice of its resignation, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent
which shall be a bank or financial institution, or an Affiliate of any such bank
or financial institution. Upon acceptance of its appointment as Agent hereunder
by a successor Agent, such successor Agent shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Agent shall be the
same as those payable to its predecessor unless otherwise agreed by the Borrower
and such successor Agent. After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Article and Section 9.03 shall continue in effect
for the benefit of such retiring Agent, its sub-agents and their respective
Related Parties in respect of any actions taken or omitted to be taken by any of
them while the retiring Agent was acting as an Agent hereunder.

Section 8.07. Credit Decisions by Lenders. Each Lender acknowledges that it has,
independently and without reliance on either Agent or any other Lender Party and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance on either Agent or
any other Lender Party and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in taking
or not taking action under or based on this Agreement, any other Loan Document
or related agreement or any document furnished hereunder or thereunder.

Section 8.08. Agent’s Fees. The Borrower shall pay to each Agent for its own
account fees in the amounts and at the times previously agreed upon by the
Borrower and such Agent.

Section 8.09. Syndication Agents, Documentation Agent, Etc. None of the
Syndication Agents, the Documentation Agent, the Lead Arranger and the Sole Book
Runner in their capacities as such shall have any duties or responsibilities or
incur any liability under this Agreement or any of the Loan Documents.

Section 8.10. No Reliance on Agents’ Customer Identification Program. Each of
the Lenders acknowledges and agrees that neither such Lender, nor any of its
Affiliates, participants or assignees, may rely on the Agents to carry out such
Lender’s,

 

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Affiliate’s, participant’s or assignee’s customer identification program, or
other obligations required or imposed under or pursuant to the USA Patriot Act
or the regulations thereunder, including the regulations contained in 31 CFR
103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other
Anti-Terrorism Law, including any programs involving any of the following items
relating to or in connection with the Borrower, its Affiliates or their agents,
this Agreement, the other Loan Documents or the transactions hereunder or
contemplated hereby: (1) any identity verification procedures, (2) any record
keeping, (3) comparisons with government lists, (4) customer notices or
(5) other procedures required under the CIP Regulations or such other laws.

(gg) Clause (vi) of Section 9.02(b) (Waivers; Amendments) and the proviso
immediately following are amended and restated in their entirety to provide as
follows, and the following new clause (vii) is added immediately following such
clause (vi) and preceding such proviso:

(vi) increase the aggregate amount of the Total Commitment, without the written
consent of the Administrative Agent and the Required Lenders (it being
understood that an increase in the Commitment of any Lender is subject to clause
(i) above); and

(vii) release all or substantially all of the Collateral from the Security
Documents (other than any release or termination of any Lien thereon provided
for in the Loan Documents, including, without limitation, upon a sale or
disposition permitted by Section 6.05), without the written consent of Lenders
having aggregate Exposures and unused Commitments representing more than
two-thirds (2/3) of the sum of all Exposures and unused Commitments at such
time, it being understood that an amendment that would extend the date, if ever,
by which the Borrower is required to subject the Equity Interests of Enhance
Financial and Radian Asset Securities Inc. to the Lien of the Security Documents
pursuant to Section 2.21(a) or that would amend the provisions of Section 6.05
shall not be deemed to be a release of Collateral governed by the provisions of
this clause (vii);

provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent, the Collateral Agent or the
Swingline Lender without its prior written consent; and provided further that
neither a reduction or termination of Commitments pursuant to Section 2.09 or
2.12 nor a supplement or amendment adding Collateral to, or releasing Collateral
from, a Security Document pursuant to the express terms of this Agreement or
such Security Document constitutes an amendment, waiver or modification for
purposes of this Section 9.02.

