Document:

<PAGE>   1

                                                                     Exhibit 4.1

                                RADIAN GROUP INC.

                                       TO

                            FIRST UNION NATIONAL BANK
                                              Trustee

                                    INDENTURE

                            Dated as of May 29, 2001
<PAGE>   2
    CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318,
                 INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:

TRUST INDENTURE
  ACT SECTION                                              INDENTURE SECTION

  Section 310(a)(1)....................................... 609
     (a)(2)     .......................................... 609
     (a)(3)     .......................................... Not Applicable
     (a)(4)     .......................................... Not Applicable
     (b)        .......................................... 608
                                                           610
Section 311(a)  .......................................... 613
     (b)        .......................................... 613
Section 312(a)  .......................................... 701
                                                           702
     (b)        .......................................... 702
     (c)        .......................................... 702
Section 313(a)  .......................................... 703
     (b)        .......................................... 703
     (c)        .......................................... 703
     (d)        .......................................... 703
Section 314(a)  .......................................... 704
     (a)(4)     .......................................... 101
                                                           1004
     (b)        .......................................... Not Applicable
     (c)(1)     .......................................... 102
     (c)(2)     .......................................... 102
     (c)(3)     .......................................... Not Applicable
     (d)        .......................................... Not Applicable
     (e)        .......................................... 102
Section 315(a)  .......................................... 601
     (b)        .......................................... 602
     (c)        .......................................... 601
     (d)        .......................................... 601
     (e)        .......................................... 514
Section 316(a)  .......................................... 101
     (a)(1)(A)  .......................................... 502
                                                           512
     (a)(1)(B)  .......................................... 513
     (a)(2)     .......................................... Not Applicable
     (b)        .......................................... 508
     (c)        .......................................... 104
Section 317(a) (1) ....................................... 503
     (a)(2)     .......................................... 504
     (b)        .......................................... 1003
Section 318(a)  .......................................... 107

                                      -i-

<PAGE>   3
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.

                                      -ii-
<PAGE>   4
         INDENTURE, dated as of May 29, 2001 between RADIAN GROUP INC., a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company"), having its principal office at 1601 Market
Street, Philadelphia, Pennsylvania 19103, and FIRST UNION NATIONAL BANK, a
national banking association duly organized and existing under the laws of the
United States, as Trustee (herein called the "Trustee").

                             RECITALS OF THE COMPANY

      The Company has duly authorized the creation of an issue of its 7.75%
Debentures Due June 1, 2011 (herein called the "Securities") of substantially
the tenor and amount hereinafter set forth, and to provide therefor the Company
has duly authorized the execution and delivery of this Indenture. The Securities
may consist of Original Securities and/or Exchange Securities, each as defined
herein. The Original Securities and the Exchange Securities shall rank equally
in right of payment with all existing and future unsecured and unsubordinated
obligations of the Company.

      All things necessary to make the Securities, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.

      NOW, THEREFORE, THIS INDENTURE WITNESSETH:

      For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:

                                   ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

SECTION 101.  Definitions.

      For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:

         (1) the terms defined in this Article have the meanings assigned to
   them in this Article and include the plural as well as the singular;
<PAGE>   5
         (2) all other terms used herein which are defined in the Trust
   Indenture Act, either directly or by reference therein, have the meanings
   assigned to them therein;

         (3) all accounting terms not otherwise defined herein have the meanings
   assigned to them in accordance with generally accepted accounting principles,
   and, except as otherwise herein expressly provided, the term "generally
   accepted accounting principles" with respect to any computation required or
   permitted hereunder shall mean such accounting principles as are generally
   accepted and applied by the Company on a consistent basis at the date of such
   computation;

         (4) unless the context otherwise requires, any reference to an
   "Article" or a "Section" refers to an Article or a Section, as the case may
   be, of this Indenture; and

         (5) the words "herein", "hereof" and "hereunder" and other words of
   similar import refer to this Indenture as a whole and not to any particular
   Article, Section or other subdivision.

      "Act", when used with respect to any Holder, has the meaning specified in
Section 104.

      "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

      "Agent Member" means any member of, or participant in, the Depositary.

      "Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depositary for such Security, Euroclear and Clearstream, in
each case to the extent applicable to such transaction and as in effect from
time to time.

      "Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities.

      "Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.

      "Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
<PAGE>   6
      "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.

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

      "Capitalized Lease Obligation" means an obligation under a lease that is
required to be capitalized for financial reporting purposes in accordance with
generally accepted accounting principles, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with such principles.

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

      "Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.

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

      "Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.

      "Comparable Treasury Issue" has the meaning set forth in the form of
Security contained in Section 203.

      "Comparable Treasury Price" has the meaning set forth in the form of
Security contained in Section 203.

      "Corporate Trust Office" means the principal office of the Trustee in
Philadelphia, Pennsylvania or New York, New York at which at any particular time
its corporate trust business shall be administered, which office as of the date
hereof is located at 123 South Broad Street, Philadelphia, Pennsylvania 19109
(Mail Code PA 1249).

       "corporation" means a corporation, association, company, joint-stock
company or business trust.

      "Covenant Defeasance" has the meaning specified in Section 1203.

                                      -3-
<PAGE>   7
      "Defaulted Interest" has the meaning specified in Section 307.

      "Defeasance" has the meaning specified in Section 1202.

      "Depositary" means, with respect to Securities issuable or issued in whole
or in part in the form of one or more Global Securities, DTC for so long as it
shall be a clearing agency registered under the Exchange Act, or such successor
(which shall be a clearing agency registered under the Exchange Act) as the
Company shall designate from time to time in an Officers' Certificate delivered
to the Trustee.

      "Designated Subsidiary" means any present or future consolidated
Subsidiary of the Company, the consolidated shareholders' equity of which
constitutes at least 15% of the consolidated shareholders' equity of the
Company.

      "DTC" means The Depository Trust Company.

      "Euroclear" means the Euroclear Clearance System (or any successor
securities clearing agency).

      "Event of Default" has the meaning specified in Section 501.

      "Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.

      "Exchange and Registration Rights Agreement" has the meaning set forth in
the form of Security contained in Section 202.

      "Exchange Offer" has the meaning set forth in the form of Security
contained in Section 202.

      "Exchange Registration Statement" has the meaning set forth in the form of
Security contained in Section 202.

      "Exchange Security" means any Security issued in exchange for an Original
Security or Original Securities pursuant to the Exchange Offer or otherwise
registered under the Securities Act and any Security with respect to which the
next preceding Predecessor Security of such Security was an Exchange Security.

      "Expiration Date" has the meaning specified in Section 104.

      "Global Security" means a Security that evidences all or part of the
Securities and bears the applicable legend set forth in Section 204, issued to
the Depositary or its nominee, and registered in the name of such Depositary or
its nominee.

                                      -4-
<PAGE>   8
      "Holder" means a Person in whose name a Security is registered in the
Security Register.

      "Indebtedness" means, with respect to any Person:

      (1)   the principal of and any premium and interest on, whether
            outstanding on the date hereof or hereafter created, incurred, or
            assumed, which is (a) indebtedness of such Person for money borrowed
            and (b) indebtedness evidenced by notes, debentures, bonds or other
            similar instruments for the payment of which such Person is
            responsible or liable;

      (2)   all Capitalized Lease Obligations of such Person;

      (3)   all obligations of such Person issued or assumed as the deferred
            purchase price of property, all conditional sale obligations and all
            obligations under any title retention agreement (but excluding trade
            accounts payable arising in the ordinary course of business or which
            are payable in full within 90 days from the date such Indebtedness
            is incurred);

      (4)   all obligations of such Person for the reimbursement of any obligor
            on any letter of credit, banker's acceptance or similar credit
            transaction (other than obligations with respect to letters of
            credit securing obligations (other than obligations described in (1)
            through (3) above) entered into in the ordinary course of business
            of such Person to the extent such letters of credit are not drawn
            upon or, if and to the extent drawn upon, such drawing is reimbursed
            no later than the third Business Day following receipt by such
            Person of a demand for reimbursement following payment on the letter
            of credit);

      (5)   all obligations of the type referred to in clauses (1) through (4)
            of other Persons and all dividends of other Persons for the payment
            of which, in either case, such Person is responsible or liable as
            obligor, guarantor or otherwise;

      (6)   all obligations of the type referred to in clauses (1) through (5)
            of other Persons secured by any Lien on any property or asset of
            such Person (whether or not such obligation is assumed by such
            Person), the amount of such obligation being deemed to be the lesser
            of the value of such property or assets or the amount of the
            obligation so secured; and

      (7)   any amendments, modifications, refundings, renewals or extensions of
            any indebtedness or obligation described as Indebtedness in clauses
            (1) through (6) above.

      "Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this

                                      -5-
<PAGE>   9
instrument and any such supplemental indenture, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern this instrument and any
such supplemental indenture, respectively.

      "Interest Payment Date" means the Stated Maturity of an installment of
interest on the Securities.

      "Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.

      "Lien" has the same meaning specified in Section 1008.

      "Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.

      "Non-Recourse Debt" means Indebtedness as to which the lenders have
recourse only to specified assets of the Company or any Designated Subsidiary,
other than the Capital Stock of a Designated Subsidiary.

      "Notice of Default" means a written notice of the kind specified in
Section 501(3) or 501(4).

      "Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Company, and delivered to the Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 1004 shall be the principal
executive, financial or accounting officer of the Company.

      "Opinion of Counsel" means a written opinion of counsel, who may be
in-house counsel for the Company, and who shall be acceptable to the Trustee.

      "Original Securities" means all Securities other than Exchange Securities.

      "Outstanding", when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:

       (1) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;

       (2) Securities for whose payment or redemption money in the necessary
amount has been theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the
Company (if the Company

                                      -6-
<PAGE>   10
shall act as its own Paying Agent) for the Holders of such Securities; provided
that, if such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;

       (3) Securities as to which Defeasance has been effected pursuant to
Section 1202; and

       (4) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.

      "Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Securities on behalf of the
Company.

      "Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.

      "Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

      "Preferred Stock" in respect of any corporation means Capital Stock of any
class or classes (however designated) which is preferred as to the payment of
dividends, or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such corporation, over shares of Capital Stock of
any other class of such corporation.

      "Primary Treasury Dealer" has the meaning set forth in the form of
Security contained in Section 203.

                                      -7-
<PAGE>   11
      "Purchase Agreement" means the Purchase Agreement dated May 24, 2001, by
and between the Company and the Purchasers named therein and relating to the
Securities, as it may be amended from time to time.

      "Purchasers" mean the Purchasers named in Schedule I of the Purchase
Agreement.

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

      "Quotation Agent" has the meaning set forth in the form of Security
contained in Section 203.

      "Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.

      "Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.

      "Reference Treasury Dealer" has the meaning set forth in the form of
Security contained in Section 203.

      "Reference Treasury Dealer Quotation" has the meaning set forth in the
form of Security contained in Section 203.

      "Registered Securities" means the Exchange Securities and all other
Securities sold or otherwise disposed of pursuant to an effective registration
statement under the Securities Act, together with their respective Successor
Securities.

      "Registration Default" has the meaning set forth in the form of Security
contained in Section 202.

      "Regular Record Date" for the interest payable on any Interest Payment
Date means May 15 or November 15 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.

      "Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.

      "Regulation S Certificate" means a certificate substantially in the form
set forth in Annex A.

      "Regulation S Global Security" has the meaning specified in Section 201.

      "Regulation S Legend" means a legend substantially in the form of the
legend required in the form of Security set forth in accordance with Section 202
to be placed upon each Regulation S Security.

                                      -8-
<PAGE>   12
      "Regulation S Securities" means all Securities required pursuant to
Section 305(c) to bear a Regulation S Legend. Such term includes the Regulation
S Global Security.

      "Remaining Scheduled Payments" has the meaning set forth in the form of
Security contained in Section 203.

      "Resale Registration Statement" has the meaning set forth in the form of
Security contained in Section 202.

      "Restricted Global Security" has the meaning specified in Section 201.

      "Restricted Period" means the period of 41 consecutive days beginning on
and including the later of (i) the day on which Securities are first offered to
persons other than distributors (as defined in Regulation S) in reliance on
Regulation S or (ii) the original issuance date of the Securities.

      "Restricted Securities" means all Securities required pursuant to Section
305(c) to bear any Restricted Securities Legend. Such term includes the
Restricted Global Security.

      "Restricted Securities Certificate" means a certificate substantially in
the form set forth in Annex B.

      "Restricted Securities Legend" means, collectively, the legends
substantially in the forms of the legends required in the form of Security set
forth in accordance with Section 202 to be placed upon each Restricted Security.

      "Rule 144" means Rule 144 under the Securities Act (or any successor
provision), as it may be amended from time to time.

      "Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.

      "Rule 144A Securities" means the Securities initially distributed in
connection with the offering of the Securities by the Purchasers in reliance
upon Rule 144A.

      "Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.

      "Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.

      "Securities Act Legend" means a Restricted Securities Legend or a
Regulation S Legend.

                                      -9-
<PAGE>   13
      "Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.

      "Special Interest" has the meaning set forth in the form of Security
contained in Section 202.

      "Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.

      "Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.

      "Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.

      "Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.

      "Treasury Rate" has the meaning set forth in the form of Security
contained in Section 203.

      "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.

      "Trustee" means the Person named as the "Trustee" in the first paragraph
of this instrument until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder.

      "U.S. Government Obligation" has the meaning specified in Section 1204.

      "Unrestricted Securities Certificate" means a certificate substantially in
the form set forth in Annex C.

                                      -10-
<PAGE>   14
      "Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".

SECTION 102.  Compliance Certificates and Opinions.

      Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.

      Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (except for certificates provided for
in Section 1004) shall include,

         (1) a statement that each individual signing such certificate or
   opinion has read such covenant or condition and the definitions herein
   relating thereto;

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

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

         (4) a statement as to whether, in the opinion of each such individual,
   such condition or covenant has been complied with.

SECTION 103.  Form of Documents Delivered to Trustee.

      In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

      Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the

                                      -11-
<PAGE>   15
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such certificate or
opinion of counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual matters is
in the possession of the Company, unless such counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.

      Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

SECTION 104.  Acts of Holders; Record Dates.

      Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.

      The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.

      The Company may, in the circumstances permitted by the Trust Indenture
Act, fix any day as the record date for the purpose of determining the Holder
entitled to give or take any request, demand, authorization, direction, notice,
consent, waiver or other action, or to vote on any action, authorized or
permitted to be given or taken by Holders. If not set by the Company prior to
the first solicitation of a Holder made by any Person in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of

                                      -12-
<PAGE>   16
Holders required to be provided pursuant to Section 701) prior to such first
solicitation or vote, as the case may be. With regard to any record date, only
the Holders on such date (or their duly designated proxies) shall be entitled to
give or take, or vote on, the relevant action.

      The ownership of Securities shall be proved by the Security Register.
      Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.

SECTION 105.  Notices, Etc., to Trustee and Company.

      Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,

          (1) the Trustee by any Holder or by the Company shall be sufficient
     for every purpose hereunder if made, given, furnished or filed in writing
     to or with the Trustee at its Corporate Trust Office, Attention: George
     Rayzis, or

          (2) the Company by the Trustee or by any Holder shall be sufficient
     for every purpose hereunder (unless otherwise herein expressly provided) if
     in writing and mailed, first-class postage prepaid, to the Company
     addressed to it at the address of its principal office specified in the
     first paragraph of this instrument or at any other address previously
     furnished in writing to the Trustee by the Company.

SECTION 106.  Notice to Holders; Waiver.

      Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.

                                      -13-
<PAGE>   17
      In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.

SECTION 107.  Conflict with Trust Indenture Act.

      If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.

SECTION 108.  Effect of Headings and Table of Contents.

      The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

SECTION 109.  Successors and Assigns.

      All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.

SECTION 110.  Separability Clause.

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

SECTION 111.  Benefits of Indenture.

      Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors hereunder
and the Holders, any benefit or any legal or equitable right, remedy or claim
under this Indenture.

SECTION 112.  Governing Law.

                                      -14-
<PAGE>   18
      This Indenture and the Securities shall be governed by and construed in
accordance with the law of the State of New York.

SECTION 113.  Legal Holidays.

      In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities (other than a provision
of any Security which specifically states that such provision shall apply in
lieu of this Section)) payment of interest or principal (and premium, if any)
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption Date
or Stated Maturity, as the case may be.

                                   ARTICLE TWO

                                 SECURITY FORMS

SECTION 201.  Forms Generally.

      The Securities and the Trustee's certificates of authentication shall be
in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or Depositary
therefor or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of such Securities.

      The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.

      Upon their original issuance, Rule 144A Securities shall be issued in the
form of one or more Global Securities registered in the name of DTC, as
Depositary, or its nominee and deposited with the Security Registrar, as
custodian for DTC, for credit by DTC to the respective accounts of beneficial
owners of the Securities represented thereby (or such other accounts as they may
direct). Such Global Securities, together with their Successor Securities which
are Global Securities other than the Regulation S Global Security, are
collectively herein called the "Restricted Global Security".

                                      -15-
<PAGE>   19
      Upon their original issuance, initial Regulation S Securities (if any)
shall be issued in the form of one or more Global Securities registered in the
name of DTC, as Depositary, or its nominee and deposited with the Security
Registrar, as custodian for DTC, for credit by DTC to the respective accounts of
beneficial owners of the Securities represented thereby (or such other accounts
as they may direct), provided, however, that upon such deposit all such
Securities shall be credited to or through accounts maintained at DTC by or on
behalf of Euroclear or Clearstream. Such Global Securities, together with their
Successor Securities which are Global Securities other than the Restricted
Global Security, are collectively herein called the "Regulation S Global
Security".

      The Company, the Trustee and either of their agents shall not be
responsible for any acts or omissions of a Depositary, for any depositary
records of beneficial ownership interests or for any transactions between the
Depositary and beneficial owners.

SECTION 202.  Form of Face of Security.

      [Insert any legend as required by Section 204.]

                                RADIAN GROUP INC.

                        7.75% DEBENTURES DUE JUNE 1, 2011

CUSIP No. .........
No. ..........                                                          $.......

       RADIAN GROUP INC., a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company", which term includes
any successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ................................., or
registered assigns, the principal sum of ......... Dollars on June 1, 2011, and
to pay interest thereon from May 29, 2001 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
on June 1 and December 1 in each year, commencing December 1, 2001 at the rate
of 7.75% per annum, until the principal hereof is paid or made available for
payment [if Original Security, insert -- ; provided, however, that if (i) the
registration statement filed by the Company (the "Exchange Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
registering a security substantially identical to this Security (except that
such Security will not contain terms with respect to the Special Interest
payments described below or transfer restrictions) pursuant to an exchange offer
(the "Exchange Offer") has not become or been declared effective by the
Securities and Exchange Commission ("SEC") within 180 days after the Securities
are initially issued (or,

                                      -16-
<PAGE>   20
in lieu thereof, if required pursuant to the Exchange and Registration Rights
Agreement (as defined below), a registration statement registering this Security
for resale (the "Resale Registration Statement") has not become or been declared
effective by the SEC within 120 days after the Resale Registration Statement is
filed), (ii) either the Exchange Registration Statement or, if applicable, the
Resale Registration Statement, if filed and declared effective, shall thereafter
either be withdrawn by the Company or shall become subject to an effective stop
order issued pursuant to Section 8(d) of the Securities Act suspending the
effectiveness of such registration statement (except as specifically permitted
under the Exchange and Registration Rights Agreement) without being succeeded as
soon as practicable by an additional registration statement filed and declared
effective, or (iii) the Exchange Offer has not been completed within 225 days
after the Securities are initially issued (if the Exchange Offer is then
required to be made pursuant to the Exchange and Registration Rights Agreement
(the "Exchange and Registration Rights Agreement"), dated as of May 29, 2001, by
and between the Company and the Purchasers (as defined therein) parties thereto,
in each case (i), (ii) and (iii) upon the terms and conditions set forth in the
Exchange and Registration Rights Agreement (each such event referred to in
clauses (i), (ii) or (iii), a "Registration Default"), then special interest
("Special Interest") will accrue (in addition to the stated interest on the
Securities) on the principal amount of the Securities, at a rate of 0.25% per
annum, determined daily, for the 90-day period immediately following the
occurrence of the Registration Default, which rate shall be increased by 0.25%
per annum at the beginning of each subsequent 90-day period (provided, however,
that the rate at which such Special Interest accrues shall not exceed 1.0% per
annum in the aggregate) and Special Interest shall accrue and be payable until
such time as no Registration Default is in effect (after which such Special
Interest rate will cease to accrue). Accrued Special Interest, if any, shall be
paid semi-annually on each Interest Payment Date and the amount of accrued
Special Interest shall be determined on the basis of the number of days actually
elapsed. Any accrued and unpaid interest (including Special Interest) on this
Security upon the issuance of an Exchange Security (as defined in the Indenture)
in exchange for this Security shall cease to be payable to the Holder hereof but
such accrued and unpaid interest (including Special Interest) shall be payable
on the next Interest Payment Date for such Exchange Security to the Holder
thereof on the related Regular Record Date]. Interest on this Security [if
Original Security, insert -- , with the exception of Special Interest,] shall be
computed on the basis of a 360-day year of twelve 30-day months.