 

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(hh) Paragraph (a) of Section 9.03 (Expenses; Indemnity; Damage Waiver) is
amended and restated in its entirety to provide as follows

(a) The Borrower shall pay (i) all reasonable and documented out-of-pocket
expenses incurred by the Arranger, the Administrative Agent, the Collateral
Agent and their respective Affiliates, including, without limitation, the
reasonable fees, charges and disbursements of Squire, Sanders & Dempsey L.L.P.,
special counsel for the Administrative Agent and the Collateral Agent, in
connection with the syndication of the credit facilities provided for herein,
the preparation and administration of the Loan Documents and any amendments,
modifications or waivers of the provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated and (ii) all
reasonable out-of-pocket expenses incurred by any Lender Party, including the
reasonable fees, charges and disbursements of any counsel for any Lender Party,
in connection with the enforcement or protection of its rights, upon and during
the continuance of a Default, in connection with the Loan Documents (including
its rights under this Section) or the Loans, including, without limitation,
(A) all such reasonable out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of the Loans and (B) the reasonable
fees and expenses of a consultant or advisor of recognized industry standing
incurred by the Administrative Agent at the request of the Required Lenders.

(ii) Each reference to the Administrative Agent in paragraphs (b), (c), (d) and
(e) of Section 9.03 (Expenses; Indemnity; Damage Waiver) shall be deemed to
refer to each of the Administrative Agent and the Collateral Agent.

(jj) Paragraph (h) of Section 9.04 (Successors and Assigns) is deleted in its
entirety.

(kk) The new Schedule of existing Liens attached as Attachment 1 to this First
Amendment is added as a new Schedule 6.02 to the Credit Agreement.

(ll) The form of amended and restated Pricing Schedule attached as Attachment 2
to this First Amendment is hereby substituted as the Pricing Schedule under and
attached to the Credit Agreement.

(mm) The form of amended and restated Schedule 2.01(a) attached as Attachment 3
to this First Amendment is hereby substituted as Schedule 2.01(a) under and
attached to the Credit Agreement.

 

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2. Amendment Effective Date; Conditions Precedent. The amendments set forth in
Paragraph 1, above, shall not be effective unless and until the date on which
the Borrower has satisfied all of the following conditions precedent (such date
of effectiveness being the “First Amendment Effective Date”):

(a) Officer’s Certificate. On the First Amendment Effective Date and after
giving effect to the amendments set forth in Paragraph 1, above, (i) there shall
exist no Default, and a Senior Officer, on behalf of the Borrower, shall have
delivered to the Administrative Agent written confirmation thereof dated as of
the First Amendment Effective Date, and (ii) the representations and warranties
of the Borrower under Article 3 of the Credit Agreement, as amended pursuant to
this First Amendment, shall have been reaffirmed in writing as being true and
correct in all material respects as of the First Amendment Effective Date.

(b) First Amendment. The Administrative Agent (or its counsel) shall have
received from the Borrower and the Required Lenders either (i) a counterpart of
this First Amendment signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this First Amendment) that such party
has signed a counterpart of this First Amendment.

(c) Corporate Authorization. The Borrower shall have delivered to the
Administrative Agent a copy, certified by its Secretary or Assistant Secretary,
of its Board of Directors’ resolutions authorizing the execution and delivery of
this First Amendment and the transactions contemplated hereby, including,
without limitation, the Security Documents.

(d) Opinion. The Administrative Agent shall have received favorable written
opinion addressed to the Administrative Agent, the Collateral Agent and the
Lenders and dated the First Amendment Effective Date of Drinker Biddle & Reath
LLP, counsel for the Borrower, covering such matters relating to the Borrower,
the Loan Documents or the transactions contemplated hereby as the Administrative
Agent shall reasonably request. The Borrower requests such counsel to deliver
such opinion.

 

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(e) Good Standing. The Administrative Agent shall have received such documents
and certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of the
Borrower and its Material Subsidiaries, the authorization for and validity of
the transactions contemplated hereby, the incumbency of officers executing Loan
Documents on behalf of the Borrower, and any other legal matters relating to the
Borrower, its Material Subsidiaries, the Loan Documents or the transactions
contemplated hereby, all in form and substance satisfactory to the
Administrative Agent and its Special Counsel (defined below).

(f) Perfection Requirements. Each of the Facility Collateral Requirement and the
Shared Collateral Requirement shall have been satisfied and the Administrative
Agent shall have received a completed Perfection Certificate dated the First
Amendment Effective Date and signed by a Senior Officer, on behalf of the
Borrower, together with all attachments contemplated thereby, including the
results of a search of the Uniform Commercial Code (or equivalent) filings made
with respect to the Borrower in the jurisdictions contemplated by the Perfection
Certificate and copies of the financing statements (or similar documents)
disclosed by such search and evidence reasonably satisfactory to the
Administrative Agent that the Liens indicated by such financing statements (or
similar documents) are permitted by Section 6.02 of the Credit Agreement or have
been released; provided that at the option of the Borrower satisfaction of the
requirement of deposit account and securities account control agreements may be
satisfied no later than 45 days after the First Amendment Effective Date (or
such later date to which the Collateral Agent may agree in writing and in its
sole discretion).

 

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(g) Insurance. The Administrative Agent shall have received evidence that the
insurance required by the Security Documents is in effect.

(h) Amendment Fees. The Borrower shall have deposited with the Administrative
Agent, for the account of each Lender that enters into to this First Amendment,
by delivery of a signature page at or prior to the time specified by the
Administrative Agent, in immediately available funds, an amendment fee equal to
three-fourths of one percent (0.750%) of an amount equal to such Lender’s
Commitment, as reduced by this First Amendment.

(i) Arranger Fees; Agent Expenses. The Borrower shall have paid or caused to be
paid to (i) KeyBank National Association, in its capacity as lead arranger, for
its own account, the fee payable pursuant to the fee letter agreement dated
April 4, 2008 and (ii) the Administrative Agent and the Collateral Agent all
fees and other amounts due and payable on or prior to the First Amendment
Effective Date, including, to the extent invoiced, reimbursement or payment of
all reasonable out-of-pocket expenses (including fees, charges and disbursements
of the Special Counsel) required to be reimbursed or paid by the Borrower
hereunder, under any other Loan Document or under said fee letter agreement.

(j) Legal Matters. All legal matters incident to this First Amendment and the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory to Squire, Sanders & Dempsey L.L.P., Cleveland, Ohio, special
counsel to the Administrative Agent and the Collateral Agent (the “Special
Counsel”).

 

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(k) Other Matters. The Administrative Agent and the Lenders shall have received
such other certificates, opinions and documents, in form and substance
reasonably satisfactory to the Administrative Agent, as the Administrative Agent
may reasonably request.

If, pursuant to the option provided in sub-paragraph (f) of this Paragraph 2,
the Borrower defers satisfaction of the condition precedent relating to any such
control agreement, the Borrower’s failure to satisfy such condition on or before
45 days after the First Amendment Effective Date (or such later date to which
the Collateral Agent may agree in writing and in its sole discretion) shall
constitute an Event of Default.

Solely for the purposes of clause 1(a)(ii) of the Limited Conditional Waiver
Agreement dated April 9, 2008 described in Recital A, above, the Borrower shall
be deemed to have satisfied the conditions required by sub-paragraphs (a), (d),
(h) and (i), above, so long as the documents or monies required by such
sub-paragraphs are deposited in escrow with, as the case may be, the
Administrative Agent or the Special Counsel, with the release from such escrow
conditioned only upon (i) execution by the Indenture Trustees of the Collateral
Trust Agreement and satisfaction of the other Shared Collateral Requirements,
(ii) delivery of satisfactory local counsel opinions for the States of Illinois,
Pennsylvania and Vermont and (iii) confirmation by the Administrative Agent and
the Borrower (or, in the case of opinions, counsel to the Borrower) that such
release shall occur.