      The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be May 15 or November 15 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date. Any such interest
not so punctually paid or duly provided for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner

                                      -17-
<PAGE>   21
not inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.

      Payment of the principal of (and premium, if any) and any such interest on
this Security will be made at the office or agency of the Company maintained for
that purpose in New York, New York or Charlotte, North Carolina, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, provided, however, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.

      Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.

      Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.

      IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

Dated:

                                 RADIAN GROUP INC.

                                 By:...............................
                                       Name:
                                       Title:

SECTION 203.  Form of Reverse of Security.

      This Security is one of a duly authorized issue of securities of the
Company designated as its 7.75% Debentures Due June 1, 2011 (herein called the
"Securities"), limited in aggregate principal amount to $250,000,000, issued and
to be issued under an Indenture, dated as of May 29, 2001 (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and First Union National Bank, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture).

      [If Original Securities, insert -- This Security is entitled to the
benefits of a Registration Rights Agreement as provided for on the face of this
Security and in Section

                                      -18-
<PAGE>   22
1010 of the Indenture. The Company may register a security substantially
identical to this Security (except that such Security will not contain terms
with respect to the payment of Special Interest (as described on the face of
this Security) or transfer restrictions) pursuant to an Exchange Offer or, in
lieu thereof, a Resale Registration Statement.]

      Reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered.

      The Securities are subject to redemption, as a whole or from time to time
in part, upon not less than 30 nor more than 60 days' notice mailed to each
Holder of Securities to be redeemed at its address as it appears in the
Securities Register, on any date prior to their Stated Maturity at a Redemption
Price equal to the greater of (i) 100% of the principal amount of such
Securities to be redeemed or (ii) as determined by a Quotation Agent (as defined
below), the sum of the present values of the Remaining Scheduled Payments of
principal and interest thereon (not including any portion of such payments of
interest accrued as of the Redemption Date) discounted to the Redemption Date on
a semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate (as defined below), plus 37.5 basis points, plus accrued
interest thereon to the Redemption Date; provided, however, that unless the
Company defaults in payment of the Redemption Price, on or after the Redemption
Date, interest will cease to accrue on the Securities or portions thereof called
for redemption.

      "Treasury Rate" means, with respect to any Redemption Date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date. The semi-annual equivalent yield to maturity will be
computed as of the second Business Day immediately preceding the Redemption
Date.

      "Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having at the time of selection a maturity
comparable to the remaining term of the Securities to be redeemed that would be
utilized in accordance with customary financial practice in pricing new issues
of corporate debt securities of comparable maturity to the remaining term of the
Securities.

      "Comparable Treasury Price" means, with respect to any Redemption Date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) as of the third
Business Day preceding the Redemption Date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if that release (or any successor release) is not
published or does not contain such prices on that Business Day, (1) the average
of the Reference Treasury Dealer Quotations for the Redemption Date, after
excluding the highest

                                      -19-
<PAGE>   23
and lowest of such Reference Treasury Dealer Quotations, or (2) if the Trustee
obtains fewer than four such Reference Treasury Dealer Quotations, the average
of all quotations obtained.

       "Quotation Agent" means the Reference Treasury Dealer appointed by the
Company.

      "Reference Treasury Dealer" means (i) Goldman, Sachs & Co. and its
successors; provided, however, that, if the foregoing shall cease to be a
primary U.S. Government securities dealer (a "Primary Treasury Dealer"), the
Company shall substitute therefor another Primary Treasury Dealer; and (ii) any
other Primary Treasury Dealer selected by the Company.

      "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount and in each case
for settlement on the next Business Day) quoted in writing to the Trustee by
such Reference Treasury Dealer at 3:30 p.m. on the third Business Day preceding
such Redemption Date.

      "Remaining Scheduled Payments" means the remaining scheduled payments of
the principal of and interest (excluding any interest accrued and paid as of the
Redemption Date) on each Debenture to be redeemed that would be due after the
related redemption date but for such redemption.

      In the event of redemption of this Security in part only, a new Security
or Securities for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.

      The Securities do not have the benefit of any sinking fund obligation.

      The Indenture contains provisions for defeasance at any time of the entire
Indebtedness of this Security or certain restrictive covenants and Events of
Default with respect to this Security, in each case upon compliance with certain
conditions set forth in the Indenture.

      In the event of a deposit or withdrawal of an interest in this Security
(including upon an exchange, transfer, redemption or repurchase of this Security
in part only) effected in accordance with the Applicable Procedures, the
Security Registrar, upon receipt of notice of such event from the Depositary's
custodian for this Security, shall make an adjustment on its records to reflect
an increase or decrease of the Outstanding principal amount of this Security
resulting from such deposit or withdrawal, as the case may be.

      If an Event of Default shall occur and be continuing, the principal of the
Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.

                                      -20-
<PAGE>   24
      Unless the context otherwise requires, the Original Securities (as defined
in the Indenture) and the Exchange Securities (as defined in the Indenture)
shall constitute one series for all purposes under the Indenture, including
without limitation, amendments, waivers and redemptions.

      The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of 66
2/3% in aggregate principal amount of the Securities at the time Outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

      As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in principal amount of the
Securities at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.

      No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.

      As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or
his attorney

                                      -21-
<PAGE>   25
duly authorized in writing, and thereupon one or more new Securities, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

      The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like aggregate principal amount of Securities of a different
authorized denomination, as requested by the Holder surrendering the same.

      No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

      Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

      All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

SECTION 204.  Form of Legend for Global Securities.

      Every Global Security authenticated and delivered hereunder shall bear one
or more of the appropriate legends in substantially the following forms, as
relevant, below:

[If the Security is a Restricted Security, insert -- THE SECURITIES EVIDENCED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933
(THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2)
IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE, IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED
STATES.]

                                      -22-
<PAGE>   26
[If the Security is a Regulation S Security, insert -- THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND
MAY NOT BE OFFERED, SOLD, OR DELIVERED IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON. UNLESS THIS SECURITY IS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS
AVAILABLE.]

[If the Security is a Global Security, insert -- THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

[If the Security is a Global Security and The Depository Trust Company is to be
the Depositary therefor, insert -- UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.]

SECTION 205.  Form of Trustee's Certificate of Authentication.

      The Trustee's certificates of authentication shall be in substantially the
following form:

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

                                      FIRST UNION NATIONAL BANK,
                                                      As Trustee

                                        By......................................
                                                             Authorized Officer

                                      -23-
<PAGE>   27
                                  ARTICLE THREE

                                 THE SECURITIES

SECTION 301.  Title and Terms.

      The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to $250,000,000, except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities pursuant to Section 304, 305, 306,
906 or 1107.

      The Securities shall be known and designated as the "7.75% Debentures Due
June 1, 2011" of the Company. Their Stated Maturity shall be June 1, 2011, and
they shall bear interest at the rate of 7.75% per annum, from May 29, 2001 or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, as the case may be, payable semi-annually on June 1 and
December 1, commencing December 1, 2001, until the principal thereof is paid or
made available for payment; provided, however, that with respect to Original
Securities, if there has been a Registration Default, Special Interest will
accrue (in addition to the stated interest on the Securities) on the principal
amount of the Securities, at a rate of 0.25% per annum, determined daily, for
the 90-day period immediately following the occurrence of the Registration
Default, which rate shall be increased by 0.25% per annum at the beginning of
each subsequent 90-day period (provided, however, that the rate at which such
Special Interest accrues shall not exceed 1.0% per annum in the aggregate) and
Special Interest shall accrue and be payable until such time as no Registration
Default is in effect (after which such Special Interest will cease to accrue).
Accrued Special Interest, if any, shall be paid semi-annually on each Interest
Payment Date and the amount of accrued Special Interest shall be determined on
the basis of the number of days actually elapsed. Any accrued and unpaid
interest (including Special Interest) on any Security upon the issuance of an
Exchange Security (as defined in the Indenture) in exchange for such Security
shall cease to be payable to the Holder thereof but such accrued and unpaid
interest (including Special Interest) shall be payable on the next Interest
Payment Date for such Exchange Security to the Holder thereof on the related
Regular Record Date.

      Interest on the Securities, with the exception of Special Interest, shall
be computed on the basis of a 360-day year of twelve 30-day months.

      The principal of and any premium and interest on the Securities shall be
payable at the office or agency of the Company in New York, New York or
Charlotte, North Carolina maintained for such purpose and at any other office or
agency maintained by the Company for such purpose; provided, however, that at
the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.

                                      -24-
<PAGE>   28
      The Original Securities are entitled to the benefits of a Registration
Rights Agreement as provided for in Sections 202 and 1010.

      The Securities shall be redeemable as provided in Article Eleven.

      The Securities shall not have the benefit of any sinking fund obligations.

      Unless the context otherwise requires, the Original Securities and the
Exchange Securities shall constitute one series for all purposes under this
Indenture, including without limitation, amendments, waivers and redemptions.

SECTION 302.  Denominations.

      The Securities shall be issuable only in registered form without coupons
and only in denominations of $1,000 and any integral multiple thereof.

SECTION 303.  Execution, Authentication, Delivery and Dating.

      The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.

      Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

      At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Securities, and the Trustee in accordance with such Company
Order shall authenticate and deliver such Securities as in this Indenture
provided and not otherwise.

      At any time and from time to time after the execution and delivery of this
Indenture and after the effectiveness of an Exchange Registration Statement
under the Securities Act with respect thereto, the Company may deliver Exchange
Securities executed by the Company to the Trustee for authentication, together
with a Company Order for the authentication and delivery of such Exchange
Securities and a like principal amount of Original Securities for cancellation
in accordance with Section 309 of this Indenture, and the Trustee in accordance
with such Company Order shall authenticate and deliver such

                                      -25-
<PAGE>   29
Exchange Securities. In authenticating such Exchange Securities, and accepting
the additional responsibilities under this Indenture in relation to such
Securities, the Trustee shall be entitled to receive, and (subject to Section
601) shall be fully protected in relying upon, an Opinion of Counsel stating
that such Exchange Securities have been duly and validly issued in accordance
with the terms of this Indenture, and are entitled to all the rights and
benefits set forth herein.

      Each Security shall be dated the date of its authentication.

      No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.

SECTION 304.  Temporary Securities.

      Pending the preparation of definitive Securities, the Company may execute,
and upon Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their
execution of such Securities.

      If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency designated pursuant to Section 1002, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Securities of authorized
denominations. Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities.

SECTION 305. Registration, Registration of Transfer and Exchange; Certain
Transfers and Exchanges.

      (a) Registration, Registration of Transfer and Exchange Generally. The
Company shall cause to be kept at the Corporate Trust Office of the Trustee a
register (the register maintained in such office and in any other office or
agency designated pursuant to Section 1002 being herein sometimes collectively
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities and of transfers of Securities. The Trustee is hereby appointed

                                      -26-
<PAGE>   30
"Security Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided.

      Upon surrender for registration of transfer of any Security at an office
or agency of the Company designated pursuant to Section 1002 for such purpose,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Securities, of any authorized denominations and of a like aggregate principal
amount.

      Subject to Section 305(b), at the option of the Holder, Securities may be
exchanged for other Securities of any authorized denominations and of a like
aggregate principal amount, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any Securities are so surrendered for exchange,
the Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.

      All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

      Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

      No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 303, 304, 906 or 1107 not involving any transfer.

      The Company shall not be required (A) to issue, register the transfer of
or exchange any Security during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of Securities
selected for redemption under Section 1103 and ending at the close of business
on the day of such mailing, or (B) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.

      The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:

         (1) Each Global Security authenticated under this Indenture shall be
   registered in the name of the Depositary designated for such Global Security
   or a nominee thereof and delivered to such Depositary or a nominee thereof or
   custodian therefor, and each such Global Security shall constitute a single
   Security for all purposes of this Indenture.

                                      -27-
<PAGE>   31
         (2) Notwithstanding any other provision in this Indenture, no Global
   Security may be exchanged in whole or in part for Securities registered, and
   no transfer of a Global Security in whole or in part may be registered, in
   the name of any Person other than the Depositary for such Global Security or
   a nominee thereof unless (A) such Depositary (i) has notified the Company
   that it is unwilling or unable to continue as Depositary for such Global
   Security or (ii) has ceased to be a clearing agency registered under the
   Exchange Act, (B) the Company in its sole discretion determines that such
   Global Security shall be exchangeable for definitive registered Securities
   and executes and delivers to the Security Registrar a Company Order providing
   that such Global Security shall be so exchangeable or (C) there shall have
   occurred and be continuing an Event of Default with respect to such Global
   Security.

         (3) Subject to Clause (2) above, any exchange of a Global Security for
   other Securities may be made in whole or in part, and all Securities issued
   in exchange for a Global Security or any portion thereof shall be registered
   in such names as the Depositary for such Global Security shall direct.

         (4) Every Security authenticated and delivered upon registration of
   transfer of, or in exchange for or in lieu of, a Global Security or any
   portion thereof, whether pursuant to this Section, Section 303, 304, 306, 906
   or 1107 or otherwise, shall be authenticated and delivered in the form of,
   and shall be, a Global Security, unless such Security is registered in the
   name of a Person other than the Depositary for such Global Security or a
   nominee thereof.

      (b) Certain Transfers and Exchanges. Notwithstanding any other provision
of this Indenture or the Securities, transfers and exchanges of Securities and
beneficial interests in a Global Security of the kinds specified in this Section
305(b) shall be made only in accordance with this Section 305(b).

         (i) Restricted Global Security to Regulation S Global Security. If the
   owner of a beneficial interest in the Restricted Global Security wishes at
   any time to transfer such interest to a Person who wishes to acquire the same
   in the form of a beneficial interest in the Regulation S Global Security,
   such transfer may be effected only in accordance with the provisions of this
   Clause (b)(i) and Clause (b)(iv) below and subject to the Applicable
   Procedures. Upon receipt by the Security Registrar of (A) an order given by
   the Depositary or its authorized representative directing that a beneficial
   interest in the Regulation S Global Security in a specified principal amount
   be credited to a specified Agent Members' account and that a beneficial
   interest in the Restricted Global Security in an equal principal amount be
   debited from another specified Agent Members' account and (B) a Regulation S
   Certificate, satisfactory to the Security Registrar and the Trustee and duly
   executed by the owner of such beneficial interest in the Restricted Global
   Security or his attorney duly authorized in writing, then the Security
   Registrar, subject to Clause (b)(iv) below, shall reduce the principal amount
   of the Restricted Global

                                      -28-
<PAGE>   32
     Security and increase the principal amount of the Regulation S Global
     Security by such specified principal amount.

         (ii) Regulation S Global Security to Restricted Global Security. If the
   owner of a beneficial interest in the Regulation S Global Security wishes at
   any time to transfer such interest to a Person who wishes to acquire the same
   in the form of a beneficial interest in the Restricted Global Security, such
   transfer may be effected only in accordance with this Clause (b)(ii) and
   subject to the Applicable Procedures. Upon receipt the Security Registrar of
   (A) an order given by the Depositary or its authorized representative
   directing that a beneficial interest in the Restricted Global Security in a
   specified principal amount be credited to a specified Agent Members' account
   and that a beneficial interest in the Regulation S Global Security in an
   equal principal amount be debited from another specified Agent Members'
   account and (B) if such transfer is to occur during the Restricted Period, a
   Restricted Securities Certificate, satisfactory to the Security Registrar and
   the Trustee and duly executed by the owner of such beneficial interest in the
   Regulation S Global Security or his attorney duly authorized in writing, then
   the Security Registrar shall reduce the principal amount of the Regulation S
   Global Security and increase the principal amount of the Restricted Global
   Security by such specified principal amount. If transfers under this Clause
   (b)(ii) occur after the Restricted Period, no Restricted Securities
   Certificate will be required.

         (iii) Non-Global Security to Non-Global Security. A Security that is
   not a Global Security may be transferred, in whole or in part, to a Person
   who takes delivery in the form of another Security that is not a Global
   Security as provided in Section 305(a), provided that, if the Security to be
   transferred in whole or in part is a Restricted Security, then the Security
   Registrar shall have received a Restricted Securities Certificate,
   satisfactory to the Security Registrar and the Trustee and duly executed by
   the transferor Holder or his attorney duly authorized in writing, in which
   case the transferee Holder shall take delivery in the form of a Restricted
   Security (subject in every case to Section 305(c)).

         (iv) Regulation S Global Security to be Held Through Euroclear or
   Clearstream during Restricted Period. The Company shall use its best efforts
   to cause the Depositary to ensure that beneficial interests in the Regulation
   S Global Security may be held only in or through accounts maintained at the
   Depositary by Euroclear or Clearstream (or by Agent Members acting for the
   account thereof), and no person shall be entitled to effect any transfer or
   exchange that would result in any such interest being held otherwise than in
   or through such an account; provided that this Clause (b)(iv) shall not
   prohibit any transfer or exchange of such an interest in accordance with
   Clause (b)(ii) above.

         (v) Restricted Non-Global Security to Restricted Global Security or
   Regulation S Global Security. If the Holder of a Restricted Security (other
   than a Global Security) wishes at any time to transfer all or any portion of
   such Security to a Person who wishes to take delivery thereof in the form of
   a beneficial interest in the Restricted Global Security or the Regulation S
   Global Security, such transfer may be effected only in

                                      -29-
<PAGE>   33
     accordance with the provisions of this Clause (b)(v) and Clause (b)(iv)
     above and subject to the Applicable Procedures. Upon receipt by the
     Security Registrar of (A) such Security as provided in Section 305(a) and
     instructions satisfactory to the Security Registrar and the Trustee
     directing that a beneficial interest in the Restricted Global Security or
     Regulation S Global Security in a specified principal amount not greater
     than the principal amount of such Security be credited to a specified Agent
     Member's account and (B) a Restricted Securities Certificate, if the
     specified account is to be credited with a beneficial interest in the
     Restricted Global Security, or a Regulation S Certificate, if the specified
     account is to be credited with a beneficial interest in the Regulation S
     Global Security, in either case satisfactory to the Security Registrar and
     the Trustee and duly executed by such Holder or his attorney duly
     authorized in writing, then the Security Registrar, subject to Clause
     (b)(iv) above, shall cancel such Security (and issue a new Security in
     respect of any untransferred portion thereof) and increase the principal
     amount of the Restricted Global Security or the Regulation S Global
     Security, as the case may be, by the specified principal amount, both as
     provided in Section 305(a).

      (c) Securities Act Legends. Restricted Securities and their Successor
Securities shall bear a Restricted Securities Legend, and the Regulation S
Securities and their Successor Securities shall bear a Regulation S Legend,
subject to the following:

         (i) subject to the following Clauses of this Section 305(c), a Security
   or any portion thereof which is exchanged, upon transfer or otherwise, for a
   Global Security or any portion thereof shall bear the Securities Act Legend
   borne by such Global Security while represented thereby;

         (ii) subject to the following Clauses of this Section 305(c), a new
   Security which is not a Global Security and is issued in exchange for another
   Security (including a Global Security) or any portion thereof, upon transfer
   or otherwise, shall bear the Securities Act Legend borne by such other
   Security, provided that, if such new Security is required pursuant to Section
   305(b)(v) to be issued in the form of a Restricted Security, it shall bear a
   Restricted Securities Legend and, if such new Security is so required to be
   issued in the form of a Regulation S Security, it shall bear a Regulation S
   Legend;

         (iii)  Registered Securities shall not bear a Securities Act Legend;

         (iv) at any time after the Securities may be freely transferred without
   registration under the Securities Act or without being subject to transfer
   restrictions pursuant to the Securities Act, a new Security which does not
   bear a Securities Act Legend may be issued in exchange for or in lieu of a
   Security (other than a Global Security) or any portion thereof which bears
   such a legend if the Security Registrar has received an Unrestricted
   Securities Certificate, satisfactory to the Security Registrar and the
   Trustee and duly executed by the Holder of such legended Security or his
   attorney duly authorized in writing, and after such date and receipt of such
   certificate, the Trustee shall

                                      -30-
<PAGE>   34
     authenticate and deliver such a new Security in exchange for or in lieu of
     such other Security as provided in this Article Three;

         (v) a new Security which does not bear a Securities Act Legend may be
   issued in exchange for or in lieu of a Security (other than a Global
   Security) or any portion thereof which bears such a legend if, in the
   Company's judgment, placing such a legend upon such new Security is not
   necessary to ensure compliance with the registration requirements of the
   Securities Act, and the Trustee, at the direction of the Company, shall
   authenticate and deliver such a new Security as provided in this Article
   Three; and

         (vi) notwithstanding the foregoing provisions of this Section 305(c), a
   Successor Security of a Security that does not bear a particular form of
   Securities Act Legend shall not bear such form of legend unless the Company
   has reasonable cause to believe that such Successor Security is a "restricted
   security" within the meaning of Rule 144, in which case the Trustee, at the
   direction of the Company, shall authenticate and deliver a new Security
   bearing a Restricted Securities Legend in exchange for such Successor
   Security as provided in this Article Three.

SECTION 306.  Mutilated, Destroyed, Lost and Stolen Securities.

      If any mutilated Security is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.

      If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.

      In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

      Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.

      Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by

                                      -31-
<PAGE>   35
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.

      The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.

SECTION 307.  Payment of Interest; Interest Rights Preserved.

      Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest.

      Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in Clause (1) or (2) below:

         (1) The Company may elect to make payment of any Defaulted Interest to
      the Persons in whose names the Securities (or their respective Predecessor
      Securities) are registered at the close of business on a Special Record
      Date for the payment of such Defaulted Interest, which shall be fixed in
      the following manner. The Company shall notify the Trustee in writing of
      the amount of Defaulted Interest proposed to be paid on each Security and
      the date of the proposed payment, and at the same time the Company shall
      deposit with the Trustee an amount of money equal to the aggregate amount
      proposed to be paid in respect of such Defaulted Interest or shall make
      arrangements satisfactory to the Trustee for such deposit prior to the
      date of the proposed payment, such money when deposited to be held in
      trust for the benefit of the Persons entitled to such Defaulted Interest
      as in this Clause provided. Thereupon the Trustee shall fix a Special
      Record Date for the payment of such Defaulted Interest which shall be not
      more than 15 days and not less than 10 days prior to the date of the
      proposed payment and not less than 10 days after the receipt by the
      Trustee of the notice of the proposed payment. The Trustee shall promptly
      notify the Company of such Special Record Date and, in the name and at the
      expense of the Company, shall cause notice of the proposed payment of such
      Defaulted Interest and the Special Record Date therefor to be given to
      each Holder of Securities in the manner set forth in Section 106, not less
      than 10 days prior to such Special Record Date. Notice of the proposed
      payment of such Defaulted Interest and the Special Record Date therefor
      having been so mailed, such Defaulted Interest shall be paid to the
      Persons in whose names the Securities (or their respective Predecessor
      Securities) are registered at the close of business on such Special Record
      Date and shall no longer be payable pursuant to the following Clause (2).

                                      -32-
<PAGE>   36
         (2) The Company may make payment of any Defaulted Interest in any other
      lawful manner not inconsistent with the requirements of any securities
      exchange on which the Securities may be listed, and upon such notice as
      may be required by such exchange, if, after notice given by the Company to
      the Trustee of the proposed payment pursuant to this Clause, such manner
      of payment shall be deemed practicable by the Trustee.

      Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.

SECTION 308.  Persons Deemed Owners.

      Prior to due presentment of a Security for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of such Security
for the purpose of receiving payment of principal of and any premium and
(subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

SECTION 309.  Cancellation.

      All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee,
be delivered to the Trustee and shall be promptly cancelled by it. The Company
may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Securities shall be authenticated in lieu
of or in exchange for any Securities cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Securities held
by the Trustee shall be disposed of as directed by a Company Order.

SECTION 310.  Computation of Interest.

      Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months, except that Special Interest shall be computed on
the basis of a 365-day year and the actual number of days elapsed.

                                      -33-
<PAGE>   37
SECTION 311.  CUSIP Numbers.

      The Company in issuing Securities may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; if so, the Trustee shall use
such CUSIP numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; provided, however that any such notice
may state that no representation is made as to the correctness of such CUSIP
numbers either as printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and any such redemption
or repurchase shall not be affected by any defect in or omission of such CUSIP
numbers.

                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

SECTION 401.  Satisfaction and Discharge of Indenture.

      This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for), and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when

      (1)   either

         (A) all Securities theretofore authenticated and delivered (other than
      (i) Securities which have been destroyed, lost or stolen and which have
      been replaced or paid as provided in Section 306 and (ii) Securities for
      whose payment money has theretofore been deposited in trust or segregated
      and held in trust by the Company and thereafter repaid to the Company or
      discharged from such trust, as provided in Section 1003) have been
      delivered to the Trustee for cancellation; or

          (B) all such Securities not theretofore delivered to the Trustee for
     cancellation

               (i)  have become due and payable, or

               (ii) will become due and payable at their Stated Maturity within
          one year, or

               (iii) are to be called for redemption within one year under
          arrangements satisfactory to the Trustee for the giving of notice of
          redemption by the Trustee in the name, and at the expense, of the
          Company,

                                      -34-
<PAGE>   38
      and the Company, in the case of (i), (ii) or (iii) above, has deposited or
      caused to be deposited with the Trustee as trust funds in trust for the
      purpose money in an amount sufficient to pay and discharge the entire
      Indebtedness on such Securities not theretofore delivered to the Trustee
      for cancellation, for principal and any premium and interest to the date
      of such deposit (in the case of Securities which have become due and
      payable) or to the Stated Maturity or Redemption Date, as the case may be;

     (2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and

     (3) the Company has delivered to the Trustee an Officers' Certificate
stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.

      Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.

SECTION 402.  Application of Trust Money.

      Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.

                                  ARTICLE FIVE

                                    REMEDIES

SECTION 501.  Events of Default.

      "Event of Default", wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

                                      -35-
<PAGE>   39
          (1) default in the payment of any interest upon any Security when it
     becomes due and payable, and continuance of such default for a period of 30
     days; or

          (2) default in the payment of the principal of or any premium on any
     Security at its Maturity; or

          (3) default in the performance, or breach, of any covenant or warranty
     of the Company in this Indenture (other than Section 1010 or a covenant or
     warranty a default in whose performance or whose breach is elsewhere in
     this Section specifically dealt with, and continuance of such default or
     breach for a period of 60 days after there has been given, by registered or
     certified mail, to the Company by the Trustee or to the Company and the
     Trustee by the Holders of at least 10% in principal amount of the
     Outstanding Securities a written notice specifying such default or breach
     and requiring it to be remedied and stating that such notice is a "Notice
     of Default" hereunder; or

          (4) a default under any bond, debenture, note or other evidence of
     Indebtedness for money borrowed (other than Non-Recourse Debt) by the
     Company or any Designated Subsidiary having an aggregate principal amount
     outstanding of at least $15,000,000, or under any mortgage, indenture or
     instrument under which there may be issued or by which there may be secured
     or evidenced any Indebtedness for money borrowed (other than Non-Recourse
     Debt) by the Company or any Designated Subsidiary having an aggregate
     principal amount outstanding of at least $15,000,000, whether such
     Indebtedness now exists or shall hereafter be created, which default (A)
     shall constitute a failure to pay any portion of the principal of such
     Indebtedness when due and payable after the expiration of any applicable
     grace period with respect thereto or (B) shall have resulted in such
     Indebtedness becoming or being declared due and payable prior to the date
     on which it would otherwise have become due and payable, without, in the
     case of Clause (A), such Indebtedness having been discharged or without, in
     the case of Clause (B), such Indebtedness having been discharged or such
     acceleration having been rescinded or annulled, in each such case within a
     period of 15 days after there shall have been given, by registered or
     certified mail, to the Company by the Trustee or to the Company and the
     Trustee by the Holders of at least 10% in principal amount of the
     Outstanding Securities a written notice specifying such default and
     requiring the Company to cause such Indebtedness to be discharged or cause
     such acceleration to be rescinded or annulled, as the case may be, and
     stating that such notice is a "Notice of Default" hereunder; or

          (5) the entry by a court having jurisdiction in the premises of (A) a
     decree or order for relief in respect of the Company in an involuntary case
     or proceeding under any applicable Federal or State bankruptcy, insolvency,
     reorganization or other similar law or (B) a decree or order adjudging the
     Company a bankrupt or insolvent, or approving as properly filed a petition
     seeking reorganization, arrangement, adjustment or composition of or in
     respect of the Company under any applicable Federal or State law, or
     appointing a custodian, receiver, liquidator, assignee, trustee,
     sequestrator or other similar official of the Company or of any substantial
     part of its property, or ordering the winding up or liquidation of its
     affairs, and the continuance of any such decree or order

                                      -36-
<PAGE>   40
     for relief or any such other decree or order undismissed or unstayed and in
     effect for a period of 60 consecutive days; or

      (6) the commencement by the Company of a voluntary case or proceeding
   under any applicable Federal or State bankruptcy, insolvency, reorganization
   or other similar law or of any other case or proceeding to be adjudicated a
   bankrupt or insolvent, or the consent by it to the entry of a decree or order
   for relief in respect of the Company in an involuntary case or proceeding
   under any applicable Federal or State bankruptcy, insolvency, reorganization
   or other similar law or to the commencement of any bankruptcy or insolvency
   case or proceeding against it, or the filing by it of a petition or answer or
   consent seeking reorganization or relief under any applicable Federal or
   State law, or the consent by it to the filing of such petition or to the
   appointment of or taking possession by a custodian, receiver, liquidator,
   assignee, trustee, sequestrator or other similar official of the Company or
   of any substantial part of its property, or the making by it of an assignment
   for the benefit of creditors, or the admission by it in writing of its
   inability to pay its debts generally as they become due, or the taking of
   corporate action by the Company in furtherance of any such action.

SECTION 502.  Acceleration of Maturity; Rescission and Annulment.

      If an Event of Default (other than an Event of Default specified in
Section 501(5) or 501(6)) occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal shall
become immediately due and payable. If an Event of Default specified in Section
501(5) or 501(6) occurs, the principal of all the Securities shall
automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable.

      At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of the Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if

     (1) the Company has paid or deposited with the Trustee a sum sufficient to
pay

         (A)   all overdue interest on all Securities,

         (B) the principal of (and premium, if any, on) any Securities which
      have become due otherwise than by such declaration of acceleration and
      interest thereon at the rate borne by the Securities,

                                      -37-
<PAGE>   41
         (C) to the extent that payment of such interest is lawful, interest
      upon overdue interest at the rate borne by the Securities, and

         (D) all sums paid or advanced by the Trustee hereunder and the
      reasonable compensation, expenses, disbursements and advances of the
      Trustee, its agents and counsel;

   and

      (2) all Events of Default, other than the non-payment of the principal of
   Securities which have become due solely by such declaration of acceleration,
   have been cured or waived as provided in Section 513.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

SECTION 503.  Collection of Indebtedness and Suits for Enforcement by Trustee.

      The Company covenants that if

          (1) default is made in the payment of any interest on any Security
     when such interest becomes due and payable and such default continues for a
     period of 30 days, or

          (2) default is made in the payment of the principal of (or premium, if
     any, on) any Security at the Maturity thereof,

the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate borne by the
Securities, and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

      If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 504.  Trustee May File Proofs of Claim.

                                      -38-
<PAGE>   42
      In case of any judicial proceeding relative to the Company (or any other
obligor upon the Securities), its property or its creditors, the Trustee shall
be entitled and empowered, by intervention in such proceeding or otherwise, to
take any and all actions authorized under the Trust Indenture Act in order to
have claims of the Holders and the Trustee allowed in any such proceeding. In
particular, the Trustee shall be authorized to collect and receive any moneys or
other property payable or deliverable on any such claims and to distribute the
same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.

      No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.

SECTION 505.  Trustee May Enforce Claims Without Possession of Securities.

      All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.

SECTION 506.  Application of Money Collected.

      Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:

          FIRST: To the payment of all amounts due the Trustee under Section
     607; and

                                      -39-
<PAGE>   43
          SECOND: To the payment of the amounts then due and unpaid for
     principal of and any premium and interest on the Securities in respect of
     which or for the benefit of which such money has been collected, ratably,
     without preference or priority of any kind, according to the amounts due
     and payable on such Securities for principal and any premium and interest,
     respectively.

SECTION 507.  Limitation on Suits.

      No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless

          (1) such Holder has previously given written notice to the Trustee of
     a continuing Event of Default;

          (2) the Holders of not less than 25% in principal amount of the
     Outstanding Securities shall have made written request to the Trustee to
     institute proceedings in respect of such Event of Default in its own name
     as Trustee hereunder;

          (3) such Holder or Holders have offered to the Trustee reasonable
     indemnity against the costs, expenses and liabilities to be incurred in
     compliance with such request;

          (4) the Trustee for 60 days after its receipt of such notice, request
     and offer of indemnity has failed to institute any such proceeding; and

          (5) no direction inconsistent with such written request has been given
     to the Trustee during such 60-day period by the Holders of a majority in
     principal amount of the Outstanding Securities;

it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.

SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.

      Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.

                                      -40-
<PAGE>   44
SECTION 509.  Restoration of Rights and Remedies.

      If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.

SECTION 510.  Rights and Remedies Cumulative.

      Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

SECTION 511.  Delay or Omission Not Waiver.

      No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.

SECTION 512.  Control by Holders.

      The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, provided that

          (1) such direction shall not be in conflict with any rule of law or
     with this Indenture, and

                                      -41-
<PAGE>   45
          (2) the Trustee may take any other action deemed proper by the Trustee
     which is not inconsistent with such direction.

SECTION 513.  Waiver of Past Defaults.

      The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default

          (1) in the payment of the principal of or any premium or interest on
     any Security, or

          (2) in respect of a covenant or provision hereof which under Article
     Nine cannot be modified or amended without the consent of the Holder of
     each Outstanding Security.

      Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.

SECTION 514.  Undertaking for Costs.

      In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company.

SECTION 515.  Waiver of Usury, Stay or Extension Laws.

      The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

                                      -42-
<PAGE>   46
                                   ARTICLE SIX

                                   THE TRUSTEE

SECTION 601.  Certain Duties and Responsibilities.

      The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.

SECTION 602.  Notice of Defaults.

      The Trustee shall give the Holders notice of any default hereunder as and
to the extent provided by the Trust Indenture Act; provided, however, that in
the case of any default of the character specified in Section 501(3), no such
notice to Holders shall be given until at least 30 days after the occurrence
thereof. For the purpose of this Section, the term "default" means any event
which is, or after notice or lapse of time or both would become, an Event of
Default.

SECTION 603.  Certain Rights of Trustee.

      Subject to the provisions of Section 601:

      (1) the Trustee may rely and shall be protected in acting or refraining
   from acting upon any resolution, certificate, statement, instrument, opinion,
   report, notice, request, direction, consent, order, bond, debenture, note,
   other evidence of Indebtedness or other paper or document believed by it to
   be genuine and to have been signed or presented by the proper party or
   parties;

      (2) any request or direction of the Company mentioned herein shall be
   sufficiently evidenced by a Company Request or Company Order, and any
   resolution of the Board of Directors shall be sufficiently evidenced by a
   Board Resolution;

      (3) whenever in the administration of this Indenture the Trustee shall
   deem it desirable that a matter be proved or established prior to taking,
   suffering or omitting any

                                      -43-
<PAGE>   47
     action hereunder, the Trustee (unless other evidence be herein specifically
     prescribed) may, in the absence of bad faith on its part, rely upon an
     Officers' Certificate;

          (4) the Trustee may consult with counsel and the written advice of
     such counsel or any Opinion of Counsel shall be full and complete
     authorization and protection in respect of any action taken, suffered or
     omitted by it hereunder in good faith and in reliance thereon;

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

          (6) the Trustee shall not be bound to make any investigation into the
     facts or matters stated in any resolution, certificate, statement,
     instrument, opinion, report, notice, request, direction, consent, order,
     bond, debenture, note, other evidence of Indebtedness or other paper or
     document, but the Trustee, in its discretion, may make such further inquiry
     or investigation into such facts or matters as it may see fit, and, if the
     Trustee shall determine to make such further inquiry or investigation, it
     shall be entitled to examine the books, records and premises of the
     Company, personally or by agent or attorney, so long as such Trustee, agent
     or attorney agrees to reasonable confidentiality provisions not
     inconsistent with the Trustee's duties hereunder; and

          (7) the Trustee may execute any of the trusts or powers hereunder or
     perform any duties hereunder either directly or by or through agents or
     attorneys and the Trustee shall not be responsible for any misconduct or
     negligence on the part of any agent or attorney appointed with due care by
     it hereunder.

SECTION 604.  Not Responsible for Recitals or Issuance of Securities.

      The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Securities. Neither the Trustee nor
any Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.

SECTION 605.  May Hold Securities.

      The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal

                                      -44-
<PAGE>   48
with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.

SECTION 606.  Money Held in Trust.

      Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company.

SECTION 607.  Compensation and Reimbursement.

      The Company agrees

      (1) to pay to the Trustee from time to time reasonable compensation for
   all services rendered by it hereunder (which compensation shall not be
   limited by any provision of law in regard to the compensation of a trustee of
   an express trust);

      (2) except as otherwise expressly provided herein, to reimburse the
   Trustee upon its request for all reasonable expenses, disbursements and
   advances incurred or made by the Trustee in accordance with any provision of
   this Indenture (including the reasonable compensation and the expenses and
   disbursements of its agents and counsel), except any such expense,
   disbursement or advance as may be attributable to its negligence, bad faith
   or willful misconduct; and

      (3) to indemnify the Trustee for, and to hold it harmless against, any
   loss, liability or expense incurred without negligence, bad faith or willful
   misconduct on its part, arising out of or in connection with the acceptance
   or administration of the trust or trusts hereunder, including the costs and
   expenses of defending itself against any claim or liability in connection
   with the exercise or performance of any of its powers or duties hereunder.

SECTION 608.  Conflicting Interests.

      If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.

SECTION 609.  Corporate Trustee Required; Eligibility

                                      -45-

<PAGE>   49
      There shall at all times be one (and only one) Trustee hereunder which
shall be a Person that is eligible pursuant to the Trust Indenture Act to act as
such and has a combined capital and surplus of at least $100,000,000 and has its
Corporate Trust Office in Philadelphia, Pennsylvania or New York, New York. If
any such Person publishes reports of condition at least annually, pursuant to
law or to the requirements of its supervising or examining authority, then for
the purposes of this Section and to the extent permitted by the Trust Indenture
Act, the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.

SECTION 610. Resignation and Removal; Appointment of Successor.

      No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.

      The Trustee may resign at any time by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.

      The Trustee may be removed at any time by Act of the Holders of a majority
in principal amount of the Outstanding Securities, delivered to the Trustee and
to the Company.

      If at any time:

      (1) the Trustee shall fail to comply with Section 608 after written
   request therefor by the Company or by any Holder who has been a bona fide
   Holder of a Security for at least six months, or

      (2) the Trustee shall cease to be eligible under Section 609 and shall
   fail to resign after written request therefor by the Company or by any such
   Holder, or

      (3) the Trustee shall become incapable of acting or shall be adjudged a
   bankrupt or insolvent or a receiver of the Trustee or of its property shall
   be appointed or any public officer shall take charge or control of the
   Trustee or of its property or affairs for the purpose of rehabilitation,
   conservation or liquidation,

then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee, or (B) subject to Section 514, any Holder who has been a bona fide
Holder of a Security

                                      -46-
<PAGE>   50
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.

      If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, the Company, by
a Board Resolution, shall promptly appoint a successor Trustee and shall comply
with the applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements of
Section 611, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner required by
Section 611, any Holder who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

      The Company shall give notice of each resignation and each removal of the
Trustee and each appointment of a successor Trustee to all Holders in the manner
provided in Section 106. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.

SECTION 611. Acceptance of Appointment by Successor.

      Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder.

      Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts.

      No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.

                                      -47-
<PAGE>   51
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.

      Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

SECTION 613. Preferential Collection of Claims Against Company.

      If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).

SECTION 614. Appointment of Authenticating Agent.

      The Trustee may appoint an Authenticating Agent or Agents which shall be
authorized to act on behalf of the Trustee to authenticate Securities issued
upon original issue and upon exchange, registration of transfer or partial
redemption thereof or pursuant to Section 306, and Securities so authenticated
shall be entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the authentication and delivery
of Securities by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at all times
be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $100,000,000 and subject to supervision or examination
by Federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance

                                      -48-
<PAGE>   52
with the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.

      Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

      An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.

      The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 607.

      If an appointment is made pursuant to this Section, the Securities may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:

      This is one of the Securities in the within-mentioned Indenture.

                                       FIRST UNION NATIONAL BANK
                                                      As Trustee

                                       By......................................,
                                                        As Authenticating Agent

                                       By.......................................
                                                              Authorized Officer

                                      -49-
<PAGE>   53
                                  ARTICLE SEVEN

                HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.

      The Company will furnish or cause to be furnished to the Trustee

      (1) semi-annually, not more than 15 days after each Regular Record Date, a
   list, in such form as the Trustee may reasonably require, of the names and
   addresses of the Holders as of such Regular Record Date, and

      (2) at such other times as the Trustee may request in writing, within 30
   days after the receipt by the Company of any such request, a list of similar
   form and content as of a date not more than 15 days prior to the time such
   list is furnished;

excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.

SECTION 702. Preservation of Information; Communications to Holders.

      The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.

      The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.

      Every Holder of Securities, by receiving and holding the same, agrees with
the Company and the Trustee that neither the Company nor the Trustee nor any
agent of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.

SECTION 703. Reports by Trustee.

                                      -50-
<PAGE>   54
      The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.

      Reports so required to be transmitted at stated intervals of not more than
12 months shall be transmitted no later than July 15 in each calendar year,
commencing in 2002.

      A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.

SECTION 704. Reports by Company.

      The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission.

                                  ARTICLE EIGHT

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.