3. No Modifications. Except as expressly provided in this First Amendment, all
of the terms and conditions of the Credit Agreement and the other Loan Documents
remain unchanged and in full force and effect.

 

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4. Confirmation of Obligations; Release.

(a) The Borrower hereby confirms that the Borrower is indebted to the Lenders
for the Loans in the amounts and as of the date set forth in Recital B, above,
and is also obligated to the Lenders in respect of other obligations as set
forth in the Credit Agreement and the other Loan Documents. The Borrower further
acknowledges and agrees that as of the date hereof, it has no claim, defense or
set-off right against any Lender or the Administrative Agent of any nature
whatsoever, whether sounding in tort, contract or otherwise, and has no claim,
defense or set-off of any nature whatsoever to the enforcement by any Lender or
the Administrative Agent of the full amount of the Loans and other obligations
of the Borrower under the Credit Agreement and the other Loan Documents.

(b) Notwithstanding the foregoing, to the extent that any claim, cause of
action, defense or set-off against any Lender or the Administrative Agent or
their enforcement of the Credit Agreement, any note, or any other Loan Document,
of any nature whatsoever, known or unknown, fixed or contingent, does
nonetheless exist or may exist on the date hereof, in consideration of the
Lenders’ and the Administrative Agent’s entering into this First Amendment, the
Borrower irrevocably and unconditionally waives and releases fully each and
every such claim, cause of action, defense and set-off which exists or may exist
on the date hereof.

5. Administrative Agent’s Expense. The Borrower agrees to reimburse the
Administrative Agent promptly for its reasonable documented out-of-pocket costs
and expenses incurred in connection with this First Amendment and the
transactions contemplated hereby, including, without limitation, the reasonable
fees and expenses of the Special Counsel.

6. Governing Law; Binding Effect. This First Amendment shall be governed by and
construed in accordance with the laws of the State of New York and shall be
binding upon and inure to the benefit of the Borrower, the Lenders and the
Administrative Agent and their respective successors and assigns.

 

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7. Counterparts. This First Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts shall constitute one and the same instrument, and all
signatures need not appear on any one counterpart. Any party hereto may execute
and deliver a counterpart of this First Amendment by delivering by facsimile or
email transmission a signature page of this First Amendment signed by such
party, and any such facsimile or email signature shall be treated in all
respects as having the same effect as an original signature. Any party
delivering by facsimile or email transmission a counterpart executed by it shall
promptly thereafter also deliver a manually signed counterpart of this First
Amendment.

8. Miscellaneous.

(a) Upon the effectiveness of this First Amendment, this First Amendment shall
be a Loan Document.

(b) The invalidity, illegality, or unenforceability of any provision in or
Obligation under this First Amendment in any jurisdiction shall not affect or
impair the validity, legality, or enforceability of the remaining provisions or
obligations under this First Amendment or of such provision or obligation in any
other jurisdiction.

(c) Construction. This First Amendment and all other agreements and documents
executed in connection herewith have been prepared through the joint efforts of
all of the parties. Neither the provisions of this First Amendment or any such
other agreements and documents nor any alleged ambiguity shall be interpreted or
resolved against any party on the ground that such party’s counsel drafted this
First Amendment or such other agreements and documents, or based on any other
rule of strict construction. Each of the

 

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parties hereto represents and declares that such party has carefully read this
First Amendment and all other agreements and documents executed in connection
herewith and therewith, and that such party knows the contents thereof and signs
the same freely and voluntarily. The parties hereby acknowledge that they have
been represented by legal counsel of their own choosing in negotiations for and
preparation of this First Amendment and all other agreements and documents
executed in connection therewith and that each of them has read the same and had
their contents fully explained by such counsel and is fully aware of their
contents and legal effect.

9. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS FIRST AMENDMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS FIRST AMENDMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO HEREBY (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS FIRST AMENDMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATION IN THIS SECTION.

 

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IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative Agent have
hereunto set their hands as of the date first above written.

 

BORROWER

RADIAN GROUP INC.

 

By:

 

/s/    Terry Latimer

 

Terry Latimer

 

Treasurer and Senior Vice President

 

KEYBANK NATIONAL ASSOCIATION, as Administrative Agent, Collateral Agent and
Lender

By:

 

/s/    Mary K. Young

 

Mary K. Young

 

Senior Vice President

 

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JPMORGAN CHASE BANK, NA, as Lender

By

 

/s/ Lawrence Palumbo, Jr.

  Lawrence Palumbo, Jr. , Vice President

 

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WELLS FARGO BANK, NATIONAL ASSOCIATION, as Lender

By

 

/s/ Robert C. Meyer

  Robert C. Meyer, Senior Vice President

 

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THE NORTHERN TRUST COMPANY, as Lender

By

 

/s/ Chris McKean

  Chris McKean, Vice President

 

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CITIBANK, N.A., as Lender

By

 

/s/ Thomas Fontana

  Thomas Fontana, Vice President

 

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BANK OF AMERICA, N.A., as Lender

By

 

/s/ H.G. Wheelock

  H.G. Wheelock, SVP

 

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BEAR STEARNS CORPORATE LENDING INC., as Lender

By

 

/s/ Stephen G. O’ Keefe

  Stephen G. O’ Keefe, Authorized Signatory

 

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FIFTH THIRD BANK, as Lender

By

 

/s/ Randolph J. Stierer

  Randolph J. Stierer , Vice President

 

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THE ROYAL BANK OF SCOTLAND plc, as Lender

By Greenwich Capital Markets, Inc., as agent

 

By

 

/s/ George Urban

  George Urban , VP

 

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PRICING SCHEDULE

 

Pricing Level

 

Level I

 

Level II

 

Level III

Eurodollar Margin

  2.000%   2.400%   2.750%

Base Rate Margin

  1.000%   1.400%   1.750%

Facility Fee Rate

  0.250%   0.350%   0.500%

For purposes of this Schedule, the following terms have the following meanings:

“Borrower’s Pricing Rating” means, as of any day, the Senior Debt Rating on such
day of each of S&P and Moody’s; provided that (i) in the event that on any day
the Rating Agencies’ respective Senior Debt Ratings do not both fall into the
same Pricing Category set forth below, the Borrower’s Pricing Rating shall be
the lower of the two Senior Debt Ratings on such day; and (ii) in the event
that, on any day, either of the Rating Agencies shall not then have in effect a
Senior Debt Rating, the Pricing Category shall be Pricing Category III. The
Pricing Categories shall be re-determined on each day on which occurs an
announcement of a change in the Senior Debt Rating issued by either Rating
Agency.

“Level I Pricing” applies for any day on which the Pricing Category is I; “Level
II Pricing” applies for any day on which the Pricing Category is II; and “Level
III Pricing” applies for any day on which the Pricing Category is III.

“Pricing Category” means, for any day, the Pricing Category (I, II, or III)
indicated on the table below that corresponds to the Borrower’s Pricing Rating
on such day:

 

Pricing Category

  I   II   III Borrower’s   A-/A3 or higher   BBB+/Baa1 and   Below BBB/Baa2
Pricing Rating*     BBB/Baa2  

“Pricing Level” refers to the determination of which of Level I, Level II, or
Level III pricing applies for any day. Pricing Levels are referred to in
ascending order, that is, Level I pricing is the lowest Pricing Level and Level
III pricing is the highest Pricing Level.

 

* If another statistical rating agency is substituted for Moody’s or S&P
pursuant to the definition of “Moody’s” or “S&P”, the equivalent ratings
category designations of such substitute Rating Agency shall be substituted for
the ratings category designations of, as the case may be, Moody’s or S&P set
forth in this table.