      The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:

      (1) in case the Company shall consolidate with or merge into another
   Person or convey, transfer or lease its properties and assets substantially
   as an entirety to any Person, the Person formed by such consolidation or into
   which the Company is merged or the Person which acquires by conveyance or
   transfer, or which leases, the properties and assets of the Company
   substantially as an entirety shall be a corporation, partnership or trust,
   shall be organized and validly existing under the laws of the United States
   of America, any State thereof or the District of Columbia and shall expressly
   assume, by an indenture supplemental hereto, executed and delivered to the
   Trustee, in form satisfac-

                                      -51-
<PAGE>   55
   tory to the Trustee, the due and punctual payment of the principal of and any
   premium and interest on all the Securities and the performance or observance
   of every covenant of this Indenture on the part of the Company to be
   performed or observed;

      (2) immediately after giving effect to such transaction and treating any
   Indebtedness which becomes an obligation of the Company or any Subsidiary as
   a result of such transaction as having been incurred by the Company or such
   Subsidiary at the time of such transaction, no Event of Default, and no event
   which, after notice or lapse of time or both, would become an Event of
   Default, shall have happened and be continuing;

      (3) if, as a result of any such consolidation or merger or such
   conveyance, transfer or lease, properties or assets of the Company would
   become subject to a mortgage, pledge, lien, security interest or other
   encumbrance which would not be permitted by this Indenture, the Company or
   such successor Person, as the case may be, shall take such steps as shall be
   necessary effectively to secure the Securities equally and ratably with (or
   prior to) all Indebtedness secured thereby; and

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

SECTION 802. Successor Substituted.

      Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
801, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Securities.

                                  ARTICLE NINE

                             SUPPLEMENTAL INDENTURES

SECTION 901. Supplemental Indentures Without Consent of Holders.

                                      -52-
<PAGE>   56
      Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

      (1) to evidence the succession of another Person to the Company and the
   assumption by any such successor of the covenants of the Company herein and
   in the Securities; or

      (2) to add to the covenants of the Company for the benefit of the Holders
   or to surrender any right or power herein conferred upon the Company; or

      (3) to add any additional Events of Default for the benefit of the
   Holders; or

      (4) to add to or change any of the provisions of this Indenture to such
   extent as shall be necessary to permit or facilitate the issuance of
   Securities in bearer form, registrable or not registrable as to principal,
   and with or without interest coupons, or to permit or facilitate the issuance
   of Securities in uncertificated form; or

      (5) to add to, change or eliminate any of the provisions of this
   Indenture, provided that any such addition, change or elimination (A) shall
   neither (i) apply to any Security created prior to the execution of such
   supplemental indenture and entitled to the benefit of such provision nor (ii)
   modify the rights of the Holder of any such Security with respect to such
   provision or (B) shall become effective only when there is no such Security
   Outstanding; or

      (6) to secure the Securities pursuant to the requirements of Section 1008
   or otherwise; or

      (7) to evidence and provide for the acceptance of appointment hereunder of
   a successor Trustee; or

      (8) to cure any ambiguity, to correct or supplement any provision herein
   which may be defective or inconsistent with any other provision herein, or to
   make any other provisions with respect to matters or questions arising under
   this Indenture, provided that such action pursuant to this Clause (8) shall
   not adversely affect the interests of the Holders in any material respect.

SECTION 902. Supplemental Indentures With Consent of Holders.

      With the consent of the Holders of not less than 66_% in principal amount
of the Outstanding Securities, by Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of

                                      -53-
<PAGE>   57
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,

      (1) change the Stated Maturity of the principal of, or any installment of
   interest on, any Security, or reduce the principal amount thereof or the rate
   of interest thereon or any premium payable upon the redemption thereof, or
   reduce the amount of the principal of any Security which would be due and
   payable upon a declaration of acceleration of the Maturity thereof pursuant
   to Section 502, or change the place of payment where, or the coin or currency
   in which, any Security or any premium or interest thereon is payable, or
   impair the right to institute suit for the enforcement of any such payment on
   or after the Stated Maturity thereof (or, in the case of redemption, on or
   after the Redemption Date), or

      (2) reduce the percentage in principal amount of the Outstanding
   Securities, the consent of whose Holders is required for any such
   supplemental indenture, or the consent of whose Holders is required for any
   waiver (of compliance with certain provisions of this Indenture or certain
   defaults hereunder and their consequences) provided for in this Indenture, or

      (3) modify any of the provisions of this Section, Section 513 or Section
   1011, except to increase any such percentage or to provide that certain other
   provisions of this Indenture cannot be modified or waived without the consent
   of the Holder of each Outstanding Security affected thereby; provided,
   however, that this clause shall not be deemed to require the consent of any
   Holder with respect to changes in the references to "the Trustee" and
   concomitant changes in this Section and Section 1011, or the deletion of this
   proviso, in accordance with the requirements of Sections 611 and 901(7).

      It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.

SECTION 903. Execution of Supplemental Indentures.

      In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

SECTION 904. Effect of Supplemental Indentures.

                                      -54-
<PAGE>   58
      Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.

SECTION 905. Conformity with Trust Indenture Act.

      Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.

SECTION 906. Reference in Securities to Supplemental Indentures.

      Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.

                                   ARTICLE TEN

                                    COVENANTS

SECTION 1001. Payment of Principal, Premium and Interest.

      The Company covenants and agrees that it will duly and punctually pay the
principal of and any premium and interest on the Securities in accordance with
the terms of the Securities and this Indenture.

SECTION 1002. Maintenance of Office or Agency.

      The Company will maintain in New York, New York or Charlotte, North
Carolina an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or

                                      -55-
<PAGE>   59
served at the Corporate Trust Office of the Trustee, and the Company hereby
appoints the Trustee as its agent to receive all such presentations, surrenders,
notices and demands.

      The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in New York, New York
for such purposes. The Company will give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any such
other office or agency.

SECTION 1003. Money for Securities Payments to Be Held in Trust.

      If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of or any premium or interest on any of
the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal and any premium and
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.

      Whenever the Company shall have one or more Paying Agents, it will, prior
to each due date of the principal of or any premium or interest on any
Securities, deposit with a Paying Agent a sum sufficient to pay such amount,
such sum to be held as provided by the Trust Indenture Act, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.

      The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will (1) comply with the provisions of the Trust Indenture Act applicable
to it as a Paying Agent and (2) during the continuance of any default by the
Company (or any other obligor upon the Securities) in the making of any payment
in respect of the Securities, upon the written request of the Trustee, forthwith
pay to the Trustee all sums held in trust by such Paying Agent as such.

      The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.

      Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or any premium or
interest on any

                                      -56-
<PAGE>   60
Security and remaining unclaimed for two years after such principal, premium or
interest has become due and payable shall be paid to the Company on Company
Request, or (if then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured general
creditor, look only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in a
newspaper published in the English language, customarily published on each
Business Day and of general circulation in New York, New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.

SECTION 1004. Statement by Officers as to Default.

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

SECTION 1005. Existence.

      Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; provided, however, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.

SECTION 1006. Maintenance of Properties.

      The Company will cause all properties used or useful in the conduct of its
business or the business of any Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times; provided, however, that
nothing in this Section shall prevent the Company from discontinuing the
operation or

                                      -57-
<PAGE>   61
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the Holders.

SECTION 1007. Payment of Taxes and Other Claims.

      The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.

SECTION 1008. Limitation on Liens on Stock of Designated Subsidiaries.

      The Company will not, and it will not permit any Subsidiary of the Company
to, at any time, directly or indirectly, create, assume, incur or permit to
exist any Indebtedness secured by a pledge, lien or other encumbrance (any
pledge, lien or other encumbrance being hereinafter in this Section referred to
as a "lien") on the Capital Stock of any Designated Subsidiary without making
effective provision whereby the Securities then Outstanding (and, if the Company
so elects, any other Indebtedness of the Company that is not subordinate to the
Securities and with respect to which the governing instruments require, or
pursuant to which the Company is otherwise obligated or required, to provide
such security) shall be equally and ratably secured with such secured
Indebtedness so long as such Indebtedness shall be secured. For purposes of this
Section 1008 only, "Indebtedness," in addition to those items specified in
Section 101 hereof, shall include any obligation of, or any such obligation
guaranteed by, any Person for the payment of amounts due under a swap agreement
or other similar instrument or agreement, or foreign currency hedge exchange or
similar instrument or agreement.

      If the Company shall hereafter be required to secure the Securities
equally and ratably with any other Indebtedness pursuant to this Section 1008,
(1) the Company will promptly deliver to the Trustee an Officers' Certificate
stating that the foregoing covenant has been complied with, and an Opinion of
Counsel stating that in the opinion of such counsel, the foregoing covenant has
been complied with and that any instruments executed by the Company or any
Subsidiary of the Company in the performance of the foregoing covenant comply
with the requirements of the foregoing covenant and (2) the Trustee is hereby
authorized to enter into an indenture or agreement supplemental hereto and to
take such action, if any, as it may deem advisable to enable it to enforce the
rights of the holder of the Securities so secured.

                                      -58-
<PAGE>   62
SECTION 1009. Limitation Upon Sales of Capital Stock of Designated Subsidiaries.

      The Company will not sell, transfer or otherwise dispose of (except to a
Subsidiary, which agrees in writing to hold such transferred shares subject to
the terms of this Section 1009), and it will not permit any Designated
Subsidiary to sell, transfer or otherwise dispose of (except to the Company or
to a Subsidiary, which agrees in writing to hold such transferred shares subject
to the terms of this Section 1009), any shares of Capital Stock of a Designated
Subsidiary, unless the entire Capital Stock of such Designated Subsidiary at the
time owned by the Company and its Subsidiaries shall be disposed of at the same
time for a consideration consisting of cash or other property, which, in the
opinion of the Board of Directors, is at least equal to the fair value thereof.

SECTION 1010. Registration Rights.

      The Company agrees that the Holders of the Original Securities are
entitled to the benefits of the Exchange and Registration Rights Agreement and
the Company covenants that it will perform or cause to be performed all duties
and obligations arising thereunder. Other than the payment of Special Interest,
the rights and remedies of the Holders for a breach of this Section 1010 are set
forth in the Exchange and Registration Rights Agreement. This Section 1010 shall
not apply to Exchange Securities.

SECTION 1011. Waiver of Certain Covenants.

      The Company may omit in any particular instance to comply with any term,
provision or condition set forth in any covenant provided pursuant to Section
901(2) for the benefit of the Holders or in any of Sections 1005 to 1009,
inclusive, if before the time for such compliance the Holders of at least 66_%
in principal amount of the Outstanding Securities shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with
such term, provision or condition, but no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

SECTION 1101. Right of Redemption.

                                      -59-
<PAGE>   63
      The Securities may be redeemed at the election of the Company, as a whole
or from time to time in part, at any time, at the Redemption Price specified in
the form of Security set forth in Section 203 herein, together with accrued
interest to the Redemption Date. Any such redemption of Securities at the
election of the Company shall be made in accordance with this Article.

SECTION 1102. Election to Redeem; Notice to Trustee.

      The election of the Company to redeem any Securities pursuant to Section
1101 shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company of less than all the Securities, the Company shall, at
least 60 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities to be redeemed.

SECTION 1103. Selection by Trustee of Securities to Be Redeemed.

      If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by lot by the Trustee, which may provide for the
selection for redemption of portions (equal to $1,000 or any integral multiple
thereof) of the principal amount of Securities of a denomination larger than
$1,000.

      The Trustee shall promptly notify the Company and each Security Registrar
in writing of the Securities selected for redemption as aforesaid and, in case
of any Securities selected for partial redemption as aforesaid, the principal
amount thereof to be redeemed.

      For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.

SECTION 1104. Notice of Redemption.

      Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.

      All notices of redemption shall state:

      (1) the Redemption Date,

                                      -60-
<PAGE>   64
      (2) the Redemption Price,

      (3) if less than all the Outstanding Securities are to be redeemed, the
   identification (and, in the case of partial redemption of any Securities, the
   principal amounts) of the particular Securities to be redeemed,

      (4) that on the Redemption Date the Redemption Price will become due and
   payable upon each such Security to be redeemed and that interest thereon will
   cease to accrue on and after said date, and

      (5) the place or places where each such Security is to be surrendered for
   payment of the Redemption Price.

      Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.

      SECTION 1105. Deposit of Redemption Price.

      Prior to any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1003) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.

SECTION 1106. Securities Payable on Redemption Date.

      Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Record Dates according to their
terms and the provisions of Section 307.

      If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.

                                      -61-
<PAGE>   65
SECTION 1107. Securities Redeemed in Part.

      Any Security which is to be redeemed only in part shall be surrendered at
an office or agency of the Company designated for that purpose pursuant to
Section 1002 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.

                                 ARTICLE TWELVE

                       DEFEASANCE AND COVENANT DEFEASANCE

SECTION 1201. Company's Option to Effect Defeasance or Covenant Defeasance.

      The Company may elect, at its option at any time, to have Section 1202 or
Section 1203 applied to any Securities upon compliance with the conditions set
forth below in this Article. Any such election shall be evidenced by a Board
Resolution.

SECTION 1202. Defeasance and Discharge.

      Upon the Company's exercise of its option to have this Section applied to
any Securities, the Company shall be deemed to have been discharged from its
obligations with respect to such Securities as provided in this Section on and
after the date the conditions set forth in Section 1204 are satisfied
(hereinafter called "Defeasance"). For this purpose, such Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by such Securities and to have satisfied all its other obligations
under such Securities and this Indenture insofar as such Securities are
concerned (and the Trustee, at the expense of the Company, shall execute proper
instruments acknowledging the same), subject to the following which shall
survive until otherwise terminated or discharged hereunder: (1) the rights of
Holders of such Securities to receive, solely from the trust fund described in
Section 1204 and as more fully set forth in such Section, payments in respect of
the principal of and any premium and interest on such Securities when payments
are due, (2) the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (4) this Article. Subject to
compliance with this Article, the Company may exercise its option to have this
Section applied to any Securities notwithstanding the prior exercise of its
option to have Section 1203 applied to such Securities.

                                      -62-
<PAGE>   66
SECTION 1203. Covenant Defeasance.

      Upon the Company's exercise of its option to have this Section applied to
any Securities, (1) the Company shall be released from its obligations under
Section 801(3), Sections 1006 through 1010, inclusive, and any covenants
provided pursuant to Section 901(2) for the benefit of the Holders of such
Securities and (2) the occurrence of any event specified in Sections 501(3)
(with respect to any of Section 801(3), Sections 1006 through 1009, inclusive,
and any such covenants provided pursuant to Section 901(2) and 501(4) shall be
deemed not to be or result in an Event of Default, in each case with respect to
such Securities as provided in this Section on and after the date the conditions
set forth in Section 1204 are satisfied (hereinafter called "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means that, with
respect to such Securities, the Company may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such specified Section (to the extent so specified in the case of Section
501(3)), whether directly or indirectly by reason of any reference elsewhere
herein to any such Section or by reason of any reference in any such Section to
any other provision herein or in any other document, but the remainder of this
Indenture and such Securities shall be unaffected thereby.

SECTION 1204. Conditions to Defeasance or Covenant Defeasance.

      The following shall be the conditions to the application of Section 1202
or Section 1203 to any Securities:

      (1) The Company shall irrevocably have deposited or caused to be deposited
   with the Trustee (or another trustee which satisfies the requirements
   contemplated by Section 609 and agrees to comply with the provisions of this
   Article applicable to it) as trust funds in trust for the purpose of making
   the following payments, specifically pledged as security for, and dedicated
   solely to, the benefits of the Holders of such Securities, (A) money in an
   amount, or (B) U.S. Government Obligations which through the scheduled
   payment of principal and interest in respect thereof in accordance with their
   terms will provide, not later than one day before the due date of any
   payment, money in an amount, or (C) a combination thereof, in each case
   sufficient, in the opinion of a nationally recognized firm of independent
   public accountants expressed in a written certification thereof delivered to
   the Trustee, to pay and discharge, and which shall be applied by the Trustee
   (or any such other qualifying trustee) to pay and discharge, the principal of
   and any premium and interest on such Securities on the respective Stated
   Maturities, in accordance with the terms of this Indenture and such
   Securities. As used herein, "U.S. Government Obligation" means (x) any
   security which is (i) a direct obligation of the United States of America for
   the payment of which the full faith and credit of the United States of
   America is pledged or (ii) an obligation of a Person controlled or supervised
   by and acting as an agency or instrumentality of the United

                                      -63-
<PAGE>   67
   States of America the payment of which is unconditionally guaranteed as a
   full faith and credit obligation by the United States of America, which, in
   either case (i) or (ii), is not callable or redeemable at the option of the
   issuer thereof, and (y) any depositary receipt issued by a bank (as defined
   in Section 3(a)(2) of the Securities Act) as custodian with respect to any
   U.S. Government Obligation which is specified in Clause (x) above and held by
   such bank for the account of the holder of such depositary receipt, or with
   respect to any specific payment of principal of or interest on any U.S.
   Government Obligation which is so specified and held, provided that (except
   as required by law) such custodian is not authorized to make any deduction
   from the amount payable to the holder of such depositary receipt from any
   amount received by the custodian in respect of the U.S. Government Obligation
   or the specific payment of principal or interest evidenced by such depositary
   receipt.

      (2) In the event of an election to have Section 1202 apply to any
   Securities, the Company shall have delivered to the Trustee an Opinion of
   Counsel stating that (A) the Company has received from, or there has been
   published by, the Internal Revenue Service a ruling or (B) since the date of
   this instrument, there has been a change in the applicable Federal income tax
   law, in either case (A) or (B) to the effect that, and based thereon such
   opinion shall confirm that, the Holders of such Securities will not recognize
   gain or loss for Federal income tax purposes as a result of the deposit,
   Defeasance and discharge to be effected with respect to such Securities and
   will be subject to Federal income tax on the same amount, in the same manner
   and at the same times as would be the case if such deposit, Defeasance and
   discharge were not to occur.

      (3) In the event of an election to have Section 1203 apply to any
   Securities, the Company shall have delivered to the Trustee an Opinion of
   Counsel to the effect that the Holders of such Securities will not recognize
   gain or loss for Federal income tax purposes as a result of the deposit and
   Covenant Defeasance to be effected with respect to such Securities and will
   be subject to Federal income tax on the same amount, in the same manner and
   at the same times as would be the case if such deposit and Covenant
   Defeasance were not to occur.

      (4) The Company shall have delivered to the Trustee an Officer's
   Certificate to the effect that such Securities, if then listed on any
   securities exchange, will not be delisted as a result of such deposit.

      (5) No event which is, or after notice or lapse of time or both would
   become, an Event of Default with respect to such Securities or any other
   Securities shall have occurred and be continuing at the time of such deposit
   or, with regard to any such event specified in Sections 501(5) and (6), at
   any time on or prior to the 90th day after the date of such deposit (it being
   understood that this condition shall not be deemed satisfied until after such
   90th day).

      (6) Such Defeasance or Covenant Defeasance shall not cause the Trustee to
   have a conflicting interest within the meaning of the Trust Indenture Act
   (assuming all Securities are in default within the meaning of such Act).

                                      -64-
<PAGE>   68
      (7) Such Defeasance or Covenant Defeasance shall not result in a breach or
   violation of, or constitute a default under, any other agreement or
   instrument to which the Company is a party or by which it is bound.

      (8) Such Defeasance or Covenant Defeasance shall not result in the trust
   arising from such deposit constituting an investment company within the
   meaning of the Investment Company Act unless such trust shall be registered
   under such Act or exempt from registration thereunder.

      (9) The Company shall have delivered to the Trustee an Officer's
   Certificate and an Opinion of Counsel, each stating that all conditions
   precedent with respect to such Defeasance or Covenant Defeasance have been
   complied with.

SECTION 1205. Deposited Money and U.S. Government Obligations to Be Held in
  Trust; Miscellaneous Provisions.

      Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee or other qualifying trustee (solely for purposes of this Section and
Section 1206, the Trustee and any such other trustee are referred to
collectively as the "Trustee") pursuant to Section 1204 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any such Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be segregated
from other funds except to the extent required by law.

      The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1204 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of Outstanding Securities.

      Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1204 with
respect to any Securities which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect the Defeasance or Covenant Defeasance, as
the case may be, with respect to such Securities.

SECTION 1206. Reinstatement.

                                      -65-
<PAGE>   69
      If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Securities by reason of any
order or judgment of any court or governmental authority enjoining, restraining
or otherwise prohibiting such application, then the obligations under this
Indenture and such Securities from which the Company has been discharged or
released pursuant to Section 1202 or 1203 shall be revived and reinstated as
though no deposit had occurred pursuant to this Article with respect to such
Securities, until such time as the Trustee or Paying Agent is permitted to apply
all money held in trust pursuant to Section 1205 with respect to such Securities
in accordance with this Article; provided, however, that if the Company makes
any payment of principal of or any premium or interest on any such Security
following such reinstatement of its obligations, the Company shall be subrogated
to the rights (if any) of the Holders of such Securities to receive such payment
from the money so held in trust.

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

                                      -66-
<PAGE>   70
      This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

      IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

                                        RADIAN GROUP INC.

                                        By: /s/ C. Robert Quint
                                           ----------------------------------
                                           Name: C. Robert Quint
                                           Title: Executive vice President,
                                                  Chief Financial Officer

                                        FIRST UNION NATIONAL BANK

                                        By: /s/ George J. Rayzis
                                           -------------------------------
                                           Name: George J. Rayzis
                                           Title: Vice President
<PAGE>   71
STATE OF        )
                )  ss.:
COUNTY OF       )

      On the ....... day of ..........., 2001, before me personally came
 ..........................., to me known, who, being by me duly sworn, did
depose and say that he is .............................. of
 ............................................................., one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.
<PAGE>   72
                                                           ANNEX A -- Form of
                                                        Regulation S Certificate

                            REGULATION S CERTIFICATE

                  (For transfers pursuant to Section 305(b)(i)
                                of the Indenture)

First Union National Bank,
  as Security Registrar
123 South Broad Street
Philadelphia, PA 19109

      Re: 7.75% Debentures due June 1, 2011 of Radian Group Inc. (the
          "Securities")

      Reference is made to the Indenture, dated as of May 29, 2001 (the
"Indenture"), between Radian Group Inc. (the "Company") and First Union National
Bank, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 or Rule 144A under the U.S. Securities Act of 1933, as
amended (the "Securities Act") are used herein as so defined.

      This certificate relates to U.S. $___________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):

      CUSIP No(s).___________________________

      CERTIFICATE No(s).____________________

The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.

      The Owner has requested that the Specified Securities be transferred to a
person (the "Transferee") who will take delivery in the form of a Regulation S
Security. In connection by such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with Rule
904 or Rule 144 under the Securities Act and with all

                                      A-1
<PAGE>   73
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:

      (1) Rule 904 Transfers. If the transfer is being effected in accordance
with Rule 904:

            (A) the Owner is not a distributor of the Securities, an affiliate
      of the Company or any such distributor or a person acting on behalf of any
      of the foregoing:

            (B) the offer of the Specified Securities was not made to a person
      in the United States;

            (C) either:

                  (i) at the time the buy order was originated, the Transferee
            was outside the United States or the Owner and any person acting on
            its behalf reasonably believed that the Transferee was outside the
            United States, or

                  (ii)the transaction is being executed in, on or through the
            facilities of the Eurobond market, as regulated by the Association
            of International Bond Dealers, or another designated offshore
            securities market and neither the Owner nor any person acting on its
            behalf knows that the transaction has been prearranged with a buyer
            in the United States;

            (D) no directed selling efforts have been made in the United States
      by or on behalf of the Owner or any affiliate thereof;

            (E) if the Owner is a dealer in securities or has received a selling
      concession, fee or other remuneration in respect of the Specified
      Securities, and the transfer is to occur during the Restricted Period,
      then the requirements of Rule 904(c)(1) have been satisfied; and

            (F) the transaction is not part of a plan or scheme to evade the
      registration requirements of the Securities Act.

      (2) Rule 144 Transfers. If the transfer is being effected pursuant to Rule
144:

            (A) the transfer is occurring after a holding period of at least one
      year (computed in accordance with paragraph (d) of Rule 144) has elapsed
      since the Specified Securities were last acquired from the Company or from
      an affiliate of the Company, whichever is later, and is being effected in
      accordance with the applicable amount, manner of sale and notice
      requirements of Rule 144; or

            (B) the transfer is occurring after a holding period of at least two
      years has elapsed since the Specified Securities were last acquired from
      the Company or from an affiliate of the Company, whichever is later, and
      the Owner is not, and during the preceding three months has not been, an
      affiliate of the Company.

                                      A-2
<PAGE>   74
      This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Purchasers.

Dated __________________________________
      (Print the name of the Undersigned,
      as such term is defined in the
      second paragraph of this certificate.)

      By:__________________________
         Name:
         Title:

(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)

                                      A-3
<PAGE>   75
                                                   ANNEX B -- Form of Restricted
                                                   Securities Certificate

                        RESTRICTED SECURITIES CERTIFICATE

          (For transfers pursuant to Section 305 (b)(ii), (iii) and (v)
                                of the Indenture)

First Union National Bank,
  as Security Registrar
123 South Broad Street
Philadelphia, PA 19109

Re:   7.75% Debentures due June 1, 2011 of Radian Group Inc. (the "Securities")

      Reference is made to the Indenture, dated as of May 29, 2001 (the
"Indenture"), between Radian Group Inc. (the "Company") and First Union National
Bank, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 or Rule 144A under the U.S. Securities Act of 1933, as
amended (the "Securities Act") are used herein as so defined.

      This certificate relates to U.S. $___________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):

      CUSIP No(s).________________________

      CERTIFICATE No(s)._________________

The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.

      The Owner has requested that the Specified Securities be transferred to a
person (the "Transferee") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with Rule
144A or Rule 144 under the Securities Act and all applicable

                                      B-1
<PAGE>   76
securities laws of the states of the United States and other jurisdictions.
Accordingly, the Owner hereby further certifies as follows:

      (1) Rule 144A Transfers. If the transfer is being effected in accordance
with Rule 144A:

            (A) the Specified Securities are being transferred to a person that
      the Owner and any person acting on its behalf reasonably believe is a
      "qualified institutional buyer" within the meaning of Rule 144A, acquiring
      for its own account or for the account of a qualified institutional buyer;
      and

            (B) the Owner and any person acting on its behalf have taken
      reasonable steps to ensure that the Transferee is aware that the Owner may
      be relying on Rule 144A in connection with the transfer; and

      (2) Rule 144 Transfers. If the transfer is being effected pursuant to Rule
144:

            (A) the transfer is occurring after a holding period of at least one
      year (computed in accordance with paragraph (d) of Rule 144) has elapsed
      since the Specified Securities were last acquired from the Company or from
      an affiliate of the Company, whichever is later, and is being effected in
      accordance with the applicable amount, manner of sale and notice
      requirements of Rule 144; or

            (B) the transfer is occurring after a holding period of at least two
      years has elapsed since the Specified Securities were last acquired from
      the Company or from an affiliate of the Company, whichever is later, and
      the Owner is not, and during the preceding three months has not been, an
      affiliate of the Company.

                                      B-2
<PAGE>   77
      This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Purchasers.

Dated ___________________________________
      (Print the name of the Undersigned,
      as such term is defined in the
      second paragraph of this certificate.)

      By:__________________________
         Name:
         Title:

(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)

                                      B-3
<PAGE>   78
                                                 ANNEX C -- Form of Unrestricted
                                                 Securities Certificate

                       UNRESTRICTED SECURITIES CERTIFICATE

       (For removal of Securities Act Legends pursuant to Section 305(c)
                               of the Indenture)

First Union National Bank,
  as Security Registrar
123 South Broad Street
Philadelphia, PA 19109

Re:   7.75% Debentures due June 1, 2011 of Radian Group Inc. (the "Securities")

      Reference is made to the Indenture, dated as of May 29, 2001 (the
"Indenture"), between Radian Group Inc. (the "Company") and First Union National
Bank, as Trustee. Terms used herein and defined in the Indenture or in
Regulation S or Rule 144 or Rule 144A under the U.S. Securities Act of 1933, as
amended (the "Securities Act") are used herein as so defined.

      This certificate relates to U.S. $__________ principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):

      CUSIP No(s).___________________________

      CERTIFICATE No(s).____________________

The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.

      The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Securities Act Legend pursuant to Section 305(c) of the
Indenture. In connection with such exchange, the Owner hereby certifies that the
exchange is occurring after a holding period of at least two years (computed in
accordance with paragraph (d) of Rule 144) has elapsed since the Specified
Securities were last acquired from the Company or from an affiliate of the
Company, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company. The Owner also

                                      C-1
<PAGE>   79
acknowledges that any future transfers of the Specified Securities must comply
with all applicable securities laws of the states of the United States and other
jurisdictions.

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

Dated: ____________________________________
       (Print the name of the Undersigned,
       as such term is defined in the
       second paragraph of this certificate.)

       By:__________________________
          Name:
          Title:

(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)

                                      C-2
<PAGE>   80
                                TABLE OF CONTENTS
                                   ----------

<TABLE>
<CAPTION>
                                                                                    Page
                                                                                    ----
<S>                                                                                 <C>
PARTIES ........................................................................      1
RECITALS OF THE COMPANY ........................................................      1

                                  ARTICLE ONE

             DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 101.  Definitions ......................................................      1
              Act ..............................................................      2
              Affiliate ........................................................      2
              control ..........................................................      2
              Agent Member .....................................................      2
              Applicable Procedures ............................................      2
              Authenticating Agent .............................................      2
              Board of Directors ...............................................      2
              Board Resolution .................................................      2
              Business Day .....................................................      2
              Capital Stock ....................................................      3
              Capitalized Lease Obligation .....................................      3
              Clearstream ......................................................      3
              Commission .......................................................      3
              Company ..........................................................      3
              Company Request" or "Company Order ...............................      3
              Comparable Treasury Issue ........................................      3
              Comparable Treasury Price ........................................      3
              Corporate Trust Office ...........................................      3
              corporation ......................................................      3
              Covenant Defeasance ..............................................      3
              Defaulted Interest ...............................................      3
              Defeasance .......................................................      3
              Depositary .......................................................      4
              Designated Subsidiary ............................................      4
              DTC ..............................................................      4
              Euroclear ........................................................      4
              Event of Default .................................................      4
              Exchange Act .....................................................      4
              Exchange and Registration Rights Agreement .......................      4
              Exchange Offer ...................................................      4
</TABLE>

--------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
      of the Indenture.
<PAGE>   81
<TABLE>
<S>                                                                                 <C>
              Exchange Registration Statement ..................................      4
              Exchange Security ................................................      4
              Expiration Date ..................................................      4
              Global Security ..................................................      4
              Holder ...........................................................      4
              Indebtedness .....................................................      5
              Indenture ........................................................      5
              Interest Payment Date ............................................      6
              Investment Company Act ...........................................      6
              Lien .............................................................      6
              Maturity .........................................................      6
              Non-Recourse Debt ................................................      6
              Notice of Default ................................................      6
              Officers' Certificate ............................................      6
              Opinion of Counsel ...............................................      6
              Original Securities ..............................................      6
              Outstanding ......................................................      6
              Paying Agent .....................................................      7
              Person ...........................................................      7
              Predecessor Security .............................................      7
              Preferred Stock ..................................................      7
              Primary Treasury Dealer ..........................................      7
              Purchase Agreement ...............................................      7
              Purchasers .......................................................      8
              QIB ..............................................................      8
              Quotation Agent ..................................................      8
              Redemption Date ..................................................      8
              Redemption Price .................................................      8
              Reference Treasury Dealer ........................................      8
              Reference Treasury Dealer Quotation ..............................      8
              Registered Securities ............................................      8
              Registration Default .............................................      8
              Regular Record Date ..............................................      8
              Regulation S .....................................................      8
              Regulation S Certificate .........................................      8
              Regulation S Global Security .....................................      8
              Regulation S Legend ..............................................      8
              Regulation S Securities ..........................................      8
              Remaining Scheduled Payments .....................................      9
              Resale Registration Statement ....................................      9
              Restricted Global Security .......................................      9
              Restricted Period ................................................      9
              Restricted Securities ............................................      9
</TABLE>

--------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
      of the Indenture.

                                      -i-
<PAGE>   82
<TABLE>
<S>                                                                                 <C>
              Restricted Securities Certificate ................................      9
              Restricted Securities Legend .....................................      9
              Rule 144 .........................................................      9
              Rule 144A ........................................................      9
              Rule 144A Securities .............................................      9
              Securities .......................................................      9
              Securities Act ...................................................      9
              Securities Act Legend ............................................      9
              Security Register and Security Registrar .........................      9
              Special Interest .................................................      9
              Special Record Date ..............................................     10
              Stated Maturity ..................................................     10
              Subsidiary .......................................................     10
              Successor Security ...............................................     10
              Treasury Rate ....................................................     10
              Trust Indenture Act ..............................................     10
              Trustee ..........................................................     10
              U.S. Government Obligation .......................................     10
              Unrestricted Securities Certificate ..............................     10
              Vice President ...................................................     10

Section 102.  Compliance Certificates and Opinions .............................     11
Section 103.  Form of Documents Delivered to Trustee ...........................     11
Section 104.  Acts of Holders; Record Dates ....................................     12
Section 105.  Notices, Etc., to Trustee and Company ............................     13
Section 106.  Notice to Holders; Waiver ........................................     13
Section 107.  Conflict with Trust Indenture Act ................................     14
Section 108.  Effect of Headings and Table of Contents .........................     14
Section 109.  Successors and Assigns ...........................................     14
Section 110.  Separability Clause ..............................................     14
Section 111.  Benefits of Indenture ............................................     14
Section 112.  Governing Law ....................................................     14
Section 113.  Legal Holidays ...................................................     14

                                  ARTICLE TWO

                                 SECURITY FORMS

Section 201.  Forms Generally ..................................................     15
Section 202.  Form of Face of Security .........................................     16
Section 203.  Form of Reverse of Security ......................................     18
Section 204.  Form of Legend for Global Securities .............................     22
Section 205.  Form of Trustee's Certificate of Authentication ..................     23
</TABLE>

--------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
      of the Indenture.

                                      -ii-
<PAGE>   83
<TABLE>
<S>                                                                                 <C>
                                 ARTICLE THREE

                                 THE SECURITIES

Section 301.  Title and Terms ..................................................     23
Section 302.  Denominations ....................................................     25
Section 303.  Execution, Authentication, Delivery and Dating ...................     25
Section 304.  Temporary Securities .............................................     26
Section 305.  Registration, Registration of Transfer and Exchange;
                 Certain Transfers and Exchanges ...............................     26
Section 306.  Mutilated, Destroyed, Lost and Stolen Securities .................     31
Section 307.  Payment of Interest; Interest Rights Preserved ...................     31
Section 308.  Persons Deemed Owners ............................................     32
Section 309.  Cancellation .....................................................     33
Section 310.  Computation of Interest ..........................................     33
Section 311.  CUSIP Numbers ....................................................     33

                                  ARTICLE FOUR

                           SATISFACTION AND DISCHARGE

Section 401.  Satisfaction and Discharge of Indenture ..........................     34
Section 402.  Application of Trust Money .......................................     35

                                  ARTICLE FIVE

                                    REMEDIES

Section 501.  Events of Default ................................................     35
Section 502.  Acceleration of Maturity; Rescission and Annulment ...............     37
Section 503.  Collection of Indebtedness and Suits for Enforcement by Trustee ..     38
Section 504.  Trustee May File Proofs of Claim .................................     38
Section 505.  Trustee May Enforce Claims Without Possession of Securities ......     39
Section 506.  Application of Money Collected ...................................     39
Section 507.  Limitation on Suits ..............................................     39
Section 508.  Unconditional Right of Holders to Receive Principal,
                         Premium and Interest ..................................     40
Section 509.  Restoration of Rights and Remedies ...............................     40
Section 510.  Rights and Remedies Cumulative ...................................     41
Section 511.  Delay or Omission Not Waiver .....................................     41
Section 512.  Control by Holders ...............................................     41
Section 513.  Waiver of Past Defaults ..........................................     41
</TABLE>

--------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
      of the Indenture.

                                     -iii-
<PAGE>   84
<TABLE>
<S>                                                                                 <C>
Section 514.  Undertaking for Costs ............................................     42
Section 515.  Waiver of Usury, Stay or Extension Laws ..........................     42

                                  ARTICLE SIX

                                  THE TRUSTEE

Section 601.  Certain Duties and Responsibilities ..............................     42
Section 602.  Notice of Defaults ...............................................     43
Section 603.  Certain Rights of Trustee ........................................     43
Section 604.  Not Responsible for Recitals or Issuance of Securities ...........     44
Section 605.  May Hold Securities ..............................................     44
Section 606.  Money Held in Trust ..............................................     44
Section 607.  Compensation and Reimbursement ...................................     45
Section 608.  Conflicting Interests ............................................     45
Section 609.  Corporate Trustee Required; Eligibility ..........................     45
Section 610.  Resignation and Removal; Appointment of Successor ................     46
Section 611.  Acceptance of Appointment by Successor ...........................     47
Section 612.  Merger, Conversion, Consolidation or Succession to Business ......     47
Section 613.  Preferential Collection of Claims Against Company ................     48
Section 614.  Appointment of Authenticating Agent ..............................     48

                                 ARTICLE SEVEN

               HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

Section 701.  Company to Furnish Trustee Names and Addresses of Holders ........     49
Section 702.  Preservation of Information; Communications to Holders ...........     50
Section 703.  Reports by Trustee ...............................................     50
Section 704.  Reports by Company ...............................................     50

                                  ARTICLE EIGHT

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

Section 801.  Company May Consolidate, Etc., Only on Certain Terms .............     51
Section 802.  Successor Substituted ............................................     52

                                  ARTICLE NINE

                            SUPPLEMENTAL INDENTURES

Section 901.  Supplemental Indentures Without Consent of Holders ...............     52
</TABLE>

--------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
      of the Indenture.

                                      -iv-
<PAGE>   85
<TABLE>
<S>                                                                                 <C>
Section 902.  Supplemental Indentures With Consent of Holders ..................     53
Section 903.  Execution of Supplemental Indentures .............................     54
Section 904.  Effect of Supplemental Indentures ................................     54
Section 905.  Conformity with Trust Indenture Act ..............................     54
Section 906.  Reference in Securities to Supplemental Indentures ...............     54

                                  ARTICLE TEN

                                   COVENANTS

Section 1001.  Payment of Principal, Premium and Interest ......................     55
Section 1002.  Maintenance of Office or Agency .................................     55
Section 1003.  Money for Securities Payments to Be Held in Trust ...............     55
Section 1004.  Statement by Officers as to Default .............................     56
Section 1005.  Existence .......................................................     57
Section 1006.  Maintenance of Properties .......................................     57
Section 1007.  Payment of Taxes and Other Claims ...............................     57
Section 1008.  Limitation on Liens on Stock of Designated Subsidiaries .........     57
Section 1009.  Limitation Upon Sales of Capital Stock of Designated Subsidiaries     58
Section 1010.  Registration Rights .............................................     58
Section 1011.  Waiver of Certain Covenants .....................................     59

                                 ARTICLE ELEVEN

                            REDEMPTION OF SECURITIES

Section 1101.  Right of Redemption .............................................     59
Section 1102.  Election to Redeem; Notice to Trustee ...........................     59
Section 1103.  Selection by Trustee of Securities to Be Redeemed ...............     59
Section 1104.  Notice of Redemption ............................................     60
Section 1105.  Deposit of Redemption Price .....................................     60
Section 1106.  Securities Payable on Redemption Date ...........................     61
Section 1107.  Securities Redeemed in Part .....................................     61

                                 ARTICLE TWELVE

                       DEFEASANCE AND COVENANT DEFEASANCE

Section 1201.  Company's Option to Effect Defeasance or
                    Covenant Defeasance ........................................     61
Section 1202.  Defeasance and Discharge ........................................     62
Section 1203.  Covenant Defeasance .............................................     62
Section 1204.  Conditions to Defeasance or Covenant Defeasance .................     63
</TABLE>

--------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
      of the Indenture.

                                      -v-
<PAGE>   86
<TABLE>
<S>                                                                                 <C>
Section 1205.  Deposited Money and U.S. Government Obligations to Be
                  Held in Trust; Miscellaneous Provisions ......................     64
Section 1206.  Reinstatement ...................................................     65

TESTIMONIUM ....................................................................     66
SIGNATURES AND SEALS ...........................................................     66
ACKNOWLEDGEMENTS ...............................................................     67

ANNEX A.........................................................................     A-1
ANNEX B.........................................................................     B-1
ANNEX C.........................................................................     C-1
</TABLE>

--------------
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
      of the Indenture.

                                      -vi-<PAGE>   1
                                                                   Exhibit 10.10

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

                          CMAC Investment Corporation

              800,000 Shares of $4.125 Cumulative Preferred Stock

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

                               PURCHASE AGREEMENT

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

                            Dated: October 29, 1992

--------------------------------------------------------------------------------
<PAGE>   2
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                 Page
                                                                 ----
<S>                                                              <C>
 1.  Authorization of Securities ...........................      1
 2.  Closing ...............................................      1
 3.  Purchasers' Conditions ................................      1
 4.  Representations and Warranties by the Company .........      4
 5.  Financial Statements and Information ..................      6
 6.  Inspection ............................................      7
 7.  Confidential Treatment of Information .................      7
 8.  Definitions ...........................................      7
 9.  Indemnification; Contribution .........................      8
10.  Exchange and Replacement of Securities ................     10
11.  Legend ................................................     10
12.  Survival of Agreements, etc. ..........................     11
13.  Amendments and Waivers ................................     11
14.  Payment on Preferred Shares; Notice of Sale, etc. .....     11
15.  Termination ...........................................     11
16.  Notices, etc. .........................................     11
17.  Expenses; Issue Taxes .................................     12
18.  Substitution of Purchasers ............................     12
19.  Representations and Warranties by the Purchasers ......     12
20.  Mutual Covenants ......................................     14
21.  Press Releases ........................................     14
22.  Miscellaneous .........................................     14
</TABLE>

Exhibit A - Purchasers
Exhibit B - Certificate of Designations for Preferred Shares
<PAGE>   3
     PURCHASE AGREEMENT (the "Agreement"), dated October 29, 1992, by and among
CMAC Investment Corporation, a Delaware corporation (the "Company"), and each of
the corporations listed in Exhibit A hereto (each a "Purchaser" and collectively
the "Purchasers").

     1.   Authorization of Securities.  The Company has authorized the issuance
and sale of 800,000 authorized but previously unissued shares of its Preferred
Stock (as such term, and other capitalized terms used herein without definition,
are defined in Section 8 hereof), $.001 par value per share, to be designated as
the "$4.125 Preferred Stock", such Preferred Stock to have the designations,
powers, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions as are set forth in
Exhibit B hereto.

     2.   Closing.  Subject to the terms and conditions hereof, the Company will
sell to each Purchaser and each Purchaser will purchase from the Company at the
closing provided for in this Section 2, the number of Preferred Shares indicated
next to such Purchaser's name in Exhibit A hereto for a purchase price of $50.00
per Preferred Share. The closing of such sales and purchases (collectively, the
"Closing") shall take place at the same time and place as the closing of the
initial public offering of the Company's common stock. The date of the Closing
is hereinafter referred to as the "Closing Date." At the Closing, the Company
will deliver to each Purchaser one or more stock certificates (as such Purchaser
may designate), each dated the Closing Date and duly registered in such
Purchaser's name (or in the name of any nominee designated by such Purchaser),
representing in the aggregate the number of Preferred Shares indicated next to
such Purchaser's name in Exhibit A hereto, against receipt of $50.00 per
Preferred Share by wire transfer of immediately available funds.

     3.   Purchasers' Conditions.  Each Purchaser's obligation to purchase
Preferred Shares hereunder is subject to the fulfillment, prior to or at the
Closing, of the following conditions:

     3.1  Representations and Warranties Correct.  The representations and
warranties of the Company contained in Section 4 shall be correct at and as of
the time of the Closing, except as affected by the transactions contemplated
hereby.

     3.2  Performance.  The Company shall have performed all agreements and
complied with all conditions contained herein required to be performed or
complied with by it prior to or at the Closing.

     3.3  Initial Public Offering.  The closing of the initial public offering
of the Company's common stock shall have occurred.

     3.4  Compliance Certificate.  Each Purchaser shall have received an
Officers' Certificate, dated the Closing Date, certifying that the conditions
specified in Sections 3.1, 3.2 and 3.3 have been fulfilled.

     3.5  Opinion of Counsel for the Company.  Each Purchaser shall have
received from Morgan, Lewis & Bockius, counsel to the Company, a favorable

                                      -1-

<PAGE>   4
opinion, dated the Closing Date and satisfactory in form and substance to such
Purchaser to the following effect:

     (a) Organization, Standing, etc. The Company is a corporation duly
         organized, validly existing and in good standing under the laws of the
         State of Delaware, having all requisite power and authority to carry on
         its business and to own, lease and operate its assets.

     (b) Purchase Agreement. The Company has all requisite power and authority
         to enter into this Agreement, to issue and sell the Preferred Shares
         and to carry out the terms hereof and thereof. This Agreement has been
         duly authorized by all necessary corporate action on the part of the
         Company and has been duly executed and delivered by duly authorized
         officers of the Company. This Agreement constitutes the legal, valid
         and binding obligation of the Company, enforceable in accordance with
         its terms except as limited by general principles of equity and
         applicable bankruptcy, insolvency, reorganization, moratorium or
         similar laws affecting the rights of creditors generally.

     (c) Issuance of Preferred Shares, etc. The Preferred Shares have been duly
         and validly authorized and issued and are fully paid and nonassessable,
         and the certificates representing the Preferred Shares have been duly
         and validly executed and delivered and are in good and proper form.
         There are no preemptive rights with respect to any of the Preferred
         Shares or the sale thereof on the part of the holders of shares of
         Common Stock under the Company's Certificate of Incorporation, by-laws
         or any agreement known to such counsel. There are no documentary, stamp
         or other taxes payable in connection with the issuance and delivery of
         the Preferred Shares.

     (d) Registration Rights Agreement. The Company has all requisite power and
         authority to enter into the Registration Rights Agreement and to carry
         out the terms thereof. The Registration Rights Agreement has been duly
         authorized by all necessary corporate action on the part of the Company
         and has been duly executed and delivered by duly authorized officers of
         the Company. The Registration Rights Agreement constitutes the legal,
         valid and binding obligation of the Company, enforceable in accordance
         with its terms except as limited by general principles of equity and
         applicable bankruptcy, insolvency, reorganization, moratorium or
         similar laws affecting the rights of creditors generally and except
         that no opinion is expressed as to the enforceability of the provisions
         contained in Section 10 of the Registration Rights Agreement.

     (e) Reserve Agreement. The Company has all requisite power and authority to
         enter into the Reserve Account Agreement and to carry out the terms
         thereof. The Reserve Account Agreement has been duly authorized by all
         necessary corporate action on the

                                      -2-
<PAGE>   5
         part of the Company and has been duly executed and delivered by duly
         authorized officers of the Company. The Reserve Account Agreement
         constitutes the legal, valid and binding obligation of the Company,
         enforceable in accordance with its terms except as limited by general
         principles of equity and applicable bankruptcy, insolvency,
         reorganization, moratorium or similar laws affecting the rights of
         creditors generally. Holders of the Preferred Shares will be entitled
         to the benefits of the Reserve Account Agreement.

     (f) Securities Law. Assuming the accuracy of the representations and
         warranties contained in Sections 19.4, 19.5 and 19.6 of this
         Agreement, the offer, issue and delivery of the Preferred Shares under
         the circumstances contemplated by this Agreement constitute
         transactions exempt from registration under the Securities Act and
         exempt from qualification under applicable state securities laws.

     (g) Compliance with Other Instruments. The execution, delivery and
         performance of this Agreement, the Registration Rights Agreement and
         the Reserve Account Agreement, the consummation of the transactions
         provided for herein or therein, and the fulfillment by the Company of
         the terms of the Preferred Shares, this Agreement, the Registration
         Rights Agreement and the Reserve Account Agreement, will not result in
         any violation of, or be in conflict with, or constitute a default
         under, or result in the creation of any mortgage, lien, charge or
         encumbrance upon any of the properties or assets of the Company
         pursuant to, any term of the Certificate of Incorporation or by-laws
         of the Company, any term of any statute, rule or government regulation
         applicable to the Company or, to the best of such counsel's knowledge,
         any agreement, instrument, judgment, decree or order applicable to the
         Company.

     (h) Governmental Consent. The Company is not required to obtain any
         consent, approval or authorization of, or to make any declaration or
         filing with, any governmental authority as a condition precedent to
         the valid execution and delivery of this Agreement, the Registration
         Rights Agreement or the Reserve Account Agreement, or to the valid
         offer, issue and delivery of the Preferred Shares as contemplated
         hereby, except for (i) the exemption order from the Pennsylvania
         Insurance Department under Section 337.6 of the Insurance Company Law
         of 1921, which has been obtained, and (ii) the filing of the
         Certificate of Designations in the form attached to this Agreement as
         Exhibit B with the Secretary of State of the State of Delaware which
         has been made.

     (i) Litigation. To the best knowledge of such counsel, there are no
         actions, proceedings or investigations pending or threatened which
         question the validity of this Agreement, the Preferred Shares, the
         Registration Rights Agreement or the Reserve Account Agreement or any
         action taken or to be taken pursuant hereto or thereto.

                                      -3-

<PAGE>   6
     3.6 Waivers and Consents. All waivers and consents required to be
obtained by the Company in connection with the transactions contemplated hereby
shall be satisfactory in form and substance to such Purchaser.

     4.  Representations and Warranties by the Company. The Company represents
and warrants that:

     4.1 Organization, Standing, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to carry on its business and
to own, lease and operate its assets.

     4.2 Purchase Agreement. The Company has all requisite power and authority
to enter into this Agreement, to issue and sell the Preferred Shares and to
carry out the terms hereof and thereof. This Agreement has been duly authorized
by all necessary corporate action on the part of the Company and has been duly
executed and delivered by duly authorized officers of the Company. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.

     4.3 Issuance of Preferred Shares, etc. The Preferred Shares have been duly
and validly authorized and, when issued will be fully paid and nonassessable
and the certificates representing the Preferred Shares will be duly and validly
executed and delivered and in good and proper form. There are no preemptive
rights with respect to any of the Preferred Shares or the sale thereof on the
part of the holders of shares of Common Stock. There will be no documentary,
stamp or other taxes payable in connection with the issuance and delivery of the
Preferred Shares.

     4.4 Registration Rights Agreement. The Company has all requisite power and
authority to enter into the Registration Rights Agreement and to carry out the
terms thereof. The Registration Rights Agreement has been duly authorized by
all necessary corporate action on the part of the Company and has been duly
executed and delivered by duly authorized officers of the Company. The
Registration Rights Agreement constitutes the legal, valid and binding
obligation of the Company.

     4.5 Reserve Agreement. The Company has furnished each Purchaser with a
true and correct copy of the Reserve Account Agreement. The Company has all
requisite power and authority to enter into the Reserve Account Agreement and
to carry out the terms thereof. The Reserve Account Agreement has been duly
authorized by all necessary corporate action on the part of the Company and has
been duly executed and delivered by duly authorized officers of the Company.
The Reserve Account Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms. Holders of
the Preferred Shares will be entitled to the benefits of the Reserve Account
Agreement.

     4.6 Securities Law. Assuming the accuracy of the representations and
warranties contained in Sections 19.4, 19.5 and 19.6 of this Agreement, the
offer, issue and delivery of the Preferred Shares under the circumstances
contemplated by this Agreement constitute transactions exempt from

                                      -4-
<PAGE>   7
registration under the Securities Act and exempt from qualification under
applicable state securities laws.

     4.7  Compliance with Other Instruments. The execution, delivery and
performance of this Agreement, the Registration Rights Agreement and the Reserve
Account Agreement, the consummation of the transactions provided for herein or
therein, and the fulfillment by the Company of the terms of the Preferred
Shares, this Agreement, the Registration Rights Agreement and the Reserve
Account Agreement will not result in any violation of or be in conflict with or
constitute a default under any term of the Certificate of Incorporation or
by-laws of the Company, and will not result in any violation of or be in
conflict with or constitute a default under any term of any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to the Company, or result in the creation of any mortgage, lien,
charge or encumbrance upon any of the properties or assets of the Company,
pursuant to any such term.

     4.8  Governmental Consent, etc. The Company is not required to obtain any
consent, approval or authorization of, or to make any declaration or filing
with, any governmental authority as a condition precedent to the valid execution
and delivery of this Agreement, the Registration Rights Agreement or the Reserve
Account Agreement, or to the valid offer, issue and delivery of the Preferred
Shares as contemplated hereby, except for (i) the exemption order from the
Pennsylvania Insurance Department under Section 337.6 of the Insurance Company
Law of 1921, which has been obtained, and (ii) the filing of the Certificate of
Designations in the form attached hereto as Exhibit B with the Secretary of
State of the State of Delaware which has been made.

     4.9  Litigation. There are no actions, proceedings or investigations
pending or threatened which question the validity of this Agreement, the
Preferred Shares, the Registration Rights Agreement or the Reserve Account
Agreement or any action taken or to be taken pursuant hereto or thereto.

     4.10 Information Furnished. The Company has furnished each Purchaser with
the Company's Preliminary Prospectus (the "Preliminary Prospectus"), dated
October 22, 1992, relating to the initial public offering of the Company's
common stock. The financial statements included in the Preliminary Prospectus
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as stated in the notes thereto), and
present fairly in all material respects the financial condition of the
corporations to which they relate as of the respective dates specified therein
and the results of operations for the respective periods specified therein.
Since the date of such financial statements, there has been no material adverse
change in the business, prospects, profits, results of operations, properties or
condition (financial or otherwise) of the Company which is not disclosed in the
Preliminary Prospectus. The Preliminary Prospectus does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements contained therein,
in the light of the circumstances under which they were made, not misleading.
The Preliminary Prospectus correctly

                                      -5-
<PAGE>   8
describes each class and series of the authorized capital stock of the Company,
including, as to each such class or series, the number of shares thereof
authorized and the number of shares thereof issued and outstanding. All of the
outstanding shares of capital stock of the Company are validly issued and
outstanding, fully paid and nonassessable.

     4.11  Use of Proceeds. The Company will use the proceeds from the sale of
the Preferred Shares as set forth in the Preliminary Prospectus.

     5.  Financial Statements and Information. The Company will deliver (in
duplicate) to each Purchaser, so long as it shall hold any Preferred Shares, and
to each other holder of at least 5% of the Preferred Shares at the time
outstanding:

          (a)  as soon as available and in any event within 50 days after the
               end of the first, second and third quarterly accounting periods
               in each fiscal year of the Company, (i) a copy of the Company's
               Quarterly Report on Form 10-Q for such quarter filed with the
               Commission or (ii) a consolidated balance sheet of the Company
               and its Subsidiaries as at the end of such period and the related
               statements of income, retained earnings and cash flows of the
               Company and its Subsidiaries for such period and (in the case of
               the second and third quarterly periods) for the period from the
               beginning of the current fiscal year to the end of such quarterly
               period, setting forth in each case in comparative form the
               figures for the corresponding periods of the previous fiscal
               year, all in reasonable detail and certified as complete and
               correct in all material respects by the principal financial or
               accounting officer of the Company;

          (b)  as soon as available and in any event with 95 days after the end
               of each fiscal year of the Company, (i) a copy of the Company's
               Annual Report on Form 10-K for such fiscal year filed with the
               Commission together with a copy as soon as available of each
               document incorporated by reference therein or (ii) a consolidated
               balance sheet of the Company and its Subsidiaries as at the end
               of such fiscal year and the related statements of income,
               retained earnings and cash flows of the Company and its
               Subsidiaries for such fiscal year, setting forth in each case in
               comparative form figures for the previous fiscal year,
               accompanied by the report thereon of independent public
               accountants of recognized national standing selected by the
               Company, which report (X) shall state that the examination by
               such accountants in connection with such financial statements has
               been made in accordance with generally accepted auditing
               standards, and (Y) shall include the opinion of such accountants
               that such financial statements have been prepared in accordance
               with generally accepted accounting principles consistently
               applied, except as otherwise specified in such opinion; and

                                      -6-

<PAGE>   9
          (c)  promptly upon their becoming available, copies of all financial
               statements, reports, and notices furnished to any holder of any
               indebtedness of the Company in excess of $500,000 and of all
               periodic reports, if any, filed by the Company with any
               securities exchange or with the Commission, and of all press
               releases and other statements made generally available by the
               Company to the public concerning developments which could have a
               material effect on the value of the Preferred Shares.

     6.  Inspection.  From and after the date hereof until the Closing, and
thereafter so long as any Purchaser and its Affiliates own at least (i) 5% of
the shares of Common Stock at the time outstanding or (ii) 5% of the Preferred
Shares at the time outstanding, the Company covenants that it will permit any
Person designated by such Purchaser, at such Purchaser's expense, to visit and
inspect any of the properties of the Company and its Subsidiaries, to examine
its and their books, reports, records and papers (and make copies thereof and
take extracts therefrom) and to discuss its and their affairs, finances and
accounts with, and to be advised as to the same by, its and their officers and
independent public accountants (and the Company hereby authorizes such
accountants to discuss with such Purchaser and any Person designated by such
Purchaser, such affairs, finances and accounts), all at such reasonable times
and as often as such Purchaser may reasonably request.

     7.  Confidential Treatment of Information.  Each Purchaser agrees to keep
confidential the information furnished to it pursuant to Sections 5 and 6
hereof, provided that any of such information may be disclosed if it has come
into the public domain other than by such Purchaser's actions or if requested by
any governmental or regulatory agency or if required by court order. Each
Purchaser acknowledges that it is aware that the United States securities laws
prohibit any person who has material non-public information about a company from
purchasing or selling securities of such company, or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.
Accordingly, each Purchaser agrees not to trade in securities of the Company in
violation of United States securities laws for so long as it is in possession of
material non-public information.

     8.  Definitions. As used in this Agreement, unless the context otherwise
requires, the following terms have the following respective meanings:

         Affiliate: a person who directly, or through one or more
intermediaries, controls, is controlled by or is under common control with,
another person.

         Commission: the Securities and Exchange Commission or any other Federal
agency at the time administering the Securities Act.

         Common Stock: the Common Stock, par value $.001 per share, of the
Company.

         Exchange Act: the Securities Exchange Act of 1934, and the rules and
regulations promulgated thereunder, or any successor act, all as the same shall
be in effect at the time.

                                      -7-

<PAGE>   10
          Officer: the Chairman of the Board, the President, any Senior Vice
President or Vice President, the Treasurer, the Secretary or the Controller of
the Company.

          Officers' Certificate: a certificate signed by two Officers of the
Company.

          Person: any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof.

          Preferred Shares: the 800,000 shares of $4.125 Preferred Stock being
purchased hereunder.

          Preferred Stock: the Preferred Stock of the Company, including the
$4.125 Preferred Stock.

          Registration Rights Agreement: the Registration Rights Agreement,
dated as of October 29, 1992, between CMAC Investment Corporation and
Commonwealth Land Title Insurance Company.

          Reserve Account Agreement: the Reserve Account Agreement, dated August
14, 1992, between CMAC Investment Corporation and Commonwealth Mortgage
Assurance Company.

          Securities Act: the Securities Act of 1933, and the rules and
regulations promulgated thereunder, or any successor act, all as the same shall
be in effect at the time.

          Subsidiary: (i) a corporation, a majority of whose capital stock with
voting power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by the Company, by the Company and a Subsidiary of
the Company or by a Subsidiary of the Company or (ii) any other person (other
than a corporation) in which the Company, a Subsidiary of the Company or the
Company and a Subsidiary of the Company directly or indirectly, at the date of
determination thereof has at least a 50% ownership interest or over which it
exercises control, by stock ownership or otherwise.

     9.   Indemnification; Contribution.

          9.1  Indemnification. In addition to all other sums due hereunder or
provided for in this Agreement, the Company agrees to hold harmless and
indemnify each Purchaser, each director or officer thereof and any controlling
person of any of the foregoing (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (individually referred to as
an "Indemnified Person") from and against any losses, claims, damages and
liabilities (including attorneys' fees and expenses of investigation) incurred
by such Indemnified Person arising, directly or indirectly, out of the
execution, delivery, performance or enforcement of this Agreement, the
Registration Rights Agreement or the Reserve Account Agreement (including,
without limitation, any failure by the Company to comply with any of its
covenants hereunder or, subject to the succeeding sentence, under the

                                      -8-
<PAGE>   11
Registration Rights Agreement or the Reserve Account Agreement), whether or not
the transactions contemplated by this Agreement are consummated. The foregoing
provisions shall not apply to (i) the circumstances provided for in Section 10
of the Registration Rights Agreement, (ii) any losses, claims, damages and
liabilities (including attorney's fees and expenses of investigation) incurred
by any Indemnified Person pursuant to Section 10(a) or Section 10(d) of either
the U.S. Underwriting Agreement or the International Underwriting Agreement, or
(iii) any losses, claims, damages and liabilities (including attorneys' fees
and expenses of investigation) incurred by an Indemnified Person relating to or
arising out of the Company's initial public offering. The Company further
agrees, promptly upon demand by an Indemnified Person, at any time or from time
to time, to reimburse such Indemnified Person for, or pay, any loss, claim,
damage, liability or expense as to which the Company has indemnified such
Indemnified Person pursuant to this Agreement.

          Each Indemnified Person agrees to give prompt written notice to the
Company after the receipt by such Indemnified Person of any written notice of
the commencement of any action, suit, proceeding or investigation or threat
thereof made in writing for which such Indemnified Person will claim
indemnification or contribution pursuant to this Agreement provided that the
failure of any Indemnified Person to give notice as provided herein shall not
relieve the Company of its obligations hereunder except to the extent that the
Company is actually prejudiced by such failure to give notice. Unless in the
reasonable judgment of such Indemnified Person a conflict of interest may exist
between such Indemnified Person and the Company with respect to such claim, each
Indemnified Person agrees to permit the Company to assume the defense of such
claim with counsel reasonably satisfactory to such Indemnified Person and, with
the prior written consent of each Indemnified Person, to compromise or settle
such claims. If the Company is not entitled to, or elects not to, assume the
defense of a claim, it will not be obligated to pay the fees and expenses of
more than one counsel for the Indemnified Persons with respect to such claim,
unless in the reasonable judgment of such Indemnified Person a conflict of
interest may exist between such Indemnified Person and any other of such
Indemnified Persons with respect to such claim, in which event the Company shall
be obligated to pay the fees and expenses of such additional counsel or
counsels. The Company will not be subject to any liability for any settlement
made without its consent.

          9.2 Contribution. If the indemnification provided for in Section 9.1
from the Company is unavailable to an Indemnified Person under Section 9.1 in
respect of any losses, claims, damages or liabilities referred to therein, then
the Company, in lieu of indemnifying such Indemnified Person, shall contribute
to the amount paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities in such proportion as is appropriate to
reflect the relative fault of the Company and Indemnified Persons in connection
with the actions which resulted in such losses, claims, damages or liabilities
as well as any other relevant equitable considerations. The relative fault of
the Company and Indemnified Persons shall be determined by reference to, among
other things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact, has been taken by, or relates to information supplied by, the
Company or Indemnified Persons, and the parties' relative intent, knowledge,
access to information and opportunity

                                      -9-

<PAGE>   12
to correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 9.1, any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.

          The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.2 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.

          If indemnification is available under Section 9.1, the Company shall
indemnify each Indemnified Person to the full extent provided in Section 9.1
without regard to the relative fault of the Company, of the Indemnified Person
or any other equitable consideration provided for in this Section 9.2.

     10. Exchange and Replacement of Securities. Upon surrender of any
Preferred Share certificate by any Purchaser for exchange at the office of the
Company or its stock transfer agent, if appropriate, the Company, at its
expense (exclusive of applicable transfer taxes or other similar taxes) will
issue, or cause to be issued, in exchange therefor a new Preferred Share
certificate in such denominations as such Purchaser may request for the same
aggregate number of shares, and registered as such Purchaser may request. Upon
receipt of evidence satisfactory to the Company of the loss, theft, destruction
or mutilation of any Preferred Share certificate and, in the case of any such
loss, theft or destruction of any Preferred Share certificate held by a person
other than any Purchaser or any institutional investor, upon delivery of a
written agreement of indemnity reasonably satisfactory to the Company in form
and amount, or, in the case of any such mutilation upon surrender and
cancellation thereof, the Company, at its expense will issue, or cause to be
issued, a new Preferred Share certificate represented by such lost, stolen,
destroyed or mutilated Preferred Share certificate.

     11. Legend. Until (a) the Preferred Shares represented by a stock
certificate are effectively registered under the Securities Act, or (b) the
holder of such Preferred Shares delivers to the Company a written opinion
reasonably acceptable to the Company (which shall not unreasonably withhold its
consent to such opinion) from legal counsel to such holder (which legal counsel
may be in-house counsel to such holder) to the effect that such legend is no
longer necessary under the Securities Act, the stock certificate representing
such Preferred Shares shall be stamped or otherwise imprinted with the
following legend:

          "The securities represented by this certificate have not been
          registered under the Securities Act of 1933, as amended, or any state

                                      -10-

<PAGE>   13
          securities laws and may not be transferred unless registered or
          qualified under the Act and applicable state securities laws or unless
          an exemption from registration is available therefor."

     12. Survival of Agreements, etc. All agreements, representations and
warranties by the Company contained herein shall survive the execution and
delivery of this Agreement, any investigation at any time made by or on behalf
of any Purchaser, and the issue and delivery of the Preferred Shares. All
statements contained in any certificate delivered by or on behalf of the
Company pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed representations and warranties by the Company hereunder.

     13.  Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term hereof may be waived to the extent not violative of
law (either generally or in a particular instance and either retroactively or
prospectively) if the Company shall obtain the written consent of each
Purchaser.

     14.  Payments on Preferred Shares; Notice of Sale, etc. So long as a
Purchaser shall hold any of the Preferred Shares, and notwithstanding anything
contained herein or in such Preferred Shares to the contrary, the Company will
pay all cash sums becoming due on the Preferred Shares held by such Purchaser
for dividends thereon in Federal funds delivered to such Purchaser at its
address set forth on Exhibit A, or at such other address or to such bank
account as such Purchaser may designate for such purpose from time to time by
written notice to the Company.

     15.  Termination. If the Closing shall fail to occur on or prior to
November 12, 1992, or if at the Closing the Company shall fail to tender
Preferred Shares to any Purchaser as provided herein, or if at the Closing any
of the conditions specified in Section 3 to any Purchaser's obligation to
purchase Preferred Shares shall not have been fulfilled, each Purchaser shall,
at its election, be relieved of all further obligations under this Agreement,
without thereby waiving any other rights such Purchaser may have by reason of
such failure or such non-fulfillment.

     16.  Notices, etc. All notices and other communications hereunder shall be
in writing and shall be mailed by first-class mail, postage prepaid, addressed

          (a) if to a Purchaser, at its address set forth on Exhibit A (with a
              copy to the attention of Howard E. Steinberg, Esq., Senior Vice
              President and General Counsel, Reliance Group Holdings, Inc., Park
              Avenue Plaza, New York, New York 10055), or at such other address
              as such Purchaser shall have furnished to the Company in writing,
              or

          (b) if to any other holder of any Preferred Share at such address as
              such holder shall have furnished to the Company in writing, or,
              until any such holder so furnishes an address to the Company, then
              to and at the address of the last holder of such Preferred Share
              who has so furnished an address to the Company, or

                                     -11-

<PAGE>   14
          (c) if to the Company, at its address at 8 Penn Center, Philadelphia,
          PA 19103, or at such other address as the Company shall have furnished
          to the Purchasers and each such other holder in writing.

     17. Expenses; Issue Taxes. The Company agrees to pay the following
expenses relating to this Agreement:

          (a) the cost of production, execution and delivery of the certificates
          for the Preferred Shares and any other documents contemplated hereby;

          (b) all expenses (including the out of pocket expenses of each
          Purchaser) relating to any amendment or modification of, or any waiver
          or consent under, this Agreement and any other documents contemplated
          hereby; and

          (c) all other expenses incurred by the Company.

          The Company also agrees to pay, or cause to be paid, all documentary
and similar taxes levied under the laws of the United States of America or any
state or local taxing authority thereof or therein in connection with the
issuance and sale by the Company to any Purchaser of Preferred Shares and the
execution and delivery of this Agreement and the other agreements and documents
contemplated hereby and any modification of any of such Preferred Shares or
such agreements and documents and will save each Purchaser harmless without
limitation as to time against any and all liabilities with respect to all such
taxes.

     18. Substitution of Purchasers. Prior to the Closing, each Purchaser shall
have the right to substitute any one or more of its Affiliates as the purchaser
of the Preferred Shares which it has agreed to purchase hereunder, by written
notice to the Company and by causing such Affiliate to execute and deliver a
copy of this Agreement, provided that such substitution does not require any
recirculation of a prospectus relating to the Company's initial public offering.
All rights which such Purchaser has under this Agreement shall inure to the
benefit of such Affiliates which shall be liable for the performance of all of
such Purchaser's obligations and representations hereunder.

     19. Representations and Warranties by the Purchasers. Each Purchaser
severally represents and warrants as to itself as follows:

     19.1 Organization and Standing. Such Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, having all requisite corporate power and
authority to perform its obligations under this Agreement.

     19.2 Authority and Binding Effect. Such Purchaser has the corporate power
and authority to execute, deliver and perform this Agreement and has taken all
actions necessary to secure all approvals required therefore. The execution,
delivery and performance of this Agreement by such Purchaser has been duly
authorized by all necessary corporate action. This Agreement constitutes the
legal, valid and binding obligation of such Purchaser, enforceable against it
in accordance with its terms.

                                     -12-

<PAGE>   15
     19.3  Validity of Contemplated Transactions.  Neither the execution and
delivery of this Agreement by such Purchaser nor the purchase of Preferred
Shares by such Purchaser contemplated hereby will contravene or violate any
statute, order, rule or regulation of any court or governmental agency or body
having jurisdiction over such Purchaser, or the Articles of Incorporation or
By-Laws of such Purchaser, or will result in a default under, or require the
consent or approval of any party to, any contract or other agreement relating
to such Purchaser's business or assets or to or by which such Purchaser is a
party or otherwise bound or affected, or require such Purchaser to notify or
obtain any consent, approval or authorization from any federal, state, local or
other court or governmental agency, except for the exemption order from the
Pennsylvania Insurance Department under Section 337.6 of the Insurance Company
Law of 1921, which has been obtained.

     19.4  Investment Representations.  Such Purchaser understands that the
Preferred Shares to be purchased by it hereunder are not registered under the
Securities Act. The Preferred Shares to be purchased by such Purchaser will be
acquired for investment for such Purchaser's own account, not as a nominee or
agent, and not with a view to the sale or distribution thereof in any
transaction which would be in violation of the Securities Act, without
prejudice, however, to such Purchaser's right at all times to sell or otherwise
dispose of all or any part of such Preferred Shares under an effective
registration statement under the Securities Act or under an exemption from such
registration available under the Securities Act; and subject, nevertheless, to
the disposition of such Purchaser's property being at all times within its
control. Such Purchaser does not have any contract, undertaking, agreement or
arrangement, other than the Registration Rights Agreement, with any person to
sell or transfer any of the Preferred Shares.

     19.5  Accredited Investors.  Such Purchaser is an "accredited investor"
within the meaning of Rule 501 under the Securities Act and is experienced
in evaluating and investing in companies such as the Company, is able to fend
for itself in the transactions contemplated by this Agreement, has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment and has the ability to bear
the economic risks of its investment. Such Purchaser has had access, during the
course of the transaction and prior to its purchase of Preferred Shares, to the
same kind of information that would be provided in a registration statement
filed by the Company under the Securities Act and has had, during the course of
the transaction and prior to its purchase of Preferred Shares, the opportunity
to ask questions of, and receive answers from, the Company concerning the terms
and conditions of the offering and to obtain additional information necessary
to verify the accuracy of any information furnished to it or to which it had
access.

     19.6  Indefinite Holding Period.  Such Purchaser understands that the
Preferred Shares being purchased hereunder may not be sold, transferred or
otherwise disposed of without registration under the Securities Act or an
exemption therefrom, and that in the absence of an effective registration
statement covering such Preferred Shares or an available exemption from
registration under the Securities Act, such Preferred Shares must be held
indefinitely.

                                      -13-

<PAGE>   16
     20. MUTUAL COVENANTS. The Company and each Purchaser agree to (a) promptly
prepare and file such notification and report forms with the Department of
Justice and the Federal Trade Commission, if any, as may be required pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, (b) promptly prepare
and file such registration or information statements required by the various
laws of each jurisdiction in which the Company owns or controls any insurance
company, (c) if applicable, diligently take, or cooperate in the taking of, all
steps that are reasonably necessary and proper to expedite the termination or
expiration of the waiting periods prescribed under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 as promptly as possible, and (d) promptly
take such other and additional steps and secure such consents as may be
necessary to effect the transactions contemplated hereunder.

     21. PRESS RELEASES. No press releases regarding the transactions
contemplated by this Agreement shall be issued by any party without the mutual
prior consent of all parties, except that in the event that the parties are
unable to agree on a press release and legal counsel for one party is of the
opinion that such press release is required by law, then such party may issue
the legally required press release.

     22. MISCELLANEOUS. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of New York, and the
parties hereby submit to the jurisdiction of any appropriate court located in
the City of New York over any suit, action or proceeding arising out of or
relating to this Agreement. If any provision of this Agreement or any
application thereof shall be invalid or unenforceable, the remainder of this
Agreement and any other application of such provision shall not be affected
thereby. This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto,
whether so expressed or not, and, in particular, shall inure to the benefit of
and be enforceable by any holder at the time of any Preferred Shares, provided
that the rights granted to a Purchaser by Sections 6, 9 and 14 shall not be
assignable to any Person who is not an Affiliate of such Purchaser. The headings
in this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. This Agreement, together with the
Registration Rights Agreement and the Reserve Account Agreement, contains the
entire agreement of the parties with respect to the subject matter hereof

                                      -14-
<PAGE>   17
and supersedes all prior agreements and understandings between the parties with
respect thereto.

     IN WITNESS WHEREOF, the parties hereto have duly executed this agreement.

                                        CMAC Investment Corporation

                                        By:         [Illegible Signature]
                                           -----------------------------------

                                        PURCHASERS

                                        Commonwealth Land Title
                                          Insurance Company

                                        By:         [Illegible Signature]
                                           -----------------------------------

                                      -15-
<PAGE>   18
                                   Exhibit A

<TABLE>
<CAPTION>
                                                     Number of
                                                     Preferred
                                                    Shares Being
Purchaser's Name and Address                         Purchased
----------------------------                        ------------
<S>                                                 <C>
Commonwealth Land Title
  Insurance Company
30th Floor
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn: Investment Department                           800,000
</TABLE>

                                      -16-
<PAGE>   19
                                                                       Exhibit B

                          CERTIFICATE OF DESIGNATIONS

                                       OF

                          CMAC INVESTMENT CORPORATION

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

                         Pursuant to Section 151(g) of
                      the Delaware General Corporation Law

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

          1.   CMAC Investment Corporation, a Delaware corporation (the
"Corporation"), is authorized to issue two classes of shares known as Common
Stock and Preferred Stock.

          2.   The Board of Directors of the Corporation is authorized by the
Certificate of Incorporation of the Corporation, as amended (the "Restated
Certificate") to establish and designate one or more series of the Preferred
Stock and to fix full, limited, multiple or fractional, or no voting rights,
and the designations, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights and other special or relative rights
thereof.

          3.   The Restated Certificate does not set forth any such powers,
designations, preferences or rights or qualifications, limitations or
restrictions of any shares or series of the Preferred Stock.

          4.   Exhibit A is a copy of the resolution adopted on the 14th day of
October, 1992, by the Board of Directors of the Corporation designating the
$4.125 Preferred Stock as a series of the Preferred Stock.

          5.   The number of shares constituting the $4.125 Preferred Stock
shall be 800,000.

          IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations to be duly adopted in accordance with the provisions of Section
151(g) of the General Corporation Law of the State of Delaware and the Restated
Certificate and to be executed in its corporate name on the 26th day of October,
1992.

                                   CMAC INVESTMENT CORPORATION

                                   By: [illegible]
                                       ---------------------
                                       Title: Vice President

Attest:

[illegible]
-------------------
Secretary
<PAGE>   20

                                                                       Exhibit A

                    RESOLUTION OF THE BOARD OF DIRECTORS OF
                          CMAC INVESTMENT CORPORATION
                          ESTABLISHING AND DESIGNATING
                             $4.125 PREFERRED STOCK
                       AS A SERIES OF THE PREFERRED STOCK

     RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of CMAC Investment Corporation (the "Corporation") by
Article FOURTH of the Certificate of Incorporation of the Corporation, as
amended (the "Restated Certificate"), this Board of Directors hereby authorizes
the issuance of a series of the Preferred Stock of the Corporation, $.001 par
value, which shall consist of 800,000 shares, and this Board of Directors hereby
fixes the powers, designations, preferences, and relative, participating,
optional and other special rights and qualifications, limitations and
restrictions of the shares of the $4.125 Preferred Stock as follows:

     (a) Designation. The designation of such series of the Preferred Stock
shall be $4.125 Preferred Stock (the "$4.125 Preferred Stock"). The number of
shares of the $4.125 Preferred Stock shall be 800,000. The number of authorized
shares of the $4.125 Preferred Stock may be reduced by the Board of Directors
of the Corporation or a duly authorized committee thereof and by the filing of
a certificate pursuant to the provisions of the General Corporation Law of the
State of Delaware stating that such reduction has been so authorized. The
number of authorized shares of the $4.125 Preferred Stock shall not be
increased.

     (b) Certain Definitions. As used in this Resolution, the following terms
shall have the following respective meanings:

     "Affiliate" has the meaning contained in Rule 12b-2 promulgated under the
Exchange Act, or any successor provision thereto.

     "Beneficial Owner" has the meaning contained in Rule 13d-3 promulgated
under the Exchange Act, or any successor provision thereto.

     "Business Day" means any day except a Saturday, Sunday or any day on which
banking institutions are legally authorized or obligated to close in the
Commonwealth of Pennsylvania or a day on which the New York Stock Exchange is
not open for the regular transaction of business.

<PAGE>   21
     "By-laws" means the By-laws of the Corporation, as amended from time to
time.

     "CMAC" means Commonwealth Mortgage Assurance Company, a Pennsylvania
corporation, or any successor entity thereto which is the principal subsidiary
of the Corporation engaged in the business of providing private mortgage
insurance.

     "Common Shares" means any stock of the Corporation which has no preference
in respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation and which
is not subject to redemption by the Corporation.

     "Common Stock" means the common stock, par value $.001 per share, of the
Corporation as of the original date of issuance of shares of the $4.125
Preferred Stock, or shares of the Corporation of any class or classes resulting
from any reclassification or reclassification thereof.

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

     "Fundamental Transaction" means any merger, consolidation, sale of assets
or similar transaction on which the holders of Common Stock are entitled to
vote.

     "Junior Dividend Shares" means shares of any series or class of the
Corporation which are by their terms expressly made junior to shares of the
$4.125 Preferred Stock at the time outstanding as to dividends.

     "Junior Liquidation Shares" means shares of any series or class of the
Corporation which are by their terms expressly made junior to shares of the
$4.125 Preferred Stock at the time outstanding as to the distribution of assets
on any voluntary or involuntary liquidation of the Corporation.

     "Parity Dividend Shares" means shares of any series or class of the
Corporation which are by their terms on a parity with shares of the $4.125
Preferred Stock at the time outstanding as to dividends.

     "Parity Liquidation Shares" means shares of any series or class of the
Corporation which are by their terms on a parity with shares of the $4.125
Preferred Stock at the time outstanding as to the distribution of assets on any
voluntary or involuntary liquidation of the Corporation.

                                      -2-
<PAGE>   22
     "Person" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government or
political subdivision thereof.

     "Senior Dividend Shares" means shares of any series or class of the
Corporation which are by their terms expressly made senior to shares of the
$4.125 Preferred Stock at the time outstanding as to dividends.

     "Senior Liquidation Shares" means shares of any series or class of the
Corporation which are by their terms expressly made senior to shares of the
$4.125 Preferred Stock at the time outstanding as to the distribution of assets
on any voluntary or involuntary liquidation of the Corporation.

     (c)  Voting Rights. Except as otherwise required by law or as expressly
provided in this paragraph (c), holders of shares of the $4.125 Preferred Stock
shall have no voting rights:

     (1)  Dividend Defaults.

          (A)  If and whenever accrued dividends on shares of the $4.125
     Preferred Stock or any Parity Dividend Shares shall not have been paid in
     an aggregate amount equal to or greater than six quarterly dividends
     (whether consecutive or not) on shares of the $4.125 Preferred Stock or
     such Parity Dividend Shares at the time outstanding, the number of
     directors then constituting the entire Board of Directors of the
     Corporation shall be increased automatically by two directors and the
     holders of shares of the $4.125 Preferred Stock and the holders of any
     Parity Dividend Shares, voting non-cumulatively and together as a single
     class, shall be entitled to fill such newly-created directorships at the
     next annual meeting of stockholders of the Corporation or at a special
     meeting called as hereinafter provided in this subparagraph (c)(1)(A). Such
     right to vote as a single class to elect two directors shall, when vested,
     continue until all dividends in default on shares of the $4.125 Preferred
     Stock and any Parity Dividend Shares, as the case may be, shall have been
     paid in full and, when so paid, such right to elect two directors
     separately as a class shall cease, subject to the same provisions for the
     vesting of such right to elect two directors separately as a class in the
     case of future dividend defaults. At any time when such right to elect two
     directors separately as a class shall have so vested, the Corporation may,
     and, upon the written request of the holders of record of not less than 20%
     of the total number of shares of the 4.125 Preferred Stock and any Parity
     Dividend Shares then outstanding, shall call a special meeting of the
     holders of such shares for the

                                      -3-
<PAGE>   23
election of directors to fill such newly-created directorships. In the case of
such a written request, such special meeting shall be held within 90 days after
the receipt of such request and, in either case, at the place and upon the
notice provided by law and in the By-laws, except that the Corporation shall
not be required to call such a special meeting if such request is received less
than 120 days before the date fixed for the next ensuing annual meeting of
stockholders of the Corporation, at which meeting such newly-created
directorships shall be filled by the holders of shares of the $4.125 Preferred
Stock and any Parity Dividend Shares.

     (B)  So long as any shares of the $4.125 Preferred Stock are outstanding,
the By-laws shall contain provisions ensuring that the number of directors of
the Corporation shall at all times be such that the exercise, by the holders of
shares of the $4.125 Preferred Stock and the holders of Parity Dividend Shares,
of the right to elect directors under the circumstances provided in
subparagraph (c)(1)(A) above will not contravene any provisions of the
Corporation's Restated Certificate or By-laws.

     (C)  Directors elected pursuant to subparagraph (c)(1)(A) shall not be
elected to any particular class of the Board of Directors and shall serve until
the earlier of:

          (i)  the next annual meeting of the stockholders of the Corporation
     and the election (by the holders of shares of the $4.125 Preferred Stock
     and the holders of Parity Dividend Shares) and qualification of their
     respective successors; or

          (ii) the date upon which all accumulations of unpaid dividends on
     shares of the $4.125 Preferred Stock and such Parity Dividend Shares shall
     have been paid in full.

If, prior to the end of the term of any director elected pursuant to
subparagraph (c)(1)(A), a vacancy in the office of such director shall occur
during the continuance of a default in dividends on the shares of the $4.125
Preferred Stock or such Parity Dividend Shares by reason of death, resignation,
disability or otherwise, such vacancy shall be filled for the unexpired term by
the appointment by the remaining director elected pursuant to subparagraph
(c)(1)(A) of a new director for the unexpired term of such former director.

                                      -4-
<PAGE>   24
          (D)  Notwithstanding any provision in this paragraph (c) to the
     contrary, so long as Reliance Group Holdings, Inc. or any Affiliate thereof
     is the Beneficial Owner of any shares of the $4.125 Preferred Stock, such
     corporation or Affiliate shall have no voting rights with respect to such
     shares of the $4.125 Preferred Stock in the event of the default on payment
     of dividends by the Corporation and any shares so beneficially owned shall
     not be counted as outstanding and entitled to vote for purposes of any vote
     or other action by the holders of the shares of $4.125 Preferred Stock and
     Parity Dividend Shares pursuant to subparagraph (c)(1).

     (2)  Miscellaneous. So long as any shares of the $4.125 Preferred Stock are
outstanding, the Corporation shall not, without either the affirmative vote of
the holders of at least two-thirds of the outstanding shares of the $4.125
Preferred Stock voting at a meeting of such holders, or the affirmative written
consent of holders of at least two-thirds of the outstanding shares of the
$4.125 Preferred Stock:

          (A)  Authorize or issue any Senior Dividend Shares or Senior
     Liquidation Shares.

          (B)  Consummate any Fundamental Transaction, unless all outstanding
     shares of $4.125 Preferred Stock have been called for redemption pursuant
     to paragraph (f)(2) below and the rights of the holders of such shares have
     ceased in accordance with paragraph (f)(3) below.

          (C)  Subject to the remaining provisions of this subparagraph
     (c)(2)(C), amend the Corporation's Restated Certificate or any certificate
     of designations or take other action so as to affect adversely in any
     material respect the voting powers or other rights, privileges, powers or
     preferences of shares of the $4.125 Preferred Stock. No class vote of the
     $4.125 Preferred Stock shall be required for any of the amendments to the
     Corporation's Restated Certificate or any certificate of designations set
     forth in subparagraph (c)(2)(C)(i) below which shall be deemed not to
     affect adversely in any material respect the voting powers or other rights
     and preferences of shares of the $4.125 Preferred Stock:

               (i)  the authorization or issuance of any shares of any series or
          class of the Corporation which are neither Senior Dividend Shares nor
          Senior Liquidation Shares.

                                      -5-
<PAGE>   25
          (D)  Amend that certain Reserve Account Agreement dated August 14,
     1992 by and between the Corporation and Commonwealth Mortgage Assurance
     Company.

     (d)  DIVIDENDS.

     (1)  Cash Dividends. The cash dividend rate on shares of the $4.125
Preferred Stock shall be $4.125 per annum per share. Cash dividends on shares of
the $4.125 Preferred Stock shall be cumulative from the date of original
issuance. Cash dividends on shares of the $4.125 Preferred Stock shall be
payable quarterly at the rate of $1.03125 per share, when, as and if declared by
the Board of Directors out of funds legally available for the payment of
dividends, on the fifteenth day of February, May, August and November of each
year (each a "Payment Date"), commencing February 15, 1993, except that if any
such Payment Date is not a Business Day then such dividend shall be payable on
the first immediately succeeding Business Day. Any cash dividend payable on
February 15, 1993 on shares of the $4.125 Preferred Stock will be computed on
the actual number of days from the date of issuance of the $4.125 Preferred
Stock to February 15, 1993. No interest or dividends will be payable in respect
of any accumulations of unpaid dividends on shares of the $4.125 Preferred
Stock. The holders of shares of the $4.125 Preferred Stock shall not be entitled
to any dividends other than the dividends provided in this paragraph (d).

     (2)  Record Date. Each cash dividend shall be paid to the holders of record
of shares of the $4.125 Preferred Stock as they appear on the stock register of
the Corporation on the fifteenth day of the month next preceding such Payment
Date (each a "Record Date"). Dividends on account of accumulations of unpaid
dividends may be declared and paid at any time, without reference to any regular
Payment Date, to holders of record on such date, not exceeding 60 days preceding
the payment date thereof, as may be fixed by the Board of Directors of the
Corporation.

     (3)  Priority of Dividends. If at any time the Corporation has failed to
pay or declare and set apart for payment accumulations of unpaid dividends on
any Senior Dividend Shares, the Corporation shall not pay any dividend on the
$4.125 Preferred Stock. Holders of shares of the $4.125 Preferred Stock shall be
entitled to receive the dividends provided in this paragraph (d) in preference
to and in priority over dividends upon the Common Shares and all Junior Dividend
Shares.

     (4)  Default; Payment of Pro Rata Dividends. Unless and until (x) all
accumulations of unpaid dividends on shares of the $4.125 Preferred Stock and
any Parity Dividend Shares at the time outstanding have been paid in full or
declared in full and sums

                                      -6-
<PAGE>   26
set apart for the payment thereof and (y) the Corporation has fully complied
with all scheduled redemption obligations, sinking fund obligations and all
other redemption obligations relating to the shares of $4.125 Preferred Stock,
any Parity Dividend Shares and any Parity Liquidation Shares at the time
outstanding, the payment of dividends on, and redemptions and purchases of,
shares of the Corporation's capital stock shall be subject to the restrictions
contained in paragraph (h) below.

          In addition, unless and until all accumulations of unpaid dividends
on shares of the $4.125 Preferred Stock and any Parity Dividend Shares at the
time outstanding have been paid in full or declared in full and sums set apart
for the payment thereof, all dividends declared by the Corporation upon shares
of the $4.125 Preferred Stock and Parity Dividend Shares shall be declared pro
rata with respect to all shares of the $4.125 Preferred Stock and Parity
Dividend Shares then outstanding, so that the amounts of any dividends declared
by the Corporation upon each share of $4.125 Preferred Stock and each Parity
Dividend Share shall in all cases bear to each other the same ratio that, at
the time of such declaration, all accumulations of unpaid dividends on shares
of the $4.125 Preferred Stock and on such Parity Dividend Shares bear to each
other.

     (e)  LIQUIDATION.

     (1)  Liquidation Value.  The liquidation value of shares of the $4.125
Preferred Stock, in case of the voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, shall be $50.00 per share, plus
an amount equal to accumulations of unpaid dividends thereon to the payment
date.

     (2)  Priority of Liquidation Distributions.  In the event of any voluntary
or involuntary liquidation, dissolution or winding-up of the Corporation, the
holders of shares of the $4.125 Preferred Stock shall be entitled to receive the
liquidation value of such shares held by them in preference to and in priority
over any distributions upon the Common Shares and the Junior Liquidation Shares,
but the holders of shares of the $4.125 Preferred Stock shall not be entitled to
receive any distribution in respect of the liquidation value of such shares
until the Corporation has paid in full the liquidation value to which the
holders of all Senior Liquidation Shares are entitled. Upon payment in full of
the liquidation value to which the holders of shares of the $4.125 Preferred
Stock are entitled, the holders of shares of the $4.125 Preferred Stock will not
be entitled to any further participation in any distribution of assets by the
Corporation. If the assets of the Corporation are not sufficient to pay in full
the liquidation value payable to the holders of shares of the $4.125 Preferred
Stock and the

                                      -7-

<PAGE>   27
liquidation value payable to the holders of the Parity Liquidation Shares, the
distribution of such assets shall be made pro rata with respect to all shares of
the $4.125 Preferred Stock and Parity Liquidation Shares then outstanding, so
that the amounts of any distributions paid on each share of $4.125 Preferred
Stock and each Parity Liquidation Share shall in all cases bear to each other
the same ratio that, at the time of such distribution, the liquidation values of
the $4.125 Preferred Stock and the Parity Liquidation Shares bear to each other.

     (3)  Consolidations, Mergers, Etc.  Neither a consolidation or merger of
the Corporation with or into any other corporation, nor a merger of any other
corporation with or into the Corporation, nor a reorganization of the
Corporation, nor the purchase or redemption of all or part of the outstanding
shares of any class or classes of the Corporation, nor the sale or transfer of
all or any part of the Corporation's assets for cash or securities or other
property shall be considered a liquidation, dissolution or winding-up of the
Corporation within the meaning of this paragraph (e); provided that, in each
case, effective provision is made in the certificate of incorporation of the
resulting or surviving corporation or otherwise for the protection of the rights
of the holders of the $4.125 Preferred Stock.

     (f)  Redemptions at the Option of the Corporation.

     (1)  Permitted Redemptions.  Subject to paragraph (f)(2) below, shares of
the $4.125 Preferred Stock shall not be redeemable by the Corporation prior to
August 15, 2002. Shares of the $4.125 Preferred Stock may be redeemed for cash
at the option of the Corporation in whole or from time to time in part on or
after August 15, 2002 at the following redemption prices per share if redeemed
during the 12-month period beginning August 15 of the year specified below:

                                      -8-
<PAGE>   28
                             12-Month
                         Period Beginning         Price
                             August 15          Per Share
                             ---------          ---------
                               2002              $54.125
                               2003              $52.750
                               2004              $51.375

and if redeemed at any time thereafter at $50.00 per share, plus, in each case,
an amount equal to accumulations of unpaid dividends thereon to the redemption
date.

     (2)  Redemption in Connection with a Fundamental Transaction.  If at any
time prior to August 15, 2002 the holders of the outstanding shares of $4.125
Preferred Stock fail to approve a Fundamental Transaction as required by
paragraph (c)(2)(B) above, such shares may be redeemed in full at the option of
the Corporation for cash at $50.00 per share, plus an amount equal to
accumulations of unpaid dividends thereon to the redemption date. The
Corporation may not exercise the redemption right provided in this paragraph
(f)(2) unless the Corporation proceeds with the Fundamental Transaction which
the holders of $4.125 Preferred Stock failed to approve.

     (3)  Notice Procedures.  Not less than 30 nor more than 60 days prior to
the date fixed for any redemption of shares of the $4.125 Preferred Stock
pursuant to this paragraph (f), a written notice specifying the time and place
of such redemption, the redemption price and the number of shares to be redeemed
shall be given by first class mail, postage prepaid, to the holders of record of
the shares of the $4.125 Preferred Stock to be redeemed at their respective
addresses as the same shall appear on the books of the Corporation, calling upon
each such holder of record to surrender to the Corporation on the redemption
date at the place designated in such notice the holder's certificate or
certificates representing the number of shares specified in such notice of
redemption. Neither a failure to mail such notice, nor any defect therein or in
the mailing thereof, to any particular holder shall affect the sufficiency of
the notice or the validity of the proceedings for redemption with respect to the
other holders. Any notice that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the holder receives
the notice. On or after the redemption date each holder of shares of the $4.125
Preferred Stock to be redeemed shall present and surrender the certificate or
certificates for such shares to the Corporation at the place designated in such
notice, and thereupon the redemption price of

                                      -9-
<PAGE>   29
such shares shall be paid to or to the order of the Person whose name appears on
such certificate or certificates as the owner thereof and each surrendered
certificate shall be cancelled. In case fewer than all the shares represented by
any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.

     (4)  Cessation of Rights as Stockholder.  If a notice of redemption has
been given pursuant to subparagraph (f)(3) above and if, on or before the date
fixed for redemption, the funds necessary for such redemption shall have been
deposited by the Corporation, in trust for the pro rata benefit of the holders
of the shares so called for redemption (so as to be and continue to be available
therefor) with a bank or trust company doing business in Philadelphia,
Pennsylvania and having capital, surplus and undivided profits aggregating at
least $100,000,000, then, notwithstanding that any certificates for such shares
have not been surrendered for cancellation, on the redemption date dividends
shall cease to accrue on the shares of the $4.125 Preferred Stock to be
redeemed, and at the close of business on the redemption date the holders of
such shares shall cease to be stockholders with respect to such shares and shall
have no interest in or claims against the Corporation by virtue thereof and
shall have no voting or other rights with respect to such shares (except the
right to receive the moneys payable upon such redemption, without interest
thereon, upon surrender, and endorsement if required by the Corporation, of
their certificates), and the shares evidenced thereby shall not be deemed to be
outstanding shares for the purpose of voting or determining the total number of
shares entitled to vote on any matter. Any moneys so deposited by the
Corporation and unclaimed at the end of two years from the redemption date may
revert to the general funds of the Corporation, and any funds held by any paying
agent may be paid to the Corporation upon request of the Corporation, after
which reversion or payment the holders of such shares so called for redemption
shall look only to the general funds of the Corporation for the payment of the
redemption price. Any interest accrued on funds so deposited shall be paid to
the Corporation from time to time.

     (5)  Partial Redemption Procedures.  If fewer than all of the outstanding
shares of the $4.125 Preferred Stock shall be called for redemption pursuant to
paragraph (f)(1) above, the shares to be redeemed shall be selected pro rata, as
nearly as practicable, or by lot as may be prescribed by resolution of the Board
of Directors of the Corporation and shall be consistent with the applicable
rules of the National Association of Securities Dealers.

                                      -10-
<PAGE>   30
     (g)  SINKING FUND. Except as otherwise provided in this paragraph (g), the
shares of the $4.125 Preferred Stock are not subject to mandatory redemption
requirements.

     (1)  MANDATORY REDEMPTION. So long as any share of $4.125 Preferred Stock
remains outstanding, on August 15 of each year from 2002 to 2011, inclusive,
the Corporation shall redeem 72,000 shares, and on August 15, 2012 shall redeem
all shares then outstanding, at a price of $50.00 per share plus accrued and
unpaid cumulative dividends to the date of redemption.

          On or before each such August 15, the Corporation shall deposit all
funds necessary for the redemption of shares of $4.125 Preferred Stock as above
provided, in trust for the account of the holders of the shares to be redeemed,
so as to be and continue to be available therefor, with a bank or trust company
doing business in Philadelphia, Pennsylvania, and having capital, surplus and
undivided profits aggregating at least $100,000,000. The particular shares of
$4.125 Preferred Stock so to be redeemed shall be determined, notice of such
redemption shall be given and the deposit of funds shall be made by the
Corporation in the manner and with the effect provided in the remaining
provisions of this paragraph (g) hereof.

          If the Corporation fails to comply with its sinking fund obligation
as heretofore provided, it shall make good any such deficiency at the earliest
possible time thereafter. The obligation to redeem shares of $4.125 Preferred
Stock for the sinking fund as aforesaid shall be cumulative if and to the
extent not satisfied in any year, whether or not there shall be funds legally
available therefor, but without interest on the amount of any deficiencies.

          Against the number of shares required to be redeemed in any year by
the provisions of this paragraph (g), the Corporation may credit shares of
$4.125 Preferred Stock which it has purchased or redeemed at any time during or
prior to such year otherwise than through the operation of the sinking fund;
provided that any shares so credited shall not theretofore have been used for
the purpose of such credit.

     (2)  NOTICE PROCEDURES. Not less than 30 nor more than 60 days prior to any
redemption date, a written notice specifying the sinking fund deposit made or to
be made, the redemption date, the time and place of such redemption, the
redemption price and the number of shares to be redeemed shall be given by first
class mail, postage prepaid, to the holders of record of the shares of the
$4.125 Preferred Stock to be redeemed at their respective addresses as the same
shall appear on the books of the Corporation, calling upon each such holder of
record to surrender

                                      -11-
<PAGE>   31
to the Corporation on the redemption date at the place designated in such
notice the holder's certificate or certificates representing the number of
shares specified in such notice of redemption. Neither a failure to mail such
notice, nor any defect therein or in the mailing thereof, to any particular
holder shall affect the sufficiency of the notice or the validity of the
proceedings for redemption with respect to the other holders. Any notice that
is mailed in the manner herein provided shall be conclusively presumed to have
been duly given whether or not the holder receives the notice. On or after the
redemption date each holder of shares of the $4.125 Preferred Stock to be
redeemed shall present and surrender the certificate or certificates for such
shares to the Corporation at the place designated in such notice, and thereupon
the redemption price of such shares shall be paid to or to the order of the
Person whose name appears on such certificate or certificates as the owner
thereof and each surrendered certificate shall be cancelled. In case fewer than
all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.

     (3)  Cessation of Rights as Stockholder. If a notice of redemption has been
given pursuant to subparagraph (g)(2) above and if, on or before the date fixed
for redemption, the funds necessary for such redemption shall have been
deposited pursuant to subparagraph (g)(1) above, then, notwithstanding that any
certificates for such shares have not been surrendered for cancellation, on the
redemption date dividends shall cease to accrue on the shares of the $4.125
Preferred Stock to be redeemed, and at the close of business on the redemption
date the holders of such shares shall cease to be stockholders with respect to
such shares and shall have no interest in or claims against the Corporation by
virtue thereof and shall have no voting or other rights with respect to such
shares (except the right to receive the moneys payable upon such redemption,
without interest thereon, upon surrender, and endorsement, if required by the
Corporation, of their certificates), and the shares evidenced thereby shall not
be deemed to be outstanding shares for the purpose of voting or determining the
total number of shares entitled to vote on any matter. Any moneys so deposited
by the Corporation and unclaimed at the end of two years from the redemption
date may revert to the general funds of the Corporation, and any funds held by
any paying agent may be paid to the Corporation upon request of the Corporation,
after which reversion or payment the holders of such shares so called for
redemption shall look only to the general funds of the Corporation for the
payment of the redemption price. Any interest accrued on funds so deposited
shall be paid to the Corporation from time to time.

                                      -12-

<PAGE>   32
     (4)  Partial Redemption Procedures. Any shares to be redeemed pursuant to
this paragraph (g) shall be selected pro rata, as nearly as practicable, or by
lot as may be prescribed by resolution of the Board of Directors of the
Corporation and shall be consistent with the applicable rules of the National
Association of Securities Dealers.

     (5)  Default. Unless and until (x) all accumulations of unpaid dividends
on shares of the $4.125 Preferred Stock and any Parity Dividend Shares at the
time outstanding have been paid in full or declared in full and sums set apart
for the payment thereof and (y) the Corporation has fully complied with all
scheduled redemption obligations, sinking fund obligations and all other
redemption obligations relating to the shares of $4.125 Preferred Stock, any
Parity Dividend Shares and any Parity Liquidation Shares at the time
outstanding, the payment of dividends on, and redemptions and purchases of,
shares of the Corporations's capital stock shall be subject to the restrictions
contained in paragraph (h) below.

     (h)  Dividend and Redemption Default Provisions. Unless and until (x) all
accumulations of unpaid dividends on shares of the $4.125 Preferred Stock and
any Parity Dividend Shares at the time outstanding have been paid in full or
declared in full and sums set apart for the payment thereof, and (y) the
Corporation has fully complied with all scheduled redemption obligations,
sinking fund obligations and all other redemption obligations relating to the
shares of $4.125 Preferred Stock, any Parity Dividend Shares and any Parity
Liquidation Shares at the time outstanding:

          (A)  No dividends may be declared or paid or set aside for payment and
     no other distribution may be made in respect of any Common Shares, Junior
     Dividend Shares or (except as provided above in subparagraph (d)(4)) Parity
     Dividend Shares, except dividends or other distributions in Common Shares
     or Junior Dividend Shares.

          (B)  No Common Shares, Junior Dividend Shares or Junior Liquidation
     Shares may be redeemed, purchased or otherwise acquired for any
     consideration (or any payment made to or available for a sinking fund for
     the redemption of any such shares) by the Corporation or any entity
     controlled by the Corporation (except (i) by conversion into or exchange
     for stock of the Corporation ranking junior to shares of the $4.125
     Preferred Stock as to dividend and liquidation rights, (ii) in repurchases
     of Common Shares, Junior Dividend Shares or Junior Liquidation Shares from
     employees or directors of or consultants to the Corporation pursuant to
     contractual arrangements entered into at the time such shares were issued
     giving the Corporation the right to

                                      -13-

<PAGE>   33
     repurchase such shares upon the occurrence of certain contingencies and
     (iii) by acquisition of Common Shares, Junior Dividend Shares or Junior
     Liquidation Shares issued in connection with an acquisition pursuant to an
     escrow, pledge or similar arrangement under which the Corporation becomes
     entitled to receive such shares).

          (C) No shares of the $4.125 Preferred Stock or any Parity Dividend
     Shares or Parity Liquidation Shares may be redeemed unless all outstanding
     shares of the $4.125 Preferred Stock are redeemed.

          (D) No shares of the $4.125 Preferred Stock or any Parity Dividend
     Shares or Parity Liquidation Shares may be purchased or otherwise acquired
     by the Corporation for value except in accordance with a purchase or
     exchange offer made simultaneously by the Corporation to all holders of
     record of shares of the $4.125 Preferred Stock, Parity Dividend Shares and
     Parity Liquidation Shares which, considering the annual dividend rates and
     the other relative rights and preferences of such shares, in the opinion of
     the Board of Directors (whose determination shall be conclusive), will
     result in fair and equitable treatment among all such shares.

     (i) STATUS OF REDEEMED SHARES. All shares of the $4.125 Preferred Stock
which are at any time redeemed pursuant to paragraphs (f) or (g) above and all
shares of the $4.125 Preferred Stock which are otherwise reacquired by the
Corporation and subsequently cancelled by the Board of Directors shall have the
status of authorized but unissued shares of Preferred Stock, without
designation as to series, subject to reissuance by the Board of Directors as
shares of any one or more other series.

                                      -14-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00027-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00027-of-00352.parquet"}]